PM Modi announced on Friday that the three agriculture laws that have sparked farmer demonstrations for the past 14 months will be repealed.
Read further for details.
Announcement before key elections
The U-turn comes only months before key state elections. State legislative elections will happen soon, notably for Punjab and Uttar Pradesh’s agricultural belts.
PM Modi addressed the nation in a speech, apologizing and announcing the withdrawal of the controversial farm laws.
What are the three farm laws, exactly? And what’s the big deal about them?
The first law is the Farmers (Empowerment and Protection) Price Assurance and Farm Services Act. Its design allowed farmers to engage in “contract farming”. Contract farming implies being able to enter into direct agreements with agribusinesses, exporters, or major buyers to produce a certain crop for a set price.
What the government said: The government emphasised that agricultural prices would be set by market forces under this law, meaning farmers would be paid more for cultivating in-demand commodities.
According to the government, farmers could sell in-demand crops at the greatest possible rates. This further alluded to a statute (enabling barrier-free intra- and inter-state trade). Another advantage, according to the government, would be the elimination of agricultural intermediaries. For the government, farmers could deal directly with the end-buyers, the agri-companies through the provisions of the act.
Concerns about the First Law
Farmers were concerned that the new rule would result in the elimination of MSP (the guaranteed minimum price for their produce). They were also concerned about the ‘corporatization of agriculture’. This refers to a scenario in which powerful corporations use their financial might to force farmers to accept unjustly low pricing.
They were apprehensive that unless selling prices were regulated, small and marginal landowners would be vulnerable to such unfair transactions. P. Chidambaram, a Congress member, echoed this concern. He also advocated for a clause that links MSP to the lowest price paid by private buyers.
Furthermore, farmers were concerned about allowing prices to be settled outside of regulated spaces like the mandis. They claimed that such price-fixing would make it difficult for the government to monitor each transaction and ensure fair prices. The law did not, however, explicitly abolish MSPs (and the Prime Minister had insisted that it would not).
The Second Farm Law
Farmers Produce Trade and Commerce (Promotion and Facilitation) Act is the second law.
What the government said: The government said that this law would allow farmers to trade all farm produce freely within and between states. Ideally, they could also sell at marketplaces of their choice, even if they were in other states. Farmers would also be exempt from paying a state-imposed levy.
Agricultural Produce Marketing Committees, or APMCs, currently sell farm produce in notified wholesale markets or mandis. Farmers sell their produce at local markets, where licenced middlemen acquire it and sell it to institutional buyers at auction prices.
Concerns about the Second Law
According to the protesting farmers, small and marginal farmers could face difficulties with this arrangement. Due to transport and storage constraints, and associated costs, these farmers could find it difficult to take advantage of possibly greater pricing at outside markets. That was why they claimed, some people decided to sell in local wholesale markets despite better prices abroad.
The wording of Section 8 of the statute was also a cause for concern for the farmers. This Section stated that farmers might seek dispute resolution from a sub-divisional magistrate (SDM). The farmers claimed that they, particularly smaller farmers, lacked the power or influence to gain access to the SDM office.
The Third Farm Law
Law 3: Act amending the Essential Commodities Act
This statute repealed the government’s right to control vital food stockpiles, save in exceptional circumstances. It also removed certain commodities, such as edible oil and onions, from the essentials list. It also allowed the government to limit the supply of such commodities or even remove them from the list entirely. Market price rise could determine the stock limit under such a law.
With farmers’ protests taking place for over 14 months and a large number of farmer deaths, PM Modi announced the repealing of the laws today. However, BKU leader Tikait has refused to call off the protests. The protests will only be called off with formal Parliament repealing of the laws.
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