As Farmer unions of Punjab and Haryana are upping their protests to the recent Farm laws passed by the parliament, and after 5th round of talks between the unions and Central Government is still inconclusive, Government assured to amend the farm laws per the objections raised. However, the farm union wants to repeal those farm laws. At this juncture, Center and union are planning to meet again on Dec 9th for another round of talks and expect to have some break through. However, most of the international media and most of the Indians are not sure what exactly are those laws and why there is opposition by only two State farmers and not from other states. Out of the three farm laws, we will go over the first one, Essential commodities Act 2020. 

Essential Commodity Act of 1955 and the need of Amendment in 2020

Central Government in Sept 2020 have amended 1955 Essential commodity act and brought sweeping changes that fits to the new modern India.  The 1955 Essential commodity Act was brough when India was going through food shortages due to famines, floods and other natural disasters. The aim of the law was to stock pile the essential goods like Rice, Wheat, Edible Oil, Pulses, Potatoes etc. This law was brought to feed the needful at a time when India was depended on food grain Imports from United states. This law enacted in 1955 aimed to regulate the food prices by preventing black marketing and hoarding of food grains. However, India in 2020 is different from 1955 and it has become a major agricultural export of various commodities. In fact, there is every need to regulate prices of these essential commodities by free supply of grains and pulses to reduce the prices in the open market. India’s agricultural production of wheat have increased 10 times to 100 million Tonnes in 2018, while the paddy increased from 25 million Tonnes in 1955 to 110 million Tonnes in 2018 apart from Pulses with 2.5 times to 25 million Tonnes in 2018. Thus, there is no need to stock pile rather sell these food grains in open market. By removing the need to stock pile those essential commodities except in real circumstances, will attract private investment to purchase the grains at the Minimum Support Price apart from the original aim of regulating the prices in open market from hoarding and black market by creating artificial scarcity. This will immensely benefit the consumer. As we know in many parts of the country there are various farmers who produce vegetables, spices, fruits apart from the essential commodities. The private investment will promote building cold storages. As an example, Farmers in Maharashtra produce Onions in large quantities, while in South and specially in arid regions like Rayalaseema Farmers grow Groundnuts and Tomatoes in large quantities. Farmers in Anantapur Dist in Andhra, produce highest groundnut in India apart from Tomatoes. Due to high yield of Tomatoes during Sept and October of every year, the farmers in the region had to sell 1 KG of Tomato for almost 1 Rupee which is a loss for farmer. It is necessity to have private investment to store the yield as needed. At a times of floods, the onion prices peak to 200 Rupee per KG while the farmer through middle men sells the same onion for less than 50 per KG. At the end, it is a loss for farmer for the lack of private investment for storage and cold storages. 

While more than 85% are micro, small and medium farmers, it is really difficult to store the produce when there is a lack of storage facilities and lack Minimum Support Price (MSP). It is important to understand that these farmers usually apply for farming loans every 6 months and the lack of Minimum support price specially for perishable food commodities leading to farmer suicides. This was seen almost in every state. Thus, the amendment of this essential commodity law helps to attract private investment in farming which India never attracted a private investment before since past 70 years.  As India is moving into an era of fastest growing economies, this amendment helps deregulate the stockpile and yet benefit with MSP.

Opposition of Punjab and Haryana Farmers 

Farmers in Punjab and Haryana are in specific opposed to these three farm laws due to regulated Mandi system in place and over 90% of the farmers produce wheat which comes under essential commodity act of 1955. When the essential commodity like wheat doesn’t come under the act except in real circumstances Farmers feared that they will lose the Minimum support price(MSP). While, India have increased the wheat production 4 times and the Minimum support price is dependent on the State regulated APMC Mandi. Thus, the farmers are opposing this amendment fearing that the Minimum support Price will be impacted apart from the private investment taking over their produce. Interestingly and on contrary the southern states like Andhra Pradesh, Tamil Nadu, Karnataka with rich paddy fields produce highest quantities of Paddy production in the country are not worried as the farmers have ability to sell their produce to Food Corporation of India with Minimum Support Price guaranteed by Government or they can sell it to any Rice Miller or to any business owner on a contract agreement made earlier apart from State’s Civil Supply department procure it with Minimum Support Price per Quintal. While in Andhra Pradesh, the state introduced “Farm gate” system to procure the paddy from door step in Villages. The same is implemented in Telangana where the farmers do not have to go to the APMC but the procurement be done at door step with MSP, while Central government has set up an insurance fund to as much as 1 Lakh crore.  

From the negotiations with the Farm unions, Central Government is ready to make amendment with the Minimum support price for the agriculture produce when private investment is made apart from allowing the farmers to go to Civil courts for any disputes which both of these are missing from the act.

To be continued…

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