Posted by : Sainadh Reddy Tuesday, 26 June 2012

In the name of reforms in agricultural marketing, the government of India is trying to force upon the states to amend their respective APMC Acts to promote the interests of multinational agri-business firms. Irrespective of the stated objectives of the reforms, the real objectives are seemingly facilitation to the agri-business multinational corporations to make purchases of agricultural produce from farmers outside ‘mandis’, making rules about the contract farming in tune with the requirements of the corporates engaged in the business of contract farming and pushing Indian agriculture towards corporatisation. The experience world over shows that such kind of reforms wherever adopted have not only endangered the food security but also have pushed the farmers to the miseries. Though full fledged impact of the so called reforms are yet to come, agri-business firms have started expanding their activities in this sector. Therefore the issue of reforms in agricultural marketing requires an immediate inquiry to safeguard the interests of Indian agriculture in general and small and marginal farmers in particular.
After independence there was a general feeling that agricultural markets do not function in a proficient manner. Apart from inefficiencies in distribution, including wastage of agricultural produce, the farmers suffer due to exploitation by traders on different accounts such as weight, illegitimate deductions, delayed payments etc. To overcome such problems different state governments enacted their respective APMC Acts. These Acts made stringent provisions to save the farmers from exploitation, promoted efficiency and made norms for spending market fees on different heads including infrastructural developments. Structure of Agricultural Produce Marketing Committee (APMC), the apex decision making body in respective ‘mandis’ was made such that farmers were in overwhelming majority and chairman of the Committee would also be a farmer. There is no doubt that with time we have to bring amendments in the laws, howsoever good they may be in their original form. Emerging changes in the field of agriculture, no doubt call for changes in laws pertaining to agricultural marketing. But this cannot be an argument to make amendments to favour multinational agri-business firms. What is required that mandis act efficiently, elections are held at regular intervals and democratic functioning of the mandis is not allowed to be diluted in any case. Whereas the reforms being pursued are working against the democratic functioning of the ‘mandis’, by allowing licenses to the private companies to establish private yards outside ‘mandis’, establishment of special agricultural markets which would not be constituted by way of elections, and market committee would be completely dominated by the members appointed by the government and a member of this committee would be Chief Executive Officer (CEO), who would be in full command of these special markets. Instead of providing sufficient safeguards to the farmers entering into contract farming, infact new rules take away legal right of the farmers to seek justice from courts.
The Model APMC Act leads to de-democratisation of agricultural markets and therefore limits the rights of the farmers to control agricultural markets. The experience world over and even in the states where private yards have been allowed to be established by the companies, heavy profits have been made by these companies without giving any benefit to the farmers. For instance the average price of Soya paid by ITC to the farmers in Madhya Pradesh was around Rs. 1150/- per quintal, it was sold by the company at an average price of Rs. 1555/- per quintal. Even the rules of contract farming, given by Model APMC Act and adopted by various state governments also favour multinational agribusiness firms. Small and marginal farmers, which constitute 90% of the farming community, have been left at the mercy of these firms. Not only this, even the definition of an agriculturist have been changed to suit the best interests of these corporations. In earlier Acts agriculturist was defined as one “ Whose livelihood depends directly on farming”. Now a change in the definition of agriculturist is contemplated as - “A person who is a resident of the notified area of the market and who is engaged in production of agricultural produce himself or by hired labour or otherwise”.

The Model APMC Act makes us remember alien rule, when Indian farmers were given unequal legal status vis-à-vis foreigners. The Model Contract Farming Agreement provided by Model APMC Act refers to corporations as ‘contract farming sponsor’. Contracts oblige farmers to produce, but does not oblige corporation to buy. In case of a dispute, farmers cannot seek justice from courts. The Model Act puts a bar to civil suits. Act 105 of Article 89 states “No court shall take cognizance of any offence punishable under this Act or any rule or any by-laws made there under, except on the complaint made by the collector or chairman, vice chairman, Chief Executive Officer of the market committee or any person duly authorized by the market committee in this behalf”. In other words, the farmers are disfranchised of all legal and civil rights. This is a system of slavery. This spells the end of democracy. The clause of restriction for the farmers to approach courts, make them handicapped in the event of breach of contract.

The review of contract farming all over the world reveals that :-

Firstly, the contracts are highly biased against the farmers. In general farmers, specially small and marginal farmers are not equipped with information and knowledge required in this regard. Further monopsonic behaviour of the agri-business firms made the situation worse for the farmers as they have very little bargaining power of the farmer. Secondly, in general firms favour large farmers and relatively better endowed regions. Companies work with small farmers only when the area is dominated by small farmers or they are dictated/encouraged by the state or by the nature of the crop. Thirdly, there is ‘agri-business normalisation’ in contract price over time. That is in practice after making the farmers dependent upon the company, offered price is gradually reduced, for example price of tomato falling from Rs. 4.50 per kg to Rs. 1.85 per kg in 10 years by Pepsi Food in Punjab. Fourthly, farmers compete with each other to get contracts, and companies even refuse to buy or reject produce with quality standards manipulation, higher costs are passed on to the farmers in the form of artificially dearer seeds and other inputs.
Fifthly, contracting also leads to food insecurity, social and economic differentiation, and ecological degradation like over-pumping of groundwater, salination and chemicalisation of soil and water.
According to a recent study on contract farming in Thailand contracts are highly biased against the farmers and companies take help of brokers (middlemen) to work with farmers. Even the intervention from the government has failed to give relief to the farmers. Instead the monetary help from the government has benefited companies only. Wide ranging discussions at different levels with farmers, traders, workers, legal experts and social workers reveal that allowing purchase outside the mandi by multinational agribusiness firms or even domestic companies is not in the best interest of the farmers in particular and nation in general. Even if we allow private parties to obtain license for the purchase of agricultural produce outside the ‘mandi’, there should not be any condition regarding minimum quantum of purchase by such private person/ company. This would make the arrangement of purchase by private agencies at a level playing with different players with varying capacities. Rather to avoid creation of monopoly by agribusiness firms a condition for the maximum quantum of purchase will have to be stipulated. In the absence of this provision with multinational agribusiness firms given the right to purchase, it is likely that using their economic power these firms may create unwarranted upheavels in the markets of agricultural produce. Regarding the contract farming we believe that the Model Act fails to address the concerns of farmers emerging from the experience of contract farming in India. It does not provide sufficient safeguards for the farmers. Rather it has the potential to create further bias in favour of multinational agribusiness firms. Further there is an acute danger of loosing our bio-diversity if agri-business firms are allowed freedom to enter into contract with farmers with regard to all types of agricultural produce. Contract farming has to be restricted both with regard to the area under contract farming arrangement and the crops. Some states while amending their respective APMC Acts have shown this restrain and has allowed contract farming arrangements for only a few crops. Government of India as well as the state governments should institute enquiry regarding working of contract farming and the problems faced by the farmers in this regard. An enquiry should also be made into the spreading suicide phenomenon among the farmers in different states and their linkages with the contract farming system.

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