Ten Economists Write to Agriculture Minister, Ask for the Repeal of Farm Laws

With negotiations between farmers and the Centre not yielding any results, a group of ten economists has written to Narendra Singh Tomar, Minister of Agriculture and Farmers’ Welfare, asking the government to repeal the Farm Laws which are “not in the best interests of the small and marginal farmers of the country, and about which a broad section of farmer organisations have raised very critical objections.”

Writing to Tomar, the economists said that the reforms being brought about by the three laws – Farmers' Produce Trade and Commerce (Promotion and Facilitation) Act, the Farmers (Empowerment and Protection) Agreement on Price Assurance and Farm Services Act, and the Essential Commodities (Amendment) Act – are based on “based on wrong assumptions and claims about why farmers are unable to get remunerative prices, about farmers not having freedom to sell wherever they like under the previously existing laws, and about regulated markets not being in the farmers’ interests.”

In their letter, the economists listed out five reasons why the laws are “fundamentally harmful in their implications for the small farmers of India.”

The economists who have signed on the letter include Prof. D.Narasimha Reddy, Professor of Economics (Retd), Univ. of Hyderabad, Prof. Kamal Nayan Kabra, Professor of Economics (Retd.), Indian Institute of Public Administration, Prof. K.N. Harilal, Professor (on leave), Centre for Development Studies, Trivandrum, and Member, Kerala State Planning Board, Prof. Arun Kumar, Malcolm S. Adiseshiah Chair Professor, Institute of Social Sciences, Prof. R.Ramakumar, NABARD Chair Professor, Tata Institute of Social Sciences, Mumbai, Prof. Vikas Rawal, Assoc. Professor of Economics, CESP, Jawaharlal Nehru University and Prof. Himanshu, Assoc. Professor of Economics, CESP, Jawaharlal Nehru University.

They write that the laws undermine the state government’s role in agriculture, calling it a “flawed approach”, both where the centre-state power balance is concerned, and with respect to the farmers interests.

“For any such reforms or new mechanisms to succeed, there has to be a buy-in from all the stakeholders in the market including farmers, traders, commission agents, etc, and this process can be handled with more sensitivity and responsiveness to local realities by the state government, rather than through a drastic and blanket legislative change at the Central level,” they write.

Secondly, they point out that the laws would create a “practically unregulated market in the ‘trade area’, side by side with a regulated market in APMC market yards, subject to two different Acts, different regimes of market fees, and different sets of rules. This is already causing the traders to move out of regulated markets into unregulated space.”

The economists also pointed out that even prior to these laws coming in, a large portion of the sale of agricultural produce happened outside the APMCs. However, they say that the APMCs still set the “benchmark” prices in daily auctions and provided “reliable price signals” to the farmers. “Without these price signals, the fragmented markets could pave the way for local monopsonies. The experience in Bihar since the removal of its APMC Act in 2006 shows that farmers have less choice of buyers and less bargaining power, resulting in significantly lower prices compared to other states,” they write.

Another cause for concern, they mention, is that contract farming would not provide “adequate protection to the interests of the farmers.” According to them, since most arrangements between private players and farmers do not allow them legal recourse, protecting companies from liabilities. While they say the laws do not address the issue, “further, the farmers are concerned that the provisions for farm services agreements together with the government's moves towards a liberalised land lease regime would pave the way for larger scale corporate farming. It should be noted that while contract farming arrangements are voluntary in principle, the acute crisis in agriculture with no price assurances, may push farmers towards this paradigm in the hope of saving themselves from the crisis.”

Echoing an oft-repeated concern voiced by the farmers, they write that the fear of domination of the big agri-businesses are legitimate. “This rightly raises concerns about consolidation of the market and the value chains in agricultural commodities in the hands of a few big players, as has happened in other countries such as the USA and Europe. It inevitably led to the "Get-Big-or-Get-Out" dynamic in those countries, pushing out the small farmers, small traders and local agri-businesses,” they said.

The economists added that instead of these reforms, what the farmers in India needed was a system that helps them bargain better and results in “their expanded involvement in the value chain through storage, processing and marketing infrastructure in the hands of farmers and FPOs. That would be a path for enhancing farmer incomes, and some of the earlier policy initiatives of the government were expected to help in that direction.”

Mentioning that such “fundamental” issues could not be addressed by amending portions of the legislation and that the current impasse in negotiations would benefit no one, they advise the government to repeal the three laws.

“Therefore, we appeal that the government withdraw these Acts, and hold extensive consultations with farmer organisations and other stakeholders on what measures would really bring equitable and sustainable benefit to the farmers and the economy. It would be the truly democratic thing to do,” they write.