Ordinances on agriculture show unwise haste, may do harm along with good
The Indian Express
18 June 2020
Written by: Ajay Vir Jakhar
Just as all ordinances aren’t reforms, all reforms aren’t the “1991
moment” for agriculture. The ordinances announced recently to facilitate
trade in agricultural produce were historically resisted by the
bureaucracy and the states. Pent up frustration at repeatedly failing to
change the status quo of depressed farmer livelihoods, and the pressure
of the PMO seeking instant delivery, has the establishment introducing
ordinances rather than bills.
Bills would require to be placed in the public domain for comments,
consultations would be held with farmers, and states whose powers and
revenues were being curtailed would get a hearing. In the hurry to
impose ordinances, however, the baby has been thrown out with the bath
water, specifically with ‘Farming Produce Trade and Commerce (Promotion
& Facilitation) Ordinance 2020.’
Due to the unionisation of middlemen (arhatias) and their financial
clout, politicians in the states have been reluctant to amend
agriculture marketing laws which are exploitative and don’t allow
farmers to receive a fair price. Rather than coax the states financially
to correct the markets, an unregulated marketplace has been created
where 15 crore farmers will be exposed to the skulduggery of traders.
Imagine the mayhem in stock markets if ROC and SEBI were similarly made
redundant.
Rather than replicate Punjab’s successful agriculture mandi model,
now states will lose vital revenue to even upgrade and repair rural
infrastructure. The ordinance may be challenged by the states for its
constitutional overreach, but, on the flip side, over time, the largest
informal sector in the country will begin to get formalised and new
business models will develop. A different breed of aggregators will
create the much-needed competition to the existing monopoly of local
traders.
Additionally, henceforth, when farmers sell agricultural produce
outside of APMC market yards, they cannot legally be charged commission
on the sale of farm produce. To survive, the APMCs across the nation
will have to radically standardise and rationalise their mandi fee
structure and limit the commission charged by traders on sale of
farmers’ produce.
My conjecture is that only because the amendment limited the powers
and revenues of the state, and not the agriculture department itself,
did the central government rush in with an amputation where a surgery
would have sufficed.
An amputation was required in the Essential Commodities Act (ECA),
1955, where a band-aid dressing has been applied. This amendment was
supposed to allay the genuine fears of traders emitting from the
bureaucracy’s draconian powers to arbitrarily evoke stockholding limits
etc. Rather than forego its own powers for the larger good, the
amendment’s fine print makes it ambiguous and leaves space for whimsical
interpretations as before. The trader’s uncertainty is compounded by
the arbitrary import-export policy decisions which dilute the purpose of
the amendment itself.
Lastly, “The Farmers (Empowerment and Protection) Agreement on Price
Assurance and Farm Services Ordinance 2020” could have been simply
called the “contract farming ordinance 2020”. It tries to placate the
fears of both the farmer and the contractor when they sign an agreement.
For the farmer, the legal recourse is never a practical choice as the
persuasive powers of the aggregators’ deep pockets cast a dark shadow
over the redressal process. Likewise, the tediously stretched legal
proceedings are dissuasion enough to either not seek redressal or settle
for unfavourable terms.
That produce derived from contract farming operations will not be
subject to any obstructionist laws is a very good step. Farmer-producer
organisations and new aggregators will get a boost with these laws, and
become harbingers of prosperity in some small corners of the
countryside. There are green shoots in the ordinances, but the downside
dwarfs the upside.
The union of the three ordinances appears to be a precursor to
implementing the Shanta Kumar Committee recommendations to dilute and
dismantle FCI, MSP & PDS which will push farmers from the frying
into the fire. It may also be interpreted to mean that now the sugar
industry needn’t pay farmers the central government FRP or the state
government SAP price for sugarcane. The way the establishment has gone
about pushing these ordinances, the government has lost moral and
political ground even amongst its most ardent supporters.
Shakespeare said, “The evil that men do lives after them; the good is
oft interred with their bones”. As in the past, government efforts
aren’t bearing fruit and like a wound, rural distress festers. Senior
officers creating policy retire and thus fail to be held accountable for
the mess they leave behind.
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