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Farmers’ Bills: Apprehension and Myths

Promoting privatization/unbridled capitalistic investment may deny promised benefits (doubling income, assured and higher prices) to the majority of smallholder farmers and sharecroppers.
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Some apprehensions about adverse impacts of the new farm reforms need to be addressed. Though long overdue and therefore welcome, these recently enacted reforms still leave several issues unresolved. Some stakeholders have  raised issues involved in agricultural production and marketing. This is especially significant owing to the preponderance of smallholder farmers and sharecroppers, who have relatively poor bargaining power.

  • Income inequality has worsened over time. This raises the important question‒ how will the new Acts impact the smallholder farmers (who hold less than 2 hectares of cultivable land), who constitute 86% of the total number of farmers, yet own only 33% of cultivated land? 
  • The reforms are silent on how sharecroppers will be protected so as to ensure that benefits will flow to them as well.
  • Promoting privatization/unbridled capitalistic investment may deny promised benefits (doubling income, assured and higher prices) to the majority of smallholder farmers and sharecroppers. 
  • This new Act may encourage high value commercial/corporate agriculture and discourage cultivation of staple food crops, thus endangering the much-needed national food and nutritional security. How will smallholders benefit?
  • Smallholder farmers’ access to credit may be adversely affected as they have tied transactions with the commission agents/intermediaries in the APMC, who provide credit at different stages of the crop and recover it at the time of sale of the produce. When smallholders enter into contract farming, procedural and legal hassles can pose serious hurdles for them in settling issues related to disputes arising from the contract.
  • The existing APMC infrastructure will continue to function, it is not clear how the infrastructure facilities will be utilized. It is also not clear who will record or track data regarding transactions and prices outside the APMC.
  • Though the government has verbally assured a Minimum Support Price (MSP), there is no guarantee. MSP is linked to the public distribution system (PDS), and hence it is critical for meeting the food security needs of the country.
  • Modernization of agriculture (either stand-alone or through contract farming) has been blamed for genetic erosion and loss of agricultural biodiversity. So, while implementing the reforms, there is a need to ensure that no further erosion of this valuable biodiversity happens. That may adversely affect the sustainability of natural resources and their management.
  • There is a need to systematically monitor and evaluate whether the promised reforms deliver expected benefits in the next 2-3 years. This can help to take up knowledge-based amendments or refinements, whenever needed.
  • Apropos the ECA Act: It is not clear how the implementing body will differentiate genuine stocking for processing or sale from stocking for speculation. This will impact traders and processors with small turnover. Also, the Act specifies reimposition of stock limits in certain situations which could lead to arbitrariness and uncertainty.
  • Apprehensions are common in case of every major reform like the WTO, Nationalization of Banks, the 1991 Economic Reforms, GST or demonetization. Suitable safeguards against some of those apprehensions, can minimize hardship and maximize benefits, particularly for the weak and vulnerable people who are hit hard.

Image courtesy Pexels

Dr. Suman K. Mukerjee is an economist and highly respected academician. He has more than 46 years of teaching and research experience in India and abroad which includes institutions like XLRI, IISWBM, St. Xaviers’ College, Kolkata, IIT Delhi etc. He has also been a columnist and member of several advisory boards of the Indian Government as well as the West Bengal Government. He is an alumnus of St. Xavier’s College, Kolkata, St. Stephen’s College and Delhi School of Economics. Presently he is a member of State Advisory Board on Education, Government of West Bengal, Advisory Board, Chairman International Marketing and Business Community, Federation of Small and Medium Industries (FOSMI), West Bengal, Economics Sub Committee BCC&I, MCC&I, ASSOCHAM, CII(ER). He is also a life member & general council member of Ceners-k, an independent thinking body of researchers on International Development.

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