Results and Ramifications of the New Farm Laws on Small and Marginal Scale Farmers in India: An In-Depth Analysis

I. Introduction

India has been an agrarian economy since eternity. The agricultural history of India dates back as far as the Indus Valley Civilisation. Today, India tops the charts in almost all the multi-faceted branches and the allied sectors of agriculture. Agriculture and farming not only acts as the largest employer of the country employing over 50% of the Indian workforce, but is also a major contributor to the country’s economic growth. As per 2018, the Indian agriculture output worldwide was of more than 414 billion dollars, which if seen with the perspective of the country's economy accounts for 17%-18% of the total GDP. Such an important sector, which has a workforce of around 100 million farmers behind it, is now threatened by the passing of three bills which will be impacting the three main agriculture acts of the country. The bills are deemed to be outrageous and highly exploitative of the farmers rights and well-being. A bill, which was supposed to be instrumental and beneficial for the agronomists, is now facing a severe protest from them against the same. This paper aims to do an in-depth analysis of the disputed bills, mainly on the effects that it will have on the small scale and marginal scale farmers while also throwing some light on the footprint and aftermath that it will leave for them. We will also be analysing the effects which these farm acts will have on the Subsidies and Countervailing Measures agreement (SCM) that India has with the WTO and how this has been camouflaged.

II. Evolution of agricultural marketing revolution

Agriculture is one of the most prominent and critical sector of Indian economy. Its growth and development is directly proportional to the well-being and prosperity of the people, keeping in mind that it has a major contribution in the country’s economy. While the production and distribution of the domestic market is subject to constant augmentation, it is of utmost importance to facilitate this sector with better marketing, infrastructure, schemes and facilities to enable the farmers in getting a better price for their produce.

Agriculture in India has had a long history, dating back to the British era where raw cotton was the first produce that attracted the attention of the government to acquire pure cotton supplies at reasonable and affordable prices to the mills of the UK. Prior to independence, the major concerns of government policies was to keep a check on the prices of food and agro based raw products. However, post-independence, there was a need to protect the interest of farmers as well as to provide them with substantial prices to increase the production was also felt. In view of this, several mandatory regulations with regard to market conduct were put in place by the government as a controlling mechanism to keep a check on the physical losses of the produce in the agricultural market, undue low prices being paid to the farmers, shooting costs of marketing, etc. which the farmers had to face. A step taken in this direction was the setting up of well-organised market yards for the selling and buying of farm produce. This was considered as an essential and highly needed requirement for regulation of market practices in wholesale markets. Consequently, the first regulated market was set up in the country under the Hyderabad Residency Order in 1886 under the regulating act of Berar Cotton and Grain Market Act of 1887, which also gave power to the government to declare and make any particular place or area in the district as the designated market for sale and purchase of agricultural produce which was to be overseen and managed by a committee.

Post this, the Government of India drafted a model bill in the year 1983, which was circulated in all the states, but not much was achieved by this until independence. Later, Agricultural Produce Market Regulation Act (APMR) was enacted and adopted by most of the states and was put into force during the late sixties and seventies. The primary wholesale markets were brought under these regulations with no exceptions. A committee with the name of Agriculture Produce Market Committee (APMC) was constituted to frame rules and procedures to regulate these marketplaces. Thus, with this, organised marketing was born.

The system of organised marketing has now been promoted in the country by a system of regulated markets. The main objective of setting up these markets is mainly to ensure that the farmers get a reasonable gain from their produce. This is done by creating fair markets environments to ensure proper supply and demand forces and by keeping the transactions as transparent as possible. Since its enforcement, the number of regulated markets in the country has increased manifold along with the number of Rural Periodical Markets.

III. Constraints and blowbacks of the present agricultural mar-keting system:

1. FRAGMENTATION OF MARKETS: The APMC act divides the state and its entire area into various smaller notified market areas, which are then governed and regulated by their respective APMCs. This makes the market highly fragmented, not only across the country but also on a smaller scale of individual districts too. This practice poses a hindrance to the market access to the farmers while simultaneously restricting the development of infrastructure that is needed to handle, store and manage the produce. The want of various licenses for trading and the levying of market fees at multiple levels along with high incidence fees and various other charges have also impacted the initial idea of setting up these markets in a negative way.

2. INSUFFICIENCY OF MARKETS: The regulated markets vary by huge numbers in different parts of the country in terms of their density. For instance, the density in Meghalaya stands at 11215 sq.km. whereas, it stands at 118.78 sq.km. in Punjab. The total area designated under regulated markets in the whole country is a mere 487 sq.km. against the recommendation made by the National Farmers Commission (2004) which said that a regulated market should be available to the farmers within the radius of 5 km. This is a clear illustration of how blatantly the system has failed to provide the required number of markets in order to handle the market surplus and to provide a comfortable and easy access to farmers.

3. OUTDATED DESIGN AND INFRASTR-UCTURE: The factors that decide the benefits and productivity of the market to the farmers stand on a major pillar of infrastructure. The sale and purchase of produce rely largely on the amenities and conveniences provided to the farmers for the same. Empirical data and studies that have been conducted show that covered and open auction platforms were present only in two-thirds of the markets, whereas only one-fourth of the markets do not have separate drying yards. Only 9% of the markets have a cold storage unit and even less than a third of them come with grading facilities.

4. EXORBITANT MARKET CHARGES

The APMCs or the market committees are authorised to collect only a fragment of market fees which ranges from 0.30% - 2.0% from the buyers when their produce comes under the notified agricultural produce. On the other hand, commission charges are fixed anywhere between 0.5% - 4.5% for food grains and 3.0% - 7.0%, in case of fruits or vegetables. Over this, various other charges like the multiple development cess, tax on entry and purchase etc. are also required to be paid which ultimately results in soaring transaction and intermediate costs and ultimately low price realisation by the farmers for their produce.

5. LICENSING RESTRICTIONS: The commission agents which work in the regulated markets have to have a license to operate which has ultimately led to their monopoly since they act as a major entry barrier in entering the APMCs for someone who’s a new entrepreneur. The different functionaries often organise themselves into associations and try to obstruct a new entry since it would pose a threat to their monopoly, hence altering the whole purpose of these set-ups. Many states do not give permits for setting up of private markets or direct marketing to farmers which pose a hindrance in competitive farming and preventing access channels for alternative marketing.

6. GREATER INTERMEDIATE COSTS AND LESSER REMUNERATION: Ministry of agriculture conducted a study which indicated that shares of producers vary from crop to crop. For instance, paddy stood at 77 – 88%, while for what it was between 77 – 88%. Similarly, for coarse grains it was between 72 – 86% and 79 – 86% for pulses. Disproportion between marketing cost and margin is highly evident in long supply chains. To manage this and to provide satisfactory remuneration to farmers, alternate channels need to be accessible. For this, major reforms in the system are highly necessary.

7. ASYMMETRY IN MARKET INFORM-ATION: To obtain every information about the market regarding the prices and functioning is not often possible for the farmers. Hence, they accept the price which is being told to them by the agents and intermediates. In order to tackle this problem, the government has started spreading awareness among the farmers through broadcasts through radios and televisions. This is also being done with the help of newspapers but the problem there is the time lag and unreliability of the quoted prices.

8. INCOMMENSURATE CREDIT FACILITIES: The number of small and marginal farmers in India make up the majority population of the farmers community. This implies that the farmers are poor and they are forced to sell their crops as soon as it is harvested at very low prices. To safeguard farmers from such exploitations, for which credits should be provided to them so they can wait for a better sell-off period and better prices.

IV. Farm bills: an overview on the genesis of the matter and concer-ns regarding it

In India, the agriculture and farming sector is mainly regulated by three major acts. The Farmers’ Produce Trade and Commerce Act, 2020, Farmers (Empowerment and Protection) Agreement on Price Assurance and Farm Services Act, 2020 and lastly the Essential Commodities (Amendment) Act, 2020. These three acts operate the farm and related laws in the country. The Acts visualize to bring change in the critical parts of the

farm economy — exchange agricultural commodities, price assurance, farm administrations including agreements, and stock cutoff points for essential commodities. These Acts sought to acquire genuinely necessary reforms in the agricultural marketing framework; for example, eliminating limitations of private stock holding of agricultural produce or making trading territories free of middlemen and taking the market directly to the farmer.

The Centre claims that the three recently passed acts concerning the agriculture laws are historic and will help reform and mend the outdated, trodden and flawed laws of agriculture in India. It also claimed that these laws will revolutionize the farm practices in India and open the doors of private investment in the sector, which will eventually help the farmers ease their way of trade. This provision is given under The Farmers (Empowerment and Protection) Agreement on Price Assurance and Farm Services Act, 2020, which lays down guidelines for contract farming. By this, the farmers will be able to engage in private and contract farming directly with the investors for a mutually agreed price and without the intervention of any intermediary. What is of concern for farmers here is the loopholes that the acts leave in their key provisions that in return opens the doors for negotiations.

Let us see what the government is proposing and the farmers are opposing by understanding the nuances of the three acts and dealing with the concerns the farmers are fearing.

1. Farmer’s Produce Trade and Commerce (Promotion and Facilitation) Bill, 2020

The first, and maybe the foremost, far-reaching and controversial, is termed the Farmer’s Produce Trade and Commerce (Promotion and Facilitation) Bill, 2020. The aim of this bill is to get around the APMC Acts at the state level. The bill restricts the APMC's supervision and authority to the APMC's "market yard." Entities are free to transact agricultural produce outside of the market yard in what is referred to as the "trade area." Buyers are not allowed to pay a fee to the APMC for transactions within the trade region, and no licenses are required. As a result, these trade areas around the country form an alternative marketing platform that promises to function in unison across the country⁴.

Main provisions⁵ :

1. The new law would establish an environment in which farmers and traders will have the right to sell and buy agricultural products as they see fit.

2. It will also encourage barrier-free inter-state and intra-state trade and commerce outside of the physical premises of markets registered under State Agricultural Produce Marketing Legislation.

3. Farmers will not be charged a cess or tax when selling their goods, and they will not be responsible for transportation costs.

4. In addition, the bill introduces an electronic trading in transaction network to ensure a smooth electronic exchange.

5. In addition to mandis, traders have the right to trade at farmgate, cold storage, warehouses, and processing plants, among other places.

6. Farmers would be able to participate in direct marketing, removing the need for intermediaries and allowing for maximum price realisation.

CONCERNS

Out of the three acts, the main concern of the farmers is the Farmers’ Produce and Trade and Commerce (Promotion and Facilitation) Act. A few contentious provisions of this act can very easily be bent and used for their exploitation.. This particular act is in the root of all the hustle that has arisen in the recent months regarding the farm laws. The very issue right here with this act is the power of the Centre to enact such a legislation on agriculture and related marketing. The seventh schedule of the Constitution of India enlists ‘agriculture’ in entry 14 of List II, while entry 28 of the same list has ‘markets and fairs’. Entry 42 of List I gives powers to the central government to regulate and control inter-state trade and commerce. While the entry of ‘trade and commerce’ under entry 26 of List II itself is subject to the provision of entry 33 of the third list or the Concurrent List, under which the Centre-made laws will prevail over those made by the states. In other words, the Centre has the ability to override any law to remove all impediments to both inter as well as intra-state trade of agriculture produce, which includes the existing APMC Acts too. On the other hand, farmers do not want any restrictions on the movement, stocking and export of their produce. Nevertheless, these restrictions relate to “trade” and not to “marketing”, which are two different aspects according to some experts. When the question of dismantling the monopoly practised by the APMCs, farmers are not very assured about the freedom of selling anywhere and to anyone that they are being constantly assured about. It has a very simple reason behind it – MSP. Most of the farmers produce is bought by the government at MSP, which happens in the mandis set up by APMC. Now, in this, where most of the trading will move out of them, these regulated markets will start losing revenues. Once this happens, they may not be formally shut but will eventually cease to exist and after that, the only buyers of a farmer's produce will be the big firms and corporates and the farmers will be left entirely on their mercy.

2. The Farmers (Empowerment and Protection) Agreement on Price Assurance and Farm Services Bill

The Farmers (Empowerment and Protection) Agreement on Price Assurance and Farm Services Bill creates a framework for contract farming. It establishes a new blueprint for farming agreements, including agribusiness, manufacturing, and the wide range of services, such as wholesalers, exporters, and major retailers, for the selling of agricultural produce at a mutually agreed-upon price.

Main provisions:

1. Farmers will be able to engage on an equal footing with manufacturers, wholesalers, aggregators, major retailers, exporters, and others under the new legislation. Farmers get price guarantee right before they sow their crops. Farmers would be entitled to this premium in addition to the minimum price if the selling price increases.

2. The risk of market unpredictability will be transferred from the farmer to the sponsor. Farmers can be protected from the ups and downs of commodity rates due to previous price determination.

3. It will also provide access to new technology, better seed, and other inputs to the farmer.

4. It will lower marketing costs and increase farmer profits.

5. With specific deadlines for redress, an effective dispute resolution process has been established.

6. Incentives for agricultural science and emerging technologies.

CONCERNS

This act is mainly focused on the dimension of contract farming and providing its regulatory framework. This includes the contracts signed by the farmers ahead of the harvest season with processors, retailers and exporters of the manyany agriculture firms. Again, this reason for opposing an act is meek, since these kinds of farming contracts between farmers and companies have been functional in the past too. The farmers are greatly benefitted by these types of contracts as the companies undertake assured buyback at prices that have been mutually pre-decided. In addition, the seeds and other facilities are provided to the farmers in order to maintain the desired quality of the product. The important thing here is that contract farming is voluntary in nature and it largely focuses on crops which are not sold in the APMC mandis. For example, the gherkins do not find any domestic market and are mainly exported, the low sugar potato that PepsiCo needs for its chips and wafers which is different from the common potato used in kitchens, or sugarcane or milk which are not sold in the mandis openly. Hence, this act mainly tends to formalise the national framework and focuses on prohibiting sponsor firms from acquiring the land of farmers by any means.

3. The Essential Commodities (Amendment) Act

Despite the fact that India has become surplus in most agricultural commodities, farmers have been unable to obtain better prices due to a lack of funding in cold storage, warehouses, manufacturing, and export, as the Essential Commodities Act dampens the entrepreneurial spirit. Farmers lose a lot of money when there are bumper harvests, particularly when it comes to perishable goods. The law would encourage more spending in cold storage and food supply chain modernization. It will benefit both farmers and consumers while stabilising prices. It will foster a competitive market environment while also reducing agri-produce waste caused by a lack of storage facilities.

Cereals, pulses, oilseeds, edible oils, onion, and potatoes are no longer considered essential commodities under the Essential Commodities (Amendment) Bill. As a result, the Essential Commodities Act no longer applies to these commodities, and they are now deregulated. However, the central government has retained the authority to govern them in exceptional situations, such as war, drought, or natural disasters, and to enforce stock limits if prices rise sharply.

CONCERNS

This act talks about the power of the central government to impose limits on stalk holding limits on edible items except under conditions of famine, war, natural calamities and other situations of grave nature which are termed as “extraordinary situations”. These situations can also include a surge in prices of horticulture (onions and potatoes) and non-perishable food items. These limits do not apply to processors and exporters but only to traders. Farmers should not be concerned with this provision as long as the holdings do not hoard beyond their capacities. This will potentially create unlimited demand for the produce and farmers will only be benefitted from this.

V. Who are small and marginal farmers?

In our country, small and marginal farmers account for nearly 85% of the farming sector. Small farmers are those that have less than 2 hectares (5 acres) of land, and marginal farmers are those who have less than 1 hectare (2.5 acres).However, marginal farmers, who account for about 65 percent of India's total farmers, have an average land holding of less than 1 acre (0.4 hectares), while small farmers have an average land holding of around 3 acres (1.21 hectares). 90% of these farmers end up buying more grains just to survive, but they also sell a portion of their harvest to raise money for groceries and other necessities. The government's minimum support price (MSP) and procurement scheme assisted these farmers in obtaining an intermediate price for crops such as paddy and wheat.

The majority of these farmers are below the poverty line (BPL) and receive food grains at a heavily subsidised rate from the Public Distribution System (PDS). As a result, they sell their food grains at a higher price, taking advantage of the MSP and the government's procurement scheme, and then buy them from PDS at a heavily subsidised rate since they are priority households.

Source: ⁶

VI. Plight of small and margin-alised farmers

Farmers in this country are agitated by the farm bills which have been passed by the parliament in 2020. Their dissatisfaction is clearly visible by the protests they have been holding up in various corners of the nation. Despite the pandemic and various other problems that the farmers who have been camping are facing they are not ready to end it any time soon. Their determination makes one think what are the issues that they are protesting against. Since this paper focuses on small land bearing farmers let us see what they think about the changes that the government is proposing. They think that their representation is not being reflected in the bill and that they are not being accounted for while making laws which adversely affect them also. In their view the new farm laws are based on what the market needs and not what farmers are in dire need of. They believe that eventually the support that the government was giving will wear off and private bodies will overpower the agricultural market leaving farmers with little or no other option. With the economy dying they will also have a very scarce option to change their livelihood.

The government thinks that the agriculture sector in India needs to increase its efficiency by involving private sectors to bring reforms which are long overdue. They believe less governmental control and more privatisation will help farmers to develop new advances in farming and bring changes which the farming sector needs at this hour. On the other hand, farmers think that since farming and agriculture are the backbone of this country, the government must cater to its needs. Farmers are most susceptible to losses depending on various non reliable factors. Government must interfere so as to reduce the losses incurred by them. They expressed their concern regarding the fact that whether their interest would be taken care of by the private sectors.

The primary issue is with the small and marginal farmers. Small farmers have small land holdings which are generally taken care of by the family of the farmer. Their cost of employment is generally ignored and is not incurred by the sales. While it may look like small land-owning farmers can take better care of their fields, it is quite the opposite. They produce much more than they receive in terms of input. Though they will have to spend more and are more vulnerable to losses due to weather and other factors, they will be treated the same way to large-scale farmers in the government's open market system. They would have to sell their produce at a lower or equal rate as that of big farmers.

There will be two big consequences for small and marginal farmers who engage in contract farming. Firstly, the crops that farmers choose provide them with six to nine months of food, fodder, fuel, and even medicine. Corporates can choose the crops in contract farming based on market demand. They will not consider the needs of a farmer's family. This will make economically poor farmers more vulnerable.

Secondly, capitalism has a widespread propensity to organise workers at a lower skill level than the one before it. Deskilling is the term for this procedure. This is implemented in factories by the use of conveyor belts or the division of labour.It is done in agriculture by taking possession of inputs such as seeds, pesticides, and fertilisers from farmers to companies, allowing corporations to control agricultural practises.⁷

As a result of this process, farmers are unable to apply their own farming knowledge and skills. Rather, they obey the instructions on the back of seed packets or pesticide labels. Farmers will be more deskilled as a result of contract farming because it will be owned by corporations and farmers will be reduced to labourers. They will gradually seek to leave, losing interest in staying in a village where they have no influence over their agricultural practises — the sense of power they derived as knowledgeable experienced farmers will fade. At some point, a few corporations would own all of the small and marginal holdings.

Agricultural goods such as paddy, potato, and onions will no longer be considered essential resources, and the amount of each can be stored indefinitely. Paddy, potato, onion, and other food items' prices can rise to the point that the farmer-turned-urban labourer would be unable to purchase them.

The average farmer's share of the end-consumer rupee for 16 major food products is anticipated to be between INR 28 and INR 78 paise. Literacy levels and market knowledge awareness are also important factors for increasing farmers' understanding, as per the study, since these two factors allow farmers to better negotiate with their buyers and get a better price for their products. Small and marginal farmers are more likely to be targeted by other market players due to a lack of market knowledge and low literacy (traders, processors etc).

DISTRIBUTION OF MAIN WORKED BY DIFFERENT INDUSTRIAL CATEGORIES, INDIA 2001⁸

Note:* Total main workers is based on actual values of cultivators and Agricultural laborers from full count (included in agricultural & allied activities) and estimated values for industrial

categories.

VII. Farm acts and the agreement on subsidies and countervailing measures: a camouflaged concept

The government of India provides subsidies to exporters under the Subsidies and Countervailing Measures (SCM) scheme. There are two exemptions mentioned in the scheme. One of them is the Merchandise Export from India (MEIS) scheme and the other one is Export Promotion Capital Goods Scheme (EPCG). We are mainly concerned with the first scheme that is the MEIS as it allows subsidies in all goods whereas EPCGS is only for capital goods.

Since India is a member of the World Trade Organisation (WTO), it has to abide by rules and agreements laid down in it. WTO opposes the two schemes as they are in violation of the SCM agreement which says that countries with per capita income of more than 1000 $ cannot give such subsidies.

MEIS allows exemption from import duty to exporters on raw goods and materials by providing them with Duty Credit Scrip. It is a concession given to exporters and is directly proportional to the amount of export done. The nature of the duty is tradable and can be traded by the exporter if he or she is not importing any raw material from outside the country and is promoting Indian farmers.

Now, subsidies are always given to the sector which the government feels that it needs help. By giving subsidies, the government is increasing the profit ratio of its companies in the International market. Since the government will be providing discounts on raw materials it means that the farmers which produce these raw materials will also get some sort of benefit from it. As it is agricultural land and agricultural products in India are tax free. Additional benefits which the farmers have like better quality seeds for the export quality product at a lower price, higher prices from contract farming for growing the special kind of crops only for export, heavy machinery provided by exporters for better result at a subsidised rate, etc. help reduce the burden from the farmers.

If WTO norms are to be followed then FDI will increase but the discounts the farmers were getting will get lower and lower. The only losing party will be the small farmers who form the majority of the agriculture community in India. Small farmers will have to buy seeds at the same price as big farmers while the output might be very less. They will be in equal footing with giants of the sector and will be forced to increase the output and earn lower inputs.

Trade expert from Jawaharlal Nehru University (JNU), Delhi, has opined that in future the negotiations for Bilateral Free Trade Agreements (FTAs) at the level of World Trade Organisations (WTO) and the member countries as well as the negotiating partners will retaliate India’s stance of boosting its export. “We will not be allowed to export without opening up our domestic markets to imports. It will have an impact on 60% of India’s workforce who are either directly or indirectly dependent on agriculture”⁹, says Biswajit Dhar.

As a matter of fact, India has been a constant opposer of the liberalisation of agriculture in global markets and as a result has given up its rights to impose high tariffs and taxes on agricultural produce for long. The country cited its commitment to protect its farmers and their interests. However, the news farm laws seem to act contrary to this belief and may have diluted this stance, or may have an after-effect to it.

VIII. Comparative analysis

Agriculture has been operated on open markets in the United States and Europe for six to seven decades. Farmers in the United States are now facing a $425 billion bankruptcy. This comes at a time when rural suicide rates are 45 percent higher than urban rates. This is also at a time when US farmers earn an annual subsidy of $60,000 on average. Farmers in India, on the other hand, receive nearly $200 in subsidies per year. In the United States, large retailers such as Walmart have no stock limit. The United States operates on the principle of "one country, one market," as well as "one world, one market." Contract farming and commodity trading are also available. Chicago is the hub of the world's largest commodities exchange. Even after everything, if US farmers are experiencing severe financial difficulties, it is clear that agricultural market reforms have not aided them. Farm incomes have been in sharp decline since the 1960s, according to the US Department of Agriculture's Chief Economist.

When Ronald Reagan was President of the United States, then-agriculture secretary Earl Butz reportedly stated, "Get big or get out." This might be what the agricultural markets were anticipating. As a result, small farmers in the United States have been forced out. The number of farmers has decreased to about 1.5 percent of the population today. The same situation occurred in Canada and the European Union.

There is no doubt that the objective of US agriculture has been on improving quality, which is why agri-business companies have expanded. They have also worked on enhancing the food supply chain. Whenever agri-business firms have intervened, they have introduced technologies to ensure that quality standards are met. However, since the 1970s, when big companies took over the dairy industry, 93 percent of small dairy farms in the United States have closed. These dairy farmers used sophisticated technology as well. They had to close because milk prices had collapsed and big corporations had increased milk production.

Agriculture in Europe receives $100 billion in annual funding through the Common Agricultural Policy. Farmers receive 50% of this as direct income assistance, but they are still facing financial difficulties. Their stress and frustration signify that their financial security on small farms is deteriorating.

The average landholding in the United States is more than 400 acres (160 hectares), while it is more than 4000 hectares in Australia. The average land holding size in India is 1.1 hectares, with 86 percent of farmers owning less than 5 acres (2 hectares). How will the open market model of agriculture succeed for small landholdings in India, if it has not worked for larger landholdings in America, Canada, Europe, and Australia?

Rather than blindly copying these countries' open market models, the challenge should be to develop our own agriculture-marketing model that is suited to the unique requirements of Indian agriculture and primarily support the small and marginal farmers.¹⁰

IX. Centre-state dynamics and its role in farm bills

India is a federal nation where Centre and state cooperate with each other to carry out the functions. The separation of power is an essential part of our constitution although it is not explicitly mentioned anywhere. The powers between the union and state have been divided under the three lists mentioned in the seventh schedule of the Indian constitution. List 1 is the union list where only Centre can make laws, List 2 is the state list on which only the state can legislate and last one is the List 3 known as the concurrent list on which both Centre and state can legislate. The Supreme Court from time to time has interpreted our constitution and evolved various doctrines that help us to deal with a scenario when there is a conflict between Centre and state.

Agriculture as a subject has been widely distributed in the three lists. The word agriculture has been mentioned 15 times in the three lists. Out of which 8 entries are present in the state list itself,: Entry 14 (agricultural education and research, pests, plant diseases); 18 (rights in or over land, land tenures, rents, transfer agricultural land, agricultural loans, etc.); 28 (markets and fairs); 30 (agricultural indebtedness); 45 (land revenue, land records, etc.); 46 (taxes on agricultural income); 47 (succession of agricultural land); and 48 (estate duty in respect of agricultural land).[i] It should also me mentioned that none of the entries of the state list mentioned above are subjects to Union list. Union list has only four entries (82, 86, 87, 88) related to agriculture while the concurrent list has only three entries.¹¹

It is clear that since states have been given power under the constitution only, they should have the power to legislate on farm bills. However, Entry 33 of the concurrent list empowers the parliament to make laws for trade and commerce, production, supply, distribution of domestic and imported products of an industry in the public interest. Therefore, it may seem like it is within the Union's powers to pass laws on contract farming and intra- and inter-state trade, and prohibit states from imposing fees/cesses outside APMC areas. But it would be wrong to call farming as trade and commerce because it is an occupation and if it were to be equated as trade and commerce then all the entries in the state list with respect to agriculture will stand nullified.

To understand the intent of our constitutional makers is extremely important while we are trying to interpret our constitution. Their original thought process as to why they had put maximum subjects related to agriculture with the states to decide? The answer to this question lies in the fact that India is a diverse country when it comes to climate as well. Every state receives different amounts of rainfall, has different varieties of soil and has different ranges of temperature. All three important ingredients which affect crop production vary from state to state. A centralised scheme or policy would not benefit each and every farmer of the country equally. Centre may pass a policy which will favour the state which has the same ruling party as the Centre but the other state will feel neglected and that would be a threat to the federal structure of the country

We are a democratic country where people choose their representative and the chosen representative acts according to the needs and desires of his people. What is the point of having representatives from every area if a common system has to be implemented ignoring the requirements of the region? Every state grows a different crop and every crop has its special need therefore applying straight jacket formulae might not work. It is best for local bodies to decide the requirements of the local farm produce and make schemes, laws, and policies accordingly. A state will know what laws and actions will benefit its local farm produce.

Whenever legislative competence of legislature is questioned with reference to entries in various lists Doctrine of Pith and Substance comes handy. It determines the true nature and intent of the act in question. Justice Gwyer in case of Subramanyan Chattiyar v. Muttuswamy Gaundar said that it is not a question of overlapping. The situation is that the law quite competently has been made in one list but the law as such is so broad in terms that it encroaches on the matter covered under another list as well. With respect to farm laws also the Centre has tried to make a wide law which encroaches entries under state list.

The Farmers’ Produce Trade and Commerce (Promotion and Facilitation) Act, 2020 flies in the face of Entry 28 of the State List (markets and fairs), and The Farmers (Empowerment and Protection) Agreement on Price Assurance and Farm Services Act, 2020 impinges on Entries 14, 18, and 46 of the State List, and Entry 7 of the Concurrent List. Both the laws seem to be an effort made by the Centre to be an act of colourable legislation. The Centre is trying to make a law indirectly which it cannot do directly.

X. Conclusion

The distress of farmers and agriculture has been long persistent in India owing to a number of factors which include less productivity, lack of basic storage and transport facilities, debt-ridden farmers and fragmented and small holdings. Handing in the fate and livelihood of farmers to the unpredictability of market forces cannot be a way to uplift and improve the conditions of the agriculture sector. Stats and experiences from other countries have shown that privatisation of the agricultural sector could have a negative impact and instead of improving, it could further instigate the troubles of the farmers. The solution to this is not by replacing one flawed model with another model that is full of loopholes and flaws. The agrarian sector is in a dire need of stability, and to which the new model will only introduce more price inconsistency by introducing market forces. The farmers will not be in the controlling position in the new system as well, just like in the previous system. It is never the farmers who get to decide the price of their produce and it is always someone else who decides on their behalf which again has extreme fluctuations and inconsistency. It is the need of the hour to reassess the existing policies and address the grievances of the concerned stakeholders. The intent of the government here is laudable but it will be a few years till we see if the changes have been a boon or a bane for the farmers. At this point of time everything is just a speculation and we can just anticipate that the act comes out to be the ‘masterstroke’, which it has been called all this while, for the farmers and their well-being.

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Footnotes

1. Author is a student at KIIT School of Law, India.

2. Author is a student at KIIT School of Law, India.

3. Author is a student at KIIT School of Law, India.

4. A Critical Analysis of the Farm Bills 2020. Latest Laws. (n.d.). https://www.latestlaws.com/articles/a-critical-analysis-of-the-farm-bills-2020/. ↩

5. Parliament passes The Farmers' Produce Trade and Commerce (Promotion and Facilitation) Bill, 2020 and The Farmers (Empowerment and Protection) Agreement of Price Assurance and Farm Services Bill, 2020. Press Information Bureau. (n.d.). https://pib.gov.in/PressReleasePage.aspx?PRID=1656929. ↩

6. Categorisation of Farmers. (n.d.). https://www.pib.g ov.in/Pressreleaseshare.aspx?PRID=1562687. ↩

7. Farmers' protests: Why are small and marginal farmers protesting against the farm acts? - Gaonconnection: Your Connection with Rural India. Gaonconnection. (2020, December 11). https://en.gaonconnection.com/farmers-protests-why-are-small-and-marginal-farmers-protesting-against-the-farm-acts/. ↩

8. Orgi. (n.d.). Economic Activity. Census of India: Economic Activity. https://censusindia.gov.in/census_And_You/economic_activity.aspx. ↩

9. New farm laws threaten India's ability to impose high tariffs on imported agri-produce. Business Today. (2020, September 28). https://www.businesstoday.in/sectors/agriculture/new-farm-laws-threaten-india-ability-to-impose-high-tariffs-on-imported-agri-produce/story/417264.html. ↩

10. 'If open markets were so benevolent, farmers in US or Europe would not be in severe crises': Chandigarh News - Times of India. The Times of India. https://timesofindia.indiatimes.com/city/chandigarh/if-open-markets-were-so-benevolent-farmers-in-us-or-europe-would-not-be-in-severe-crises/articleshow/78328364.cms. ↩

11. The Constitution of India, (2012). ↩