Farmer’s protests in India have created quite a buzz globally . But few know exactly why the farmers are protesting. Here’s a explanation on the contentious Farmer’s Bills.
NH 44, Singhu Border, Delhi is one of the occupied highways leading to Delhi, blocked for months.
Thousands of farmers from the northern states of India have marched to Delhi to protest new farming laws. They have blocked over 5 major highways surrounding Delhi. The police faced them with the tear gas and water canon, but they made it through and have set up camps in and around Delhi.
The reason behind the widespread chaos is because Prime Minister Modi’s government has passed new farming laws that will change how the agriculture industry has worked for ages.
And in a country of 1.5 billion people, where agriculture workers make-up half of the workforce, the consequences of these laws could be devastating.
In the 1960’s India developed a nationwide food marketing system to ensure fair prices. It’s a complicated system and it differs from state to state but here is one way to understand it better.
It begins with farmers getting their crops to the ‘Mandis’ or wholesale markets. The farmers then sell those crops to traders via auctions with see through pricing.
Prices can also be informed by Minimum Support Price or MSP.
The government price for crops like wheat, rice, cotton and likewise. The government buys a couple of crops at these prices in restricted states , but the prices can still serve as a standard.
The purchase then goes to a secondary market or stored by the buyers before they are sent out for future vending. It’s not a perfect system though! They have been made keeping in mind the fact that farmers are the frail link and they can be exploited in manyways.
Since the Green Revolution, agriculture has gone from nearly 50% of the GDP to just 15%. Implying that millions of farmers already having trouble making ends meet in the diminishing economy.
More than 50% of India’s farming sector is in debt. And this debt has contributed to suicide. In the last two years more than 30,000 farmers have died by suicide. Because of this economic deprivation farmers have been asking for reforms for ages, but in 2020, instead of providing more conservation for this vulnerable community, the government went in the contrasting direction.
“Farmers fear that the direction in which the reforms are happening is actually a direction of dismantling of the MSP.
- Kavita Kuruganti
Farming acts that sparked the protests
Each regulates a different part of the system.
The first act creates free unregulated trade outside the market. The laws in these spaces would override ‘Mandi’ rules, and although a lot of trade takes place outside already. What happens in the markets remains a standard across the industry. But this act will create two parallel markets with not so likely rules.
It creates room for big corporate players to come in unregulated. And in this market structure, the farmers in the regulated markets are bound to move out and operate in the unregulated spaces and that is where the farmers are going to miss out.
The second act creates a framework to reduce farming deals; any business agreements would be strictly between farmers and traders with little oversight giving farmers few options to fight bad trade. As these agreements increase outside of wholesale markets, they would further break the market and leave small farmers depending on the terms set by big firms or be cut out of the trade all together.
And the third act, eliminates the storage limits decided before this act by the government to control prices. Unlimited storage concludes that anyone with sufficient money can stock up, the issue they can also start dictating prices.
Altogether the three acts invite big players into fragmented and deregulated markets that could lead to breach prices for the farmers. The need of the hour is to understand farmer’s anger, they didn’t get what they wanted and what was implied down upon them is very distinct from what they are asking for.