Farmers from Punjab and Haryana are protesting recent agriculture bills passed by the Prime Minister Modi, due to the economic impact it has on the backbone of the Indian economy-hard working farmers.
There are three reform farm bills passed by the Modi administration that encourage private sector firms to invest in agriculture. Due to the impact this legislation has on supply and demand, farmers will earn less and in return struggle to provide for their families.
These bills arrive at a particular arduous time for farmers. Farm bankruptcies have been a source of misery in India for decades, but the COVID pandemic has exacerbated these grievances. With surging cases in India, lockdowns have prevented farmers from tending to their fields. These new bills add to an already devastating year for farmers.
The three bills
- Promotion & Facilitation
-Empowerment & Protection
There are three main problems with the current state-controlled system known as the mandi system.
- Supply chain inefficiency leads to crops spoiling during the transaction chain
-Cartels of commission agents work together to buy crops for the lowest price.
- Farmers face a lack of options for selling their crops and making a profit.
The provisions in these new bills would liberate farmers from the mandi system, allowing them to sell their crops to private corporations and other mandi markets outside of their geographical area. These bills will lead to the creation of a national common market for farmers to sell their crops and the dismantling of the mandi monopoly.
Illusion Of Competition:
These two private industry juggernauts that would fill this void- Ambani and Adani- would hardly create the envisioned competition. Commission agents and mandis would practically be eliminated, leaving the power and control to lie with the large corporations.
Currently, farmers have a guarantee that comes as the minimum support price (MSP). This ensures a certain base price for the crops. With the introduction of private companies, farmers worry that they will incur more debt as companies seek to maximize their profits and control the market.
While theoretically these bills create more competition, farmers are concerned that a few large corporations will dominate the market. Within the mandi system, farmers retain some bargaining power due to the fact that is a public system. Farmers fear this power will be further reduced if there are monopolies set up by private companies.