Farm Bills 2020 - Dictation matter for SSC, Railway

Farm Bill / Minimum Support Price (MSP)

MSP is the minimum price which the government pays for the farmers’ produce at the time of procurement. It is aimed at saving the crops from price fluctuations in the market. The MSP fixed by the government is considered as being remunerative for farmers. However, MSPs do not have legal backing.

MSPs were first introduced in 1966-67 when the country adopted Green Revolution technologies. To boost the domestic production and encourage farmers to plant the high yielding varieties, the government resorted to MSP. A minimum support price was guaranteed to them.

It is fixed by the centre based on the recommendations of the Commission for Agricultural Costs and Prices (CACP) which is a statutory body. CACP submits two separate reports for Kharif and Rabi seasons and based on these, centre fixes MSPs twice a year. As of now, 23 crops are being supported by the centre by fixing of MSP. They belong to the family of cereals, pulses, oilseeds and commercial crops.

MSP is needed to safeguard farmers from the market price fluctuations. The prices of farm commodities are dependent on various factors such as good harvest season which leads to fall in prices. In such cases, farmers might not prefer to sow the aforesaid crop next season. MSPs would encourage farmers to sow these crops and thereby maintain a healthy supply.

Although the government announces MSP for 23 crops, only 2-3 crops are effectively procured. The production of rice and wheat greatly increased at the expense of other crops like pulses. The significant increase in buffer

stocks adds up to huge storage and transportation costs. Doing away with MSP without taking the farmers into confidence is not the right step. Also, other steps like improving the irrigation facilities, implementing land reforms and access to technology are necessary to make farming more remunerative to farmers. Implementing various suggestions given by Swaminathan commission would be a right step instead of considering MSP as the panacea.

Market Intervention Scheme is a price support mechanism for those horticultural commodities which are not supported by MSP. The commodities covered are mostly perishable in nature. The scheme is similar to MSP but is temporary in nature.

MS Swaminathan commission was constituted by the centre in 2004 for recommending various measures to alleviate farmer’s distress. NCF submitted five reports in total and recommending various measures, like-

• Insertion of Agriculture in the concurrent list of the constitution.

• Addressing the issue of land reforms and inequalities in landholdings.

• Increasing the investments in agriculture-related infrastructure.

• MSP support to be provided to crops other than for paddy and wheat.

• Steps to be taken for forming a single Indian market which promotes grading, branding and packaging.

• Preserving the right of access to non-timber forest produce.

The centre has recently passed two farm bills namely, The Farmers’ Produce Trade and Commerce (Promotion and Facilitation) Bill, 2020, The Farmers (Empowerment and Protection) Agreement on Price Assurance and Farm Services Bill, 2020. Other than these two bills, another bill, The Essential Commodities (Amendment) Act,2020 has also been a bone of contention between the farmers and the centre.

The first bill i.e., the Farmers’ produce trade and commerce bill gives more choice to the farmers regarding their produce. It allows the farmers to sell their farm produce outside the government regulated mandis or the Agricultural Produce Marketing Committee (APMC). APMC as an institution became obsolete and is fixing low prices for the produce. This is leading the farmers to resort to distress sales in the event of bumper prchoose the best price for their products and sell accordingly.

The second bill i.e., the Farmers’ agreement on price assurance and farm services bill has provisions regarding the contract farming. It gives the farmers an opportunity to strike a deal with corporates even before the production. This shifts the risk from farmers onto the businessmen and also the farmers will be assured of a fixed price.

From the Farm Bills, farmers get higher prices for their produce since restrictions to sell in the physical premises of mandis has been done away with. They provide for a 3 level dispute settlement mechanism- conciliation board, sub-divisional magistrate and appellate authority. The Farm Bill ensure a guaranteed price for the product to be mentioned in the agreement between farmers and businessmen. The State governments are prohibited from levying market fees for trading outside the trade area.

However, there are some drawbacks of the Farm Bills. There is no clarity or mention regarding the MSP in the proposed laws. There is no involvement of Judiciary in the dispute settlement mechanism. Farmers’ concern that their interests would be ignored in case of disputes with large corporate houses. Under contract farming, there is a fear of becoming slaves to corporate buyers on one’s own land. (800 words)