Amid the standoff between central government and farmers especially from Haryana, Punjab and Uttar Pradesh over new farm laws, the experts think the new laws will only work in favour of farmers in the long run and there is no reason to repeal them. The way industries were opened up in 1991 and those reforms paved the way for Indian economy to get global exposure, these agricultural reforms will also strengthen the rural economy and give farmers more avenues to sell their produce at better price. However, withering away of minimum support price and APMCs are where the shoe is pinching and these are the major causes of concern among the farming community. Zee Business takes a look at these issues and how these new laws are much needed to uplift the poor farmers.

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Agricultural Produce Market Committees (APMCs) are the marketing boards established by the state governments to safeguard the interest of farmers by eliminating intermediaries.

According to Vijay Sardana, agriculture economist, it is a state subject and the central government has no role in that, so the fear of losing APMCs under new law is completely baseless. It’s up to states how do they develop APMCs . Cost of transaction in mandis ranges from 3 to 8.5% plus other overheads like transportation etc. 

Food Corporation of India or FCI, the largest procurer of produce from the APMCs pays commission to agents while procuring farm produce which also inflates the cost upto 14.5%, which is highest in the world. There will be no role of middlemen under the new system and hence a better price mechanism as farmers can  make more money by directly selling to those whom middlemen are selling.

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With the new farm laws- Farmers’ Produce Trade and Commerce (Promotion and Facilitation) Act, Farmers (Empowerment and Protection) Agreement on Price Assurance and Farm Services Act, and the Essential Commodities (Amendment) Act,  in place, the farmers will have a choice to sell their produce to only those who are paying higher price. “The main contention is commission of middlemen which will stop coming under the new mechanism. FCI will be able to directly procure from farmers without going to middlemen.  The new law will empower farmers as they will have a choice to opt which wasn’t there up till now. APMCs can be given to farmers association to undertake trading in efficient and fair way,” Sardana said.

The other major contention which is making headlines is the fear of losing MSP with the new farm laws. MSP provides safety net to the farmers in times of price fluctuations due to various factors including monsoon and natural calamity. The government provides MSP for 23 crops but only wheat and rice are procured by the government at MSP. According to a central government committee report, only 6% of the country's farmers take advantage of MSP and various reports suggest that most of these farmers are from Punjab and Haryana. MSP is a policy instrument and farmers are demanding to make it a part of legislation. They want procurement below MSP to be made a punishable offence.

As per former agriculture secretary, Shobhana K Pattanayak, MSP is availed mainly by Punjab and Haryana. New farm laws are required for the diversified agriculture system of India which will be suitable for perishables, high value crops, flowers and other products. States which don’t grow wheat and rice will also stand to benefit under the new system. There are apprehensions that the benefit of MSP will go away with the new laws coming in but the Food Security Act will continue to exist as the total requirement of wheat and rice is at exceptionally high level, so the government will continue to purchase under MSP. It should allay the fear of farmers.

“MSP is a policy instrument and not a legal instrument. Whether it has to be made a legal instrument or not is debatable. But it has been working well for wheat and rice.  The government has limited resources and to cover all the crops under MSP is not practical. It cannot become the market, it has to create the market. The market forces should play out so that everybody gets benefitted,” said Pattanayak.

When asked whether small and marginalised farmers may lose their bargaining power to the big multinationals, Pattanayak said the current dispute regulation system needs to be bolstered to address their concerns of losing livelihood under the new law. Formation of FPOs (farmers producers organisation) will also give protection to farmers in terms of their negotiation power. The government needs to educate farmers and make them aware about how can they avail most from the system without getting exploited. There will certainly be initial hiccups as the transitioning to any new system is difficult but for the country with diversified agriculture system, these laws are very much needed.

According to the Chairman of ICFA (Indian Council of Food and Agriculture), MJ Khan, participation of corporates in agriculture sector is important.  With the entry of private companies in the agriculture sector, infrastructure, logistics, food processing and supply chain etc. will improve. As the sector will open up to the private companies, the government should make sure that proper regulations are in place so that the farmers don’t get exploited. These laws are very much needed for post- harvest management which will improve with the entry of private companies. Regarding MSP, he said that the government should rationalise it in the long run and diversify it from rice and wheat. Government needs to consult with farmers to alleviate their fears and it is eager to hold dialogue with them, so the consensus should form between both the parties. All in all these farm laws are necessary for the betterment of farmers and there is no reason to repeal them.