Amended essential commodities Act 'legally' allows hoarders to charge exorbitant prices

By Dr Simi Mehta*
Agriculture being the heart of every civilization, the sector and the lifeline of the sectors -- the farmers -- deserve a much better attention. The new laws formed by the current government have created havoc in the country with farmers marching to the borders of capital city to show their repulsion against the laws.
Various scholars have sided the three laws, saying they are part of the much-awaited reforms in agriculture. But this picture was juxtaposed by some scholars, who have argued that the Central government is privatizing the agriculture. With this background, the South Asian Studies Center at the Impact and Policy Research Institute and Counterview organized a webinar on India’s New Agricultural Laws 2020: Looking Beyond Farmer Concerns.
Prof Utpal K De of the North-Eastern Hill University, Shillong, in his introduction, pointing towards apprehensions towards the three laws, said, farmers can sell their produce anywhere beyond their state, but are not sure how this would ensure implementation of the Minimum Support Price (MSP) regime. For small farmers, without cooperatives, it becomes difficult to find markets in a different state.
Further, he said, one of the laws, the amended Essential Commodities Act, will allow hoarding of goods which will create an opportunity to exploit price variation. Moreover, the new laws have affirmed faith incontract farming. While farmers can avoid some of the market risks, there is fear that the bargaining power of big business would turn disadvantageous for them.
Prof Ranjit Singh Ghuman of the Centre for Research in Rural and Industrial Development (CRRID), Chandigarh, said that, according to the government, the farm bills have nothing to do with MSP and mandis will continue as they are and that the new farm laws are only a means to give greater freedom to farmers.
However, he believed, the laws are sought to be hastily implemented, one reason why they are being termed anti-constitutional. “Though the government claims the reform is urgent, what was the harm in consulting the farmers' representatives before enacting the laws?”, he asked.
Prof Ghuman said, one of the stated objectives of the farm laws is to free the farmers from middlemen. Nevertheless, the government has not guaranteed to prevent creation of a new set of middlemen. New forms of exploitation cannot be tolerated. The government claims that the laws would facilitate private investment in the agricultural and rural infrastructure. It is unclear as to what prevented such investment as of today.
One of the three farm laws, amendment to the Essential Commodities Act, in fact, has legally allowed hoarders to charge exorbitant prices, he said, noting, “The 1943 Bengal famine was not because of the non-availability of grains, rather the culprit was hoarding.”
Reminding participants of the bitter experience of contract farming in Punjab, Prof Ghuman said, small and marginal farmers have not benefited from this venture and 86% of Indian farmers fall under this category. This brings about an unequal playing field and the benefit is skewed. Although there is no compulsion for farmers to engage in contract, the market environment would compel the farmers to do so, he added.
All of these stress on the viability of the aim to increase farmers' income, Prof Ghuman said. There are other ways this could be done, for instance by compiling with the Swaminathan MSP standard. Had this standard been followed, the Punjab farmers would have received from paddy alone Rs 10,771 crore more in a season. But the government has failed to comply. Instance of failing to keep the election promise, the lack of credibility, has been a reason behind the farmers unwilling to buy the words of the government, he added.

Private investors have not been interested in investing in agricultural infrastructure, though they were not prevented to do so

The existing agrarian crisis needs to be understood and addressed, asserted Prof Ghuman. The concern is not only of farmers but of every citizen who consumes farm produce. Food security is integral part of life and it would be threatened if the crisis is not seen through the proper lens. And this cannot be done by simply enforcing a law without dialogue. There is a need for new and better laws that would ensure growth and sustainable development.
Dr Swarna Sadasivam Vepa, visiting professor at the Madras School of Economics, opined that farmers are the most affected and they have the capacity to withstand and resist the government laws for a longer period. However, the silence of the others in comparison with that of Punjab and Haryana, does not imply their acceptance, nor does it mean the Acts are good.
Only an opinion survey conducted in various parts of the country would enable us to get a clear picture of the pros and cons of the laws, Dr Vepa said. Skeptical about what new benefits would proceed from the laws, she added, private investors have not been interested in investing in agricultural infrastructure, though they were not prevented to do so earlier.

Agricultural economist Dr Amerender Reddy said that guaranteeing MSP would not only ensure food security by procuring wheat and paddy from the farmers, but also for other crops. Now only paddy and wheat are being procured, and the cost is about Rs 2 lakh crore. For guaranteeing MSP for all crops, there is a need to establish procurement centres for it and also expand the budget beyond its capacity.
He added, amendment to the Essential Commodities Act would lead to a monopolist situation, as it fails to address how the government should regulate an oligopoist situation which lies beyond the scope of APMCs.
Prof G Sridevi, quoting Dr BR Ambedkar, said, low productivity is not because of small land holding, rather it is because of the insufficient capital investment going into a particular land. Public capital formation in the agriculture sector has declined and private capital formation has helped only certain groups.
Ambedkar propagated that land must be under the control of the state which should ensure equal distribution of the capital and other resources required for the productivity in an equitable manner, said Prof Sridevi, adding, “The three Acts do not discuss the impact on the socially marginalized groups. We require reforms, but reforms must be brought about through discussion and with an element of trust.”
There has been record improvement in the agricultural sector, but it is not sufficient to match the aspirations, Prof Sridevi said. Looking at the way forward, it is important to engage in healthy debate with all the stakeholders before proposing reforms and such debates should be fostered to understand the looming crisis. Structural changes will be imperative like crop insurance, income insurances, cash transfer and public investment in research and extension.
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*With Impact and Policy Research Institute (IMPRI), New Delhi. Acknowledgement: Gby Atee,  research intern at IMPRI, pursuing bachelors in economics from Ashoka University