The three Bills – Essential Commodities (Amendment) Bill, 2020, The Farmers (Empowerment and Protection) Agreement on Price Assurance Bill, 2020 and The Farmers’ Produce Trade and Commerce (Promotion & Facilitation) Bill, 2020 passed in the Parliament during the monsoon session are not only against the federal structure of India, but also have the ability to spell doom on farmers.
The Amendment deprives states of their ability to regulate prices after the deregulation of commodities under Essential Commodities Act, 1955. Additionally, the other two Bills legislate on Agriculture, which is the 14th Entry in the State List under the Seventh Schedule of the Indian Constitution. Moreover, the Bills override the existing APMC laws in states and prohibit collection of market fee, cess or levy on farmers and traders by the State Governments. All these changes have been made without any consultation with the states, thereby, contravening the spirit of federalism in the country.
The lack of a stock limit under Essential Commodities (Amendment) Bill, 2020 allows corporates and traders with capacity and resources to hoard the commodities. Hoarding of these commodities will allow them to manipulate the market. Shortage of supply created by such hoarding will have two adverse consequences: firstly, it will cause the prices to rise exorbitantly in the absence of regulation. Secondly, it will incentivise the expansion of black market of these commodities.
Furthermore, contract farming has been provided for, without safeguards. The Bill provides for a mutually agreed arrangement between the farmer and buyer. This will include price and redressal mechanism within its terms, completely eliminating the requirement of an MSP (Minimum Support Price) and standard redressal system. In the absence of an MSP, sponsors are likely to negotiate for lowest prices, leading to exploitation of farmers. Moreover, the sponsor can also exploit the farmer’s lack of legal understanding to include conditional terms that will further decrease prices. This coupled with the lack of a standard redressal mechanism will lead to severe exploitation of farmers.
The new provisions will pave way for increased presence of corporations and traders in the agriculture sector without Government regulation. In this exercise of allowing free market, the worst hit stakeholders will be the small and marginal farmers. These farmers rely heavily on Government interventions like MSP and public procurement. Moreover, the exemption from a stock limit under The Essential Commodities (Amendment) Bill opens the scope for hoarding and manipulation of prices, therefore, increasing the exploitation of such farmers.