Introduction

“JAI JAWAN, JAI KISAN”. This is very popular slogan; you must have heard it multiple times. But how
much do we actually value our farmers and soldiers? So, this article is about the latest ordinances
related to agriculture, which has infuriated the farmers of the nation. Especially the farmers of
Punjab and Haryana are out on the streets to condemn these ordinances.

Criticism

Now let us talk about the ordinances brought in by the Modi Government. They have claimed that
these ordinances would create one nation one market and will give the farmers the freedom of
choice – they can sell their product wherever they wish to. We need to understand two things here:
Seen broadly until now only 6% of the farmers in the entire country gets MSP. And MSP would only
be given if they if they sell in the regulated APMC mandis. 94% farmers are in any case dependent
upon the markets. The NSSO report tells us that even in 2012-13, when they surveyed the mandis
they found that the majority of the produce was being sold to private trade outside the mandis.

These ordinances also state that the areas outside these APMC will have no taxes on sale or
purchase. The farmer alleges that if the government make sale and purchase outside the mandis it
will make the mandis less attractive, due to the absence of the taxes, outside the mandi consumers
will not prefer mandis. This would pose a huge disadvantage for the farmers. Because in APMC the
mandis are regulated and the transactions are recorded. There is also a minimum support price, but
no MSP exists outside these mandis. There is no Minimum Support Price for the farmers. there is no
one to regulate anything and to ensure farmers are treated fairly and are not exploited.

But there is a provision that if the traders buy inside APMC, then they will have to pay the mandi tax.
But if the private companies buy outside the mandis, then they would not have to pay taxes. So, the
traders and the companies would want to buy-produce outside. And gradually, people will move out
of the mandis and this will cause the mandis to start becoming redundant. When the mandi system
collapses, then obviously, the MSP that was assured to the farmers would also decline gradually. The
protesting farmers believe that these ordinances would "corporatize " the agricultural sector of
India. A good, recent example of this would be when Pepsi sued some farmers in court in Gujarat.
Most of the farmers in the country do not have the requisite knowledge to understand lengthy
contracts. Most experts also say that the government is fooling people by claiming that these
ordinances would impart freedom of choice but this freedom already exists with the farmers. They
can sell their produce wherever they wish to.

It is being said that with this system of "one country, one market " would allow the farmers to sell
anywhere. But the whole question is that if 86% farmers of India are not able to go from one district
to another to sell their produce, How are we expecting them to travel from Chandigarh to Bangalore
or from Bangalore to Chhattisgarh to sell their produce? That is not possible! And this issue exists
not only in India but in many developed countries as well. Due to which, you will be surprised to
know, farmer suicides are on the rise even in developed countries like France and America. And
these countries are undergoing an agricultural crisis. Because even in these countries, major
multinational companies have captured a monopoly. And are exploiting the farmers. The small
farmers are the worst hit.

Free markets basically refer to a situation where the government does not interfere. And let
businesses operate the way they want to - which sounds good superficially, but if the market is left
free for the businesses to earn profit as they wish to then overall, this will not be good for the
society and the world. Because if businesses and big companies operate without the regulation of
the government, then they will always think about their profits and if they are only focused upon the
profits, who is going to look after the environment? It is going to get destroyed- which is actually
happening all across the world today.

APMC

 The APMC system was introduced to prevent distress sale by farmers to their creditors, to
protect farmers from the exploitation of intermediaries and traders and to ensure better prices
and timely payment for their produce through the auctions in the APMC area.

 The APMC Acts mandated that the sale/purchase of agricultural commodities is carried out in a
specified market area, and, producer-sellers or traders pay the requisite market fee, user
charges, levies, and commissions for the commission agents (arhatias).

 These charges were to be used for further development of the mandis and their infrastructure.
 In the initial years, APMC acts helped remove malpractices and freed the farmers from the
exploitative power of middlemen and mercantile capital.

 The golden period for APMC markets lasted till around 1991.

EFFECTS OF APMC:

 APMC Acts restricted the farmer from entering into direct contract with any processor/
manufacturer/ bulk processor.

 These markets acquired the status of restrictive and Monopolistic markets, harming the farmers
rather than helping them to realize remunerative prices.

 APMC became an arm of the state and the market fee as the tax levied by the state. Rather than
as a fee charged for providing services and development of mandis.

 The levies and other market charges imposed by states vary widely. Statutory levies/mandi tax,
VAT etc. All add up to hefty amounts, create market distortions with cascading effects and strong
entry barriers.

 Agents in an APMC have formed cartels to create a monopsony. The farmers were left with no
choice but to seek the help of middlemen.
PROBLEM WITH APMC:

 Markets highly fragmented

 High Incidence of Market Fee/ Charges
 Less Remuneration to the Farmers and High Intermediation Cost
 Insufficient Number of Markets
 High Post-Harvest Wastages
 Market Information Asymmetry
 Inadequate Marketing Infrastructure
 Restrictions in Licensing
 Inadequate Credit Facilities

What has the Govt Done?

The Government made the following changes:

 Model APMC Act of 2003

 E National Agricultural Market (NAM)
 Ordinance agriculture -Three ordinances are mentioned below:
1. The Farmers’ Produce Trade and Commerce (Promotion and Facilitation) Ordinance
Under this ordinance, the farmer can sell his finished crops to any merchant anywhere.
There will be no compulsion to sell in APMC mandi of their own specific area. The
government is putting this forward as part of “one nation, one market.”

2. The Farmers (Empowerment and Protection) Agreement on Price Assurance and Farm
Services
Under this ordinance, the farmer broadly signs a contract to sell the crops on the basis of the
parameters set by his crop standards. It is believed that this may reduce the risk of the
farmer.
 3. Amendment in Essential Commodities Act 1955
The moneylenders and businessmen used to earlier buy crops at affordable rates and store
them in large numbers and engage in black marketing. The government enacted the
Essential Commodities Act in 1955 to curb black marketing. But now, under the new
amendment, agricultural products like cereals, pulses, oilseeds, edible oils, and potatoes
have been removed from it.

Solutions:

Independence for the farmers would be to assure MSP both within and outside the Mandis.MSP
should be made legal. We deliberately kept agriculture impoverished to build it up. There is an RBI
report between 2011 -2012 and 2017-2018 that 0.4% of the GDP was being invested in agriculture. a
sector where 50% of the population or 60 crores people are involved only 0.4% of the GDP is being
invested. There is no doubt that there are shortcomings in APMC. But if we improve the APMC by
building it up and removing its shortcomings and lay a new network of 42,000 mandis in and if we
are able to provide farmers with an assured income, that is the only way forward.

Conclusion:

The lessons of the last decade should lead to the question why are APMCs being made the fulcrum
of the debate on agricultural reforms. For sure, a legal framework that leads to monopolies should
be changed. But if mere repeal or enactment of laws leads to development, every country in the
world would be developed.