After Indian independence, the agricultural distribution segment was run by money lenders and high-end traders, unable to access the markets, farmers back then were perpetually in debt.
To combat the apparent problem, the government of India enacted Agricultural Produce Markets Regulation (APMR) Acts during the sixties and seventies. Designated market areas were established in states under the jurisdiction of the Agricultural Produce Market Committee (APMC).
These mandis required traders to obtain a licence for procurement of produce and established a minimum support price (MSP) to provide farmers assurance against acute fall in prices.
APMC Act directly contributed to the green revolution’s success as these incentives were uplifting for farmers and provided them with a fair shot at the practice.
Over the years, traders found loopholes in the regulated structure and several malpractices were observed. The market committee had little supervision and this led to the illegitimate sale of trade licences to the highest bidder. Demography of licensed traders changed to crooked intermediaries who formed cartels to extort farmers for cheaper prices.
Despite the imperfection of mandis, government support and guarantee provided under the APMC act was always an option for farmers to fall back on, until 2020.
The 2020 ordinance and the future of APMC
One nation one market campaign heavily emphasises on the freedom, farmers will enjoy under the new Act. Modi government claims that the new legislation will allow farmers to sell anywhere they want, ignoring the fact that the farmers already had the freedom to sell anywhere under the previous legislation. Indian agriculture market is a two market entity, and this provides a reliable alternative to farmers.
Only 6 per cent of farmers get MSP; ie they sell in APMC regulated markets. 94 per cent of farmers chose to sell in the open market, this implies mandis don’t really have any restrictive hold on the agriculturists.
Traders will be exempt from market fees and taxes for trades outside of APMC mandis. Anyone will be able to buy directly from the farmer and not be required to pay any fees to the APMC. Absence of additional charges coupled with exclusive legislation will immediately open the gates for big conglomerates to flood in the agriculture sector of India.
Any person with a PAN card can acquire farm produce and shall be considered a trader, raising concerns for long term financial reliability.
This lucrative condition will make the unregulated market a very attractive option and eventually result in the collapse of mandis.
Farmers cannot seek court interference in an event of a dispute with the unlicensed trader, they will have to approach their local SDMs and DMs.
Fears arise when uneducated farmers with finite resources get in legal battles with corporate powerhouses, recently, for growing the FC5 potato variety, exclusively grown Lay’s potato chips, Pepsi has sued the farmers in Gujarat. The variety of FC5 has a lower moisture content needed for snacks such as potato chips to be made. Pepsi-Co is demanding more than 10 million rupees daily for suspected patent infringement.
Essential Commodities Act
The Essential Commodities Act was established in 1955 to ensure the delivery of certain listed commodities if obstructed due to hoarding or black marketing, would severely affect the everyday life of people.
The new amendment deregulates commodities such as cereals, pulses, oil-seeds, edible oils, onion and potatoes. Without limits on food crop stockpile, hoarding and unusual price wars will become a casual reality impacting farmers and Indian households alike.
Farmers claim that the price triggers envisioned in the Bill are nonsensical and are so high that they will rarely ever be invoked.
There have been many efforts to facilitate dialogue, in vain as farmers say that the government has no intention of repealing the three ordinances and is attempting to delude with ambiguous declarations and deceitful tactics. At the Singhu border, agitation persists and farmers show no sign of backing down.