Amid the continuing standoff between farmers’ groups and the central government over the farm laws, 10 economists from India’s most reputed research institutions on Thursday wrote a letter to Agriculture Minister Narendra Singh Tomar against the reforms, The Indian Express reported. They have demanded that the Centre immediately repeal the laws.
The economists who wrote the letter include Professors D Narasimha Reddy (retired), formerly of the University of Hyderabad; Kamal Nayan Kabra (retired), formerly of the Indian Institute of Public Administration and the Institute of Social Sciences, New Delhi; KN Harilal from the Centre for Development Studies, Thiruvananthapuram, and member of the Kerala State Planning Board; and R Ramakumar from the Tata Institute of Social Sciences, Mumbai.
The economists, who have for long engaged with agricultural policy matters, said that the three laws were not in the best interests of small and marginal farmers, calling it “fundamentally harmful” in their implications.
The letter said:
“We do believe that improvements and changes are required in the agricultural marketing system for the benefit of millions of small farmers, but the reforms brought by these Acts do not serve that purpose. They are 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.”
— The letter from the 10 economists, The Indian Express
They mentioned five reasons to repeal the contentious laws. First, the economists argued that the reforms undermine the role of state governments in regulating markets. They said the state governments were far more accessible and accountable to farmers’ interests than the central government. “Hence state regulation of markets is more appropriate than bringing a large part of commodity sales and trade under the ambit of the central government Act, by establishing trade areas,” the letter said.
The second reason the senior economists stated was that the laws create two markets with different set of rules, which is a “trade area” side-by-side with a regulated market in Agricultural Produce Market Committee. “This is already causing the traders to move out of regulated markets into unregulated space,” the letter said. “If collusion and market manipulation are concerns inside the APMC markets, the same collusion and market manipulation are likely to continue in the unregulated market space.”
The new laws also create fragmented markets and monopolies, the economists said. Citing the example of Bihar, which removed the APMC Act in 2006, they said farmers have less choice of buyers and less bargaining power, leading to significantly lower prices compared to other states.
The reforms would further result in unequal players in contract farming, therefore farmers’ interests are not protected, they said. “The current scenario is likely to continue, where most of the contract farming happens through unwritten arrangements with no recourse for farmers, and most arrangements are made through aggregators or organizers to protect companies from any liability,” the letter read. “The Act doesn’t have any provision to address this.”
The fifth reason raised concerns about domination by big agricultural businesses. They said:
“It is legitimate to understand that the three Acts together represent unshackling of agri-business companies from state-level regulation and licensing, constraints such as existing relationships between farmers, traders and market agents, and from limits on stocking, processing and marketing.
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.”
— The letter from the 10 economists, The Indian Express
The economists urged the Narendra Modi government to discuss the farm laws with farmers’ groups so that it would bring equitable and sustainable benefit to agriculture sector.
Farm law protests
Tens of thousands of farmers, mostly from Punjab and Haryana, have been protesting at key entry points to Delhi for 23 days against the laws. The farmers fear the agricultural reforms will weaken the minimum support price mechanism under which the government buys agricultural produce, will lead to the deregulation of crop-pricing, deny them fair remuneration for their produce and leave them at the mercy of corporations.
The government, on the other hand, maintains that the new laws will give farmers more options in selling their produce, lead to better pricing, and free them from unfair monopolies.
The negotiations between farmers’ groups and the Centre has not progressed since the last meeting, scheduled to be held on December 9, was cancelled. Both the government and farmer leaders have reiterated their positions and dialed up the rhetoric, but have not made no concrete efforts to resume discussions to resolve the deadlock.
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