Economists Submit Letter to Agriculture Minister Citing Problems With Farm Acts

Ten Senior Economists drafted a letter to the Agriculture Minister citing five reasons as to why the Acts are not as pro-farmer as it seems to be.

farmers

A group of ten Senior Economists from various educational institutions around the country drafted a letter on Thursday to the Agriculture Minister Narendra Singh Tomar, citing the many anxieties farmers might have with regard to the Farm Acts.

The three-page letter highlighted five main issues:

1. The laws were undermining the State government’s role in regulating the agricultural markets. It was noted that the state government machinery was more accessible and accountable to farmers at all levels as compared to one central power.

2. The creation of two Markets, with two different sets of rules. The laws seemed to be hinting at the creation of a regulated and an unregulated market. Which can be used to the benefit of corporates to further exploit small farmers- especially tribal farmers who live in relatively inaccessible areas.

“…collusion and market manipulation are likely to continue in the unregulated market space. Within the regulated APMC markets, there exist mechanisms to address and prevent such market manipulation, whereas in the unregulated ‘trade areas’, the central Act contemplates no such mechanisms

3. Fragmented markets, monopsonies, and the problem with price discovery: There is no longer a regulation within market yards- which existed otherwise because of the APMC market yards. Farmers depended on the APMC for reliable price signals, which would now no longer be available.

4. Unequal players in Contract farming: There has never been a system in place to regulate contract farming. The new Act also does not address the issue- meaning farmers would continue being exploited through unwritten agreements.

The new laws also allow for a liberalized land lease- meaning now farmers could be exploited through corporates on larger land areas. Farmers who are on the brink of an agricultural crisis would have no choice but to sign up for this exploitation.

5. Concern about domination by big agri-business. Citing the examples of countries like the USA and Europe, they mentioned the possibility of a “Get-big-or-Get-Out” dynamic that would push small farmers, traders, and local agri-businesses out of the farming industry.

The Need For A New Approach

The economists suggested a few other approaches that the government must consider if it really wishes to benefit the farmers as it claims.

What Indian farmers require is a system that enables better bargaining power and 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.

We strongly believe that it is not desirable to perpetuate the impression that farmers are misled by others, when they are raising valid and genuine concerns. The current impasse is not in anyone’s interests and it is the responsibility of the government to proactively resolve it by addressing the farmers’ concerns.

About the current laws, they said it sets a different direction where it is up to agribusiness companies, freed from regulation and constraints, to invest and set up processing, storage and marketing infrastructure – consolidating their hold on the value chain – while the government steps back from its commitment to help farmers build infrastructure and consolidate their bargaining position in the market.

Related read: Its Farmers Vs Corporates, not about political parties: Farmer Organisations

Who were the Economists? 

The letter was written by the following Senior Economists:

  • Prof. D.Narasimha Reddy, Professor of Economics (Retd), Univ. of Hyderabad, Former Professor, National Institute of Rural Development
  • Prof. Kamal Nayan Kabra, Professor of Economics (Retd.), Indian Institute of Public Administration, and Former Professor, Institute of Social Sciences, New Delhi
  • Prof. K.N. Harilal, Professor, Centre for Development Studies, Trivandrum, and Member, Kerala State Planning Board
  • Prof. Rajinder Chaudhary, Former Professor, Dept. of Economics, M.D.University, Rohtak, Haryana
  • Prof. Surinder Kumar, Senior Professor, CRRID, Chandigarh, and Former Professor of Economics, M.D. University, Rohtak
  • Prof. Arun Kumar, Malcolm S. Adiseshiah Chair Professor, Institute of Social Sciences, New Delhi
  • Prof. Ranjit Singh Ghuman, Professor of Eminence (Economics), GNDU, Amritsar, and Professor of Economics, CRRID, Chandigarh
  • Prof. R.Ramakumar, NABARD Chair Professor, Tata Institute of Social Sciences, Mumbai
  • Prof. Vikas Rawal, Assoc. Professor of Economics, CESP, Jawaharlal Nehru University, New Delhi
  • Prof. Himanshu, Assoc. Professor of Economics, CESP, Jawaharlal Nehru University, New Delhi

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