The game of basketball was going hard, the score was neck and neck. Both teams were shooting two and three pointers. When the home team was shooting a three pointer the visiting team responds with a shot from the line and the ball goes swish -nothing but the net. Sometimes the visiting team had a two point lead and the next minute the home team sinks a three pointer to get an edge. Both coaches were extremely animated to directing their teams. Suddenly the ball went out of bounds, each team was claiming possession and it was hard to figure out which team’s player touched the ball the last. Coaches and players were on top of their lungs yelling and screaming it was the other team. But the referees were good, they kept a keen eye on the ball and finally made the right call. Gave the ball to the team that rightfully had the claim on the ball. It is important to have impartial referees and officials. In the business world the SEC (Securities and Exchange Commission) plays the role of a referee.
SEC was created by the US congress in 1934 to protect inventors and the public with unfair business practices. Stocks and securities issued by various companies became worthless before the crash of 1929 because companies previously provided misleading or false information. SEC provides oversight; its mission is to protect inventors and maintain a fair and effective market. The agency is responsible for creating public trust in the market. Investors can invest money knowing that the SEC is there to ensure they get accurate and valid information from companies and that companies provide accurate estimates of risk. Investors can still lose money in the market, but they do that knowingly. The agency also ensures and keeps eye on business mergers and acquisitions. It ensures that after merging or acquiring one business should not get a monopoly in the market. Competition is good for the economy and general public. It promotes innovation and customer service. What does the game of basketball and selling stocks and bonds in the share market have in common with India’s farm bills? Well before we talk about that let’s first understand what these three farm bills are and their intent.
The Bills
The first bill is, The Farmers (Empowerment and Protection) Agreement of Price Assurance and Farm Services Act of 2020. This bill mainly provides freedom to farmers to trade with anyone in the open market. The law requires that the price of the produce should be set in advance and the process of price determination must be explained. If price is subject to variation, it should also be explained along with guaranteed price. Any disputes will be first handled by the board, the board and the resolution process should be mentioned in the agreement. If a dispute is not resolved by the board it can be presented to a magistrate. There is also provision to dispute the magistrate's ruling as well by either party.
The second farm bill is, The Farmers Produce Trade and Commerce (Promotion and Facilitation) Act of 2020. This bill allows farmers to sell their produce to anyone even outside of APMC (Agricultural Produce Market Committee). APMC usually has a farmers’ market set where farmers can bring their produce and expect to get higher, if not a minimum suggested price set by government agencies. This law also removes or abolished market fee and allows non license traders to enter in contract with farmers.
The third and final farm bill is, The Essential Commodities (Amendment) Act of 2020. This bill makes modification in The Essential Commodities Act of 1955 which empowers the central government to regulate the supply of essential commodities like potatoes, onions, and oilseeds under extraordinary circumstances. Also, the central government can designate certain commodities like fertilizers, petroleum products and food items as essential commodities and regulate the production and supply of these commodities. The bill that passed in 2020 deregulates or removes cereals, oilseeds, edible oil, onions, potatoes, and other items from the essential commodity list. It deregulates the market in hopes to improve competition and free trade to help consumers.
If we study these three bills closely, we find they are good for the farmers. The farmers can sell their produce anywhere which increases the market and can get a better price for their crops. There will not be any market fee or tax on deals, this also can help farmers. There is a process to resolve conflict should one arise. The law is also removing commodities from the essential commodity list and allowing free trade in hope to increase farmer income. The minimum price is set even before farming starts and it is written in the contract. So why are farmers protesting these bills? What is the issue?
What is the Issue?
Well, it has to do with trust in the central and state governments. Farmers feel that the government wants to get out of regulating farm products and prices. It is the same as if referees do not want to be part of the game. Without a good referee, the game of basketball can’t be played fairly. Without the SEC's overview on the stock market people will lose confidence. Similarly, if farmers have no trust in their elected officials, it would be hard to accept any new changes. Efforts to bring big corporations and allow them to control farming contracts is not looked favorably by farmers. Policies adopted by the government were leaving farmers in a tough spot. Farmer income has not risen as much as other sectors in the last twenty years. This was and still is a leading factor of farmer suicide in Punjab. Most farmers are small size operations and do not have resources to help fight disputes with big corporations. Let’s look at some objections to the specific points in the farm bills.
Since trade can be conducted anywhere it would mean that mandis run by APMC will most likely be closed. Farmers will be forced to sell their crop to corporate companies in the open market and these companies can drive prices lower and lower with their unfair business practices. Corporations have more resources and legal support than farmers, any dispute will be hard to fight with these big companies. This gives a feeling as if farmers are abandoned by their own government. The impartial referee does not want to participate in making sure the game runs fairly. In any dispute most likely the farmers will get the short end of the stick. The farmers fear losing their freedom and have to grow crops that big corporations want them to grow. Basically, modern economical slavery.
Removing various items from the essential commodity list now allows traders to buy these commodities and store them to limit supply and inflate prices in the market. At the same time farmers do not have warehouses to store these commodities. If they want to rent warehouse spaces they are mostly owned by corporations and farmers can be easily denied, or charge rent that defeats the purpose for a farmer to store commodities. Farmers will be forced to sell to big corporations. Not only that, this change can lead to increased prices for consumers as well. According to the bill, stocking limits can only be invoked, meaning the government will only regulate how much traders can stock, if there is a hundred percent price increase of non-perishable produce and fifty percent for perishable items. Traders can maintain little less than hundred and fifty percent price hikes to hoarding and increasing higher prices for consumers and hefty profits for themselves.
Because of these worries and experiences farmers had previously with the unregulated or self regulated private sector they started a local protest in Punjab and Haryana after these bills were quickly passed through the legislative system. After two months of local protest farmers from Punjab, Haryana and other states started the Delhi chalo movement. Police and law enforcement charged at protesting farmers with water cannons, tear gas and sticks to stop the protest. After the initial protest, farmers from other states like Utter Pradesh, Madya Pradesh, Rajasthan Chhattisgarh and other states have also joined the protest. The movement is also politicized and painted with colors that it is not. Farmers from Punjab were called anti nationalist and terrorists. Several rounds of talks have happened since the bills were passed but still there is no resolution. For now, the Supreme Court of India has put a stay on the farm bills, but farmers want these bills repealed.
It is strange that the government is pushing so hard for these bills that according to the central government should help farmers. If the farmers, who these bills are supposed to help so much do not want them, why not back off a little. By May of 2021 almost close to five hundred people died due to the harsh condition they are living in while protesting. Number of violent incidents have broken out at Lakhimpur, Singhu border, and red fort where people have been injured and lost their lives. It is all worth losing precious lives. Why not work with the farmers to explore ways to move forward toward a reform in the farming sector. Take small steps to build trust and see if the change results in improving the life and income of farmers. With a collaborative approach the changes will be welcomed. Would this not be beneficial for the country and for the farmers? What is going on right now is not good for anyone. Hope at the end common sense prevails. Hope government plays the role of a good referee. Hope government will play a role that will build trust.
- Anonymous
Sources
https://www.theindiaforum.in/article/three-farm-bills
https://www.business-standard.com/article/current-affairs/benefits-drawbacks-of-the-3-farm-laws-at-the-heart-of-farmers-protests-120120600592_1.html
https://prsindia.org/billtrack/the-farmers-empowerment-and-protection-agreement-on-price-assurance-and-farm-services-bill-2020
https://youtu.be/3EUL_f8vGJ0
https://en.wikipedia.org/wiki/2020%E2%80%932021_Indian_farmers%27_protest
https://indianexpress.com/article/cities/chandigarh/477-protesters-died-during-six-months-of-delhi-morcha-87-from-punjab-skm-7331842/