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New farm laws to boost competition; farmers can sell produce to corporates: CEA
Mumbai | July 2021
MUMBAI: New farm laws will ultimately help farmers get better returns as the legislations provide for competition by allowing them to sell their produce to even corporates like Reliance and ITC for good prices, Chief Economic Advisor K Subramanian said on Monday.
The farm laws were cleared by Parliament last year but the Supreme Court, in January 2021, suspended their implementation amid protests by farmers. The farm laws is a step towards improving the incomes of small and marginal farmers, Subramanian said.
Critics of the laws have been questioning the manner in which the bills were passed and alleged that the reform will help big businesses by corporatising farm activities.
Subramanian said the insistence on selling goods only at Agricultural Produce Marketing Committee (APMC) markets dented farmers' realisations because the buyer who acted as an intermediary had an upper hand in the trade due to factors like it being a perishable commodity or the costs involved in coming to the market again.
"The farm bill provides for competition so that the small and marginal farmer can go to the intermediary and say if you are not going to provide a good price, I can go and sell it to someone else. That someone else could be ITC, Reliance or Farm Fresh," he added.
Speaking at an event to celebrate the foundation event of Nabard, he said these entities will compete for farmers' produce, which will ensure that a farmer, especially a small and marginal farmer, will get the adequate value of the produce.
The presence of the APMC Acts, which the farm laws seek to do away with, can be traced back to the needs of 13th-century conqueror Alauddin Khilji to feed his big army, Subramanian said, adding that a farmer gets only up to 15 per cent of the value of a commodity with the intermediary making the most.
Subramanian, an academic-turned-policy advisor, added that competition has always helped the final consumers and producers, pointing to sectors like banking, mutual funds, telecom and airports as success stories.
He also said the rich farmers do not face the same troubles as small and marginal farmers when it comes to selling goods because of their ability to invest in storage infrastructure apart from being better networked.
Apart from the APMC laws, the farm reforms also do away with the provisions of the Essential Commodities Act, which do not distinguish between legitimate storage and hoarding of an agri commodity, he added.
Subramanian said the provisions were being used for perverse outcomes, which is visible through the fact that there were over 80,000 raids with only under 2 per cent of them being prosecuted, and its core motive of stabilising prices was not achieved at all.
"The small and marginal farmer has been losing out and his state has not improved significantly despite over 75 years of independence," he said, claiming that the laws along with the agricultural infrastructure fund will be of help.
The laws will increase farmers' incomes, enable more innovation and push growth in the agricultural sector significantly, he noted.