The new farm reform laws and the protests by various bodies are making headlines. Let me bring out who are the people who are going to lose and why are they protesting.

The agriculture reform comprised of the below 3 laws:

  1. The Farmers’ Produce Trade and Commerce (Promotion and Facilitation) Bill, 2020
  2. The Farmers (Empowerment and Protection) Agreement on Price Assurance and Farm Services Bill, 2020
  3. The Essential Commodities (Amendment) Bill, 2020

The first law allows the farmers sell their produce outside Mandis literally to any one and the purchaser just needs to have a “PAN Card”. Till now, in many states, farmers could sell only at APMCs to those customers selected by the licensed commission agents (called Arthiyas in Punjab). And since, not every one could become a Arthiya which required a license, they formed cartels and hence purchased from farmers at the prices they deemed suitable. The farmers could also sell to the Food Corporation of India (FCI) at Minimum Support Price (MSP). But the FCI officials colluded with middlemen to make the farmers sell at lower prices and hence the farmers never got the MSP, and the benefits of MSP was shared between corrupt FCI officials and the Middlemen. The argument that’s being given against the laws is that “Mandis will vanish due to the new laws”. This itself proves that Mandis don’t pay the right value to the farmer due to which the farmer wont go to a Mandi once (s) gets an open market to sell.

The second law allows contract farming. The Middlemen/Arhtiyas had become rich due to their monopolies. And they used to lend money to farmers and made it obligatory for the farmer to sell their produce to them. With a well regulated contract farming law with an adjudicating authority to sort out disputes, the farmers can now enter into contracts with persons, corporates, farming societies of their choice and wont be forced to sell to middlemen and the corrupt FCI officials.

The third law amends the “Essential Commodities Act(ECA)”. In the ECA , the government can impose limits on how much one can store. In case the person stores more than the specified amount, there is a jail provision. The Law is so stringent that, once a charge has been formed, it will be responsibility of the accused to prove that he was innocent and if (s)he failed (s)he could be jailed. ECA was promulgated in 1955. At that time there were shortage of food grains and any hoarding could create inflation. But over the period of time, India’s food grain produce increased and India even started to export food grains. Hence, putting such limits through ECA became counter productive as India did not see any investments in cold chains, storage facilities etc. Hence, is no surprising that nearly 35% of the vegetable produce gets wasted.

Coming back to our questions who loses due to the laws, that may explain who are protesting.

  1. Middlemen. Due to lack of monopolies they wont survive.
  2. Corrupt FCI officials. These people actually benefited from MSP.
  3. Black marketers and hoarders. They could manipulate food prices due to lack of competition/monopolies.

Who benefits?

  1. Farmers. They will get freed from the trap of Arthiya/middlemen/Corrupt FCI officials, as they will have a bigger client base to sell their produce.
  2. Tax payers. As the benefit of MSP will go to actual farmers I am sure the Govt’s MSP spending will come down.
  3. Exporters. Since, they can directly purchase from farmers, they will be more competitive in international market.
  4. Common man. Since chains of middle men will go away, hoarding and black marketing will reduce and food prices will fall, or at least remain stagnant. Food inflation will be a thing of past.

Now, we can understand who all are protesting and why.

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