The most formidable opposition to economic reforms of 1991 by Prime Minister Narasimha Rao came from the industrial and business houses. They had become accustomed to operating in the protected environment under the license-permit raj and feared the uncertain future despite being the primary beneficiaries of reforms. Same is the story with farmer unions of Punjab and Haryana up in arms against the three landmark farm Bills passed by Parliament.
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, and The Essential Commodities (Amendment) Act, 2020, together fulfil a long-standing demand of farmers and recommendations of numerous committees and experts.
The farm laws end the absurd situation where the farmer was the only producer who did not have control over the sale and price of their produce. The laws will liberate the farmers from the obligation to sell their produce in the government-designated mandis or APMCs, and facilitate barrier-free inter-state trade.
The roots of the APMC (Agriculture Produce Market Committee) goes back to colonial rule to ensure the cheap supply of raw cotton to mills in Britain. Furthermore, the roots of price control go back to the infamous Khilji era when policy to ensure a cheap supply of agricultural produce to the Turkic settlers in garrison towns impoverished the peasantry.
Even after Independence, price control was used to implicitly tax agriculture to ensure a cheap supply of agricultural products to the cities and industrial centres. With the dilution of the Essential Commodities Act, there is now a greater scope of investment in supply chains, storage and trading networks which will benefit the farmers. Also, now farmers can securely engage with the Agri-business firms, processors, wholesalers, exporters or large retailers for farm services and sale of future farming produce by a mutually-agreed lucrative price framework, fairly and transparently through a contract.
Interestingly, these have been the demands of the farmer's unions currently protesting in the Delhi-National Capital Region. Before the 2019 general elections, one of the leading protestors, the Bhartiya Kisan Union (BKU) had demanded the abolition of APMCs, freedom from Arhityas or intermediaries, full freedom to trade, to sell, to rent and/or lease farmland, to enter into contract farming and futures trading in a ‘Kisan manifesto’. Moreover, the same had been promised to a greater or lesser degree by the opposition political parties.
While the farms laws have become the rallying cry for protests, these protests are not about the provisions in the law themselves. In the first round of talks with the central government, union leaders were unable to give concrete points against the laws.
The primary reason lies in the uncertainty and fear of the future. Neither the APMCs nor the MSP (minimum support price) is abolished. Nevertheless, farmers are apprehensive about the future where the APMCs may become redundant due to competition from the agri-business companies. With the APMCs out of the picture, the MSP will automatically become defunct, and with it, they will lose their bargaining power vis-a-vis private buyers. This fear haunts Punjab and Haryana the most as they are the main centres of procurement, accounting for the 65 percent of wheat and 30 percent of rice in 2019-2020.
The deeper reason of protests lies in the broader political economy where affluent capitalist farmers and landlords that emerged during the green revolution are trying to defend their turf from the entry of corporate and big capital. The State support in the form of subsidies, the APMCs and the MSP, was critical in the formation of this class of capitalist farmers in Punjab and Haryana who employ wage labour and operate for profit. Moreover, the same wealthy farmers-landlords also act as moneylenders, intermediaries and have interests in other agriculture-related trade and commerce.
They are now spearheading the protests and owing to their social power and ability to shape local narrative, they’ve been able to mobilise the significant sections of small and medium farmers as well.
Also, the control over the APMCs, agri-trade and commerce, co-operatives, etc. are sources of power of the local rural elites. Moreover, these local semi-feudal elites form the grassroots structures of the power which political parties must accommodate in their quest for power. No political party can resist these farmers’ protest unless one is determined that dismantling the existing edifice of rural political economy is a just cause. However, it means that farmers protest can only be dealt with politically and not technically by haggling over provisions of the laws. Abhinav Prakash Singh is assistant professor, Shri Ram College of Commerce, University of Delhi, Delhi. Views are personal.