Explainer: Why farmers, Centre have failed to reach an agreement

The farmers have been angry since the government promulgated the ordinances in June. The Centre has not been able to persuade the farmers that their fears are unfounded. Here are the key points:

Farmers gather in large numbers to protest at Singhu border near Delhi | File Photo: PTI

The deadlock in talks between the government and farmers over the three new agriculture laws, despite the Centre’s proposal to give written assurances on key concerns, reflects more than raw anger among the farmers, mainly from Punjab, Haryana and parts of Uttar Pradesh.

The farming community, especially in Punjab, has been upset ever since the Centre promulgated the ordinances on June 5 before coming out with Bills and finally enacting them as laws — The Farmers Produce Trade and Commerce (Promotion and Facilitation) Act, 2020; The Farmers (Empowerment and Protection) Agreement on Price Assurance and Farm Services Act, 2020; and The Essential Commodities (Amendment) Act, 2020.

Also read: Farm laws: Key points from govt’s draft proposal sent to farmers

Farmers are protesting against all the three laws. Their objections originally are mostly against the provisions of the first. While there has been no uniform demand among the protesters, it now seems their concerns are mainly about sections relating to MSP and “market fee” in the first Act.

Here’s looking at some contentious points and the government’s stand:

Why are mostly Punjab and Haryana farmers agitated?

Central agencies make most purchases for food security, including the public distribution system, from the two. The farmers fear that the three laws would deny them an assured price, or the Minimum Support Price (MSP), which is often more than the market price particularly during times of surplus. In Punjab, 95 per cent of paddy growers benefit from MSP, whereas in UP, only 3.6 per cent benefit, as per government data.

MSP and ‘free markets’

The farmers’ fears over MSP and free markets stems from the possibility that if there are two markets buying the same commodities but only one of them levies a tax, trade will inevitably shift to the one without a tax. The fear appears to be that states without enough tax revenue or resources may be disinclined to keep the existing MSP system going.

Govt stand: On Thursday (December 10), Agriculture Minister Narendra Singh Tomar said: “We are ready to give it in writing that MSP would continue. The government has proposed to amend the Farmers Produce Trade and Commerce (Promotion and Facilitation) Act to bring parity between ‘free markets’ and notified markets controlled by state governments.”

What farmers say: The government has avoided addressing concerns that these laws help only corporates and MNCs. “These will result in increasing the input costs, losses, debts and displacement from land,” said Yogendra Yadav of Swaraj India, which is heading the agitation under All India Kisan Sangharsh Coordination Committee.

Concerns on Agriculture Produce Marketing Committees (APMCs)

By 2019, 17 states had removed fruits and vegetables’ monopoly from APMCs and 19 had provisioned contract farming into their respective APMC Acts.

What farmers say: These laws sidestep APMCs and give preference to MNCs and corporates. They also said if agriculture is a state subject, the Centre doesn’t have the right to make laws on it.

Govt stand: APMC and MSP are not affected by the new laws, Tomar said. These laws are reforms taken up after discussions with stakeholders. The central government is well within its constitutional rights while making laws on agricultural trade, said Tomar as well as Food and Consumer Affairs Minister Piyush Goyal.

Farmers’ concerns: They will be forced to sell their produce in private market.

Govt stand: Union minister Goyal said this is completely erroneous. “There is absolutely no provision in the law which brings an element of compulsion on any farmer,” he said. Tomar said the government wanted to liberate the farmers from the shackles of mandi so that they could sell their produce anywhere, to anyone, at his own price, outside the purview of mandi.

“We have already made provision in the Act that agreement under these laws will only be between processors and farmers’ produce. There is no provision for any lease or agreement over farmers’ land,” the Agriculture Minister added.

The provision on ‘market fee’: The law states that “no market fee or cess or levy, by whatever name called, under any State APMC Act or any other state law, shall be levied on any farmer or trader or electronic trading and transaction platform for trade and commerce in scheduled farmers’ produces in a trade area”. Officials say this provision will reduce the cost of transaction and will benefit both the farmers and the traders.

According to an Indian Express report, under the existing system, such charges in states like Punjab come to around 8.5% — a market fee of 3%, a rural development charge of 3% and the arhatiya’s commission of about 2.5%.

Balbir Singh Rajewal, president of Bhartiya Kisan Union (Rajewal) told the paper that by removing the fee on trade, the government is indirectly incentivizing big corporates. They said this provision does not provide a level playing field to APMC mandis.

“If you calculate the mandi transaction cost on one quintal wheat, at 8.5% all inclusive, it comes about Rs 164. So, on the sale of every quintal of wheat outside the mandi, you are incentivizing big corporates, who will use this difference to offer better prices to farmers in the initial days. And when the APMC mandi system collapses in due course, they will monopolize the trade,” Rajewal said.

A government official, on the other hand, questioned why the states do not make transactions in mandis cost-efficient. “When they are giving free electricity and other subsidies, why can’t they provide a free facility to farmers for selling their produce?” the official told the paper.

Also read: Amritsar farmers on 700 tractor trolleys head to Delhi as protest enters Day 16