The Rajya Sabha passed two out of the three Bills being referred to as the Farm Bills [link]. These two Bills are the Farmers Produce Trade and Commerce (Promotion and Facilitation) Bill, 2020, and the Farmers (Empowerment and Protection) Agreement on Price Assurance and Farm Services Bill, 2020. The Lok Sabha had already passed these Bills. There was some ruckus in the Rajya Sabha where the Bill was passed through a voice vote.
If farmers have greater choice to sell to whoever & wherever, if there is contract farming with safeguards to give assured price & improve quality, if trading & storage restrictions are removed [link] Why still Farmers are protesting? Let's take a look.
1. The farmers of Punjab, Haryana & Western Uttar Pradesh, are the ones primarily protesting. Why?
- Government procurement infrastructure in these areas is very good, This is because the Green Revolution of the 1960s started here.
- Government offered procurement through Food Corporation of India (FCI) & a minimum support price (MSP) to farmers, before every agriculture season.
- The system has evolved & the Government sets an MSP on 23 agricultural crops, it has bought some pulses and oilseeds as well.
- The fear among farmers is that next step in agriculture reform process might be doing away of government procurement process as well as MSP. This is going to primarily hurt farmers from Punjab & Haryana, who benefit tremendously from this.
2. The farmers who benefit from government procurement process & MSP are medium & large farmers [link] - published by Commission for Agricultural Costs & Prices 2020-21.
- Hence, it's the bigger farmers who are protesting.
- Government have assured that there are no plans to do away with government procurement or MSP policy, But protestors don't seem to be buying these assurances.
3. Why big farmers not buying the government's assurances? The answer lies in the fact that it might be natural that next step in the process of reforming agriculture is reforming government procurement & MSP policy.
4. The MSP policy has led to excess production & excess procurement of rice & wheat by government over the years. As of Sep 2020, FCI had 700.27 lakh tonnes of rice & wheat. As per stocking norms FCI needs to have 411.2 lakh tonnes as of July. If they are incentivised to grow something, with a regular buyer available (Government), they are bound to do that.
5. Other big fear among farmers, those representing them & many economists, is that large corporates will take over contract farming. And their might be increase in cost of production such as human labour, machinery, seeds, fertilisers, fuel, etc.
To conclude, Government procurement & MSP where introduced in a time when India didn't produce enough food grains to feed itself. And with new Farm Laws, honestly big farmers can still do business, where as small farmers (2-5 acres) & marginal farmers (5-10 acres) will be benefited a lot.