There is a lot of discussion around the Agri bill in the past two weeks. The topic is actually around the three bills that were passed.

1. Farmers’ Produce Trade and Commerce (Promotion and Facilitation) Bill, 2020
2. ️Farmers (Empowerment and Protection) Agreement on Price Assurance and Farm Services Bill, 2020
3. ️Essential Commodities (Amendment) Bill 2020

There is sufficient details about these online, but if you would like to read up about it, please check out the references provided at the end of this article.

Many people have asked me for my views on this topic.

I have given my response in two forms.

Short Answer:

If the agri bills are implemented by our leaders the way it says, it could be the game chamber in Indian Agri eco system. India can become a world leader in Agri sector.

At the same time, we have to be cautious of the facts from the past, that such noble causes have been misused heavily by bad elements for personal gains thereby defeating the purpose. I sincerely hope this bill helps farmers of all sizes to have the freedom to explore new avenues that were restricted earlier. (Eg. export market, direct selling to any one etc)

Please see the long answer for the concerns, the reasons and the work around.

Long Answer:

I always trust people and believe every word they say. Later, they either prove the belief or disprove the belief.

This law appears to be a very noble move (just like stop at red light means ‘stop’ – every Indian decides when to stop, if to stop and has their own reasoning for their action). It is very similar to the GST or demonetisation, which were noble, but used craftily by bad elements, who could not be controlled until today.

If the agri bills are implemented by our leaders the way it says, it could be the game chamber in Indian Agri eco system. India can become a world leader in Agri sector.

At the same time, we have to be cautious of the facts from the past, that such noble causes have been misused heavily by bad elements for personal gains thereby defeating the purpose. I sincerely hope this bill helps farmers of all sizes to have the freedom to explore new avenues that were restricted earlier. (Eg. export market, direct selling to any one etc)

I spoke to many farmers in Punjab, MP and Tamilnadu on this topic.

Here is the main concern of the farmers:

Minimum Support Price (MSP) was at least used in the past as a reference point to help them sell at or above it. With the current change, MSP becomes optional. This means a financially strong buyer (eg. Reliance) could pay high prices for a few years and then wipe out competition and then dictate all terms to farmers after that, much below MSP – with zero interference from Govt.
(Reliance has shown an example of how this can be done with Jio).

Many who hear the above scenario, immediately say ‘we should let the markets decide’. That will not work in India, because the final price to the public is controlled heavily by our Governments.

Here are some facts to support my above statement. (Courtesy: https://agribusinessmatters.substack.com/p/unpacking-the-farmbills-controversy)

The first image shows pay structure for lowest pay in Govt. job in India.

The second image shows Paddy selling price in India.

Essentially, while a farmer in 1970 got MSP of 76, the minimum salary of a government employee was around 196. In 2018, while the farmer got paid 1735 for a quintal of wheat, the minimum salary of the government employee was 18000.

In other words, while farmer’s MSP climbed 22 times over a period of forty-eight years(2018-1970), the minimum government salary increased by 91 times, during the same period.

This is why ‘market forces will dictate selling price’ might not work in current agri context in India.

My wish: I wish Minimum Support Price (MSP) becomes a legal right – which means the Government should make it a legal requirement to buy at or above MSP. That will ensure the above concern of the farmers are immediately resolved.

Note: At 5 Minute Farmers, we have solved this problem by making MSP irrelevant and giving farmers the power to decide as the selling price to customer will be always calculated from the Producer Selling Price (PSP) – a term we invented to let everyone know that the producer sets this price. The value added by the 5 Minutes platform is to ensure farmers do not get greedy by showing them the approximate production cost in their region for their produce at all times, based on the data we have collected for each produce in each pincode in India.

References:
This twitter thread has a good introduction to the background of APMCs:
https://twitter.com/NANDlNl/status/1307521155574587393

One of the well wishers of 5 Minute Farmers, Venky, has written about the bill here:
https://agribusinessmatters.substack.com/p/unpacking-the-farmbills-controversy

I had written my views about the problems behind Farmer Producer Organisations here:
http://blogs.youknowwho.in/2020/09/19/status-of-fpo-in-india-an-independent-observation/