TOPIC : THE THREE FARM LAWS- LESSONS FOR POLICY DISCOURSE AND EVIDENCE BASED POLICY MAKING

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THE CONTEXT: The Parliament has passed three Farm Bills which replaced three Ordinances in 2020 dealing with free trade of agriculture produce, contract farming and essential commodities. The controversies surrounding these Laws point out not only to the federal and farmers’ opposition but also to the flaws in the way these Laws are made. Law or policy making demands adopting a process that involves wide ranging consultations, debate and eliciting feedback etc. This “policy discourse” is vital for formulation of policies based on evidence. In this context, this write up examines the various aspects of the Farm Laws and in the background of these explains public policy process.  For the purpose of this write up Law and policy, and Government and Parliament are used interchangeably.

THE SALIENT FEATURES OF THE THREE FARM LAWS

FARMERS’ PRODUCE TRADE AND COMMERCE (PROMOTION AND FACILITATION) ACT, 2020

• Farmers’ produce trading: The Act allows intra-State and inter-State trade of farmers’ produce outside the various markets and places notified under the State APMC Acts.
• Electronic trade: The Act permits the electronic trading of agricultural produce regulated under any State APMC Act in the specified trade area.  An electronic trading and transaction platform can be set up by companies, FPOs, societies etc to facilitate the direct and online buying and selling of such produce
• Market fee abolished: The Act prohibits State Governments from levying any market fee, cess or levy on farmers, traders, and electronic trading platforms for trade of farmers’ produce conducted in an ‘outside trade area’.

FARMERS (EMPOWERMENT AND PROTECTION) AGREEMENT ON PRICE ASSURANCE AND FARM SERVICES ACT, 2020

• Farming agreement: The Act provides for a farming agreement between a farmer and a buyer prior to the production or rearing of any farm produce.  The period of an agreement will be one crop season, or one production cycle of livestock.  The maximum period is five years, unless the production cycle is more than five years.
• Pricing of farming produce: The price of farming produce should be mentioned in the agreement.  For prices subjected to variation, a guaranteed price for the produce and a clear reference for any additional amount above the guaranteed price must be specified in the agreement.  Further, the process of price determination must be mentioned in the agreement.
• Dispute Settlement:  All disputes must be referred to the Board for resolution.  If the dispute remains unresolved by the Board after thirty days, parties may approach the Sub-Divisional Magistrate for resolution whose decision can be appealed to an Appellate Authority (presided by the collector or the additional collector) against decisions of the Magistrate. The Magistrate or the Appellate Authority may impose certain penalties on the party contravening the agreement.

ESSENTIAL COMMODITIES (AMENDMENT) ACT, 2020

• Regulation of food items:  The Act provides that the Central Government may regulate the supply of certain food items including cereals, pulses, potatoes, onions, edible oilseeds, and oils, only under extraordinary circumstances.   These include: (i) war, (ii) famine, (iii) extraordinary price rise and (iv) natural calamity of grave nature.
• Stock limit: The Act requires that imposition of any stock limit on agricultural produce must be based on price rise.  A stock limit may be imposed only if there is: (i) a 100% increase in retail price of horticultural produce; and (ii) a 50% increase in the retail price of non-perishable agricultural food items.

THE BENEFITS OF THE FARM ACTS: AN ANALYSIS

ENDING HISTORY OF EXPLOITATION AT MANDIS

• The farmers are receiving a low share of what the consumer pays as indicated by a Reserve Bank of India study covering mandis in 16 States, 16 food crops and 9,400 farmers, traders, retailers. The farmers’ shares were 28 per cent for potato, 33 per cent for onion, 49 per cent for rice, Injecting competition by widening farm markets will benefit farmers which the three farm laws aim at.

BETTER REMUNERATION FOR FARMERS

• Farmers can sell their produce within the State or anywhere else in the country and there will be no restriction on this type of trade. This will benefit the farmers that they will be able to sell their produce to the merchant wherever they get a higher price.

DEREGULATION OF AGRI TRADE

• There will be no need for any kind of license for traders to purchase agricultural produce of farmers in the trade area outside the APMC mandi, but also those holding PAN card or any other document notified by the Central Government can join this trade. This will facilitate trade in agricultural products and will benefit the farmers.

COMPETITIVE MARKETS FOR AGRI PRODUCTS

• Allowing buyers outside APMC mandis promotes competition and halts exploitation. At present, while consumers are paying higher price, farmers are still receiving lower returns due to inefficiencies and imperfections. Unified Market Platform (UMP) in Karnataka resulted in increase of prices by 38 per cent. This implies that current market prices are depressed by 38 per cent due to lack of adequate competition. Opening up the markets can push the APMCs to offer competitive prices.

AGRICULTURE MARKETS STARVED OF 3Cs

• Agricultural markets are starved of capital, competition and commitment. Capital injection postpones operation of the Law of diminishing marginal returns.
• Investment in marketing infrastructure, processing, and logistics benefits society. New provisions of Essential Commodities Act enable scale economies in agricultural marketing which will attract private sector investment especially in supply chain.

ADDRESSING THE PROBLEM OF MIDDLEMEN IN APMC

• The APMCs still don’t issue formal receipts which are supposed to mention the price, quantity or quality of the produce. Further, due to closed markets, farmers are forced to sell to those middlemen who they have borrowed money from, starting off a vicious circle of exploitation in times of distress sales. Unfair deductions, undercover sales, cartels and collusions at APMCs have continued denying remunerative prices to the farmers.

BENEFITS OF CONTRACT FARMING

• Contract farming enable farmers to offer produce at a predetermined price. When the market price is above contractual price, farmers have the liberty to sell at the higher price. Small farmers have benefitted more than large farmers in contract farming as income derived per acre was the highest for small farmers as a study on contract farming in Karnataka has shown.

THE CHALLENGES OF THE FARM ACTS

• Farmers’ opposition: The primary reason for farmers’ opposition is the lack of clarity on MSP. They demand a legislative backing for MSP as they fear that in the name of open and free trade the mandatory procurement by FCI on MSP will be done away with. Secondly, farmers, feel they will lose the protection of regulation provided by APMC structure and fall prey to the whims and fancies of the private players. Thirdly, they resist contract farming as they fear they will lose their lands due to unfair terms of contract agreement.
• Issue of federalism: Agriculture and markets are State subjects as per entry 14 and 28 respectively in List II. The Acts (except ECA Amendment) are being seen as a direct encroachment upon the functions of the States and against the spirit of cooperative federalism. States contend that entry 33(b) in the Concurrent List (agricultural trade, commerce, production, supply, and food distribution) do not give power to enact Laws by Centre in these areas. Also many States like Punjab, Rajasthan etc have passed their own Farm Bills that run counter to the Central Laws.
• Case study experience: The much hyped Bihar experience presents a mixed bag. In 2004-05, the State Agricultural Board earned 60 crores through taxes and spent 52 crores, of which 31% was on developing infrastructure. With no revenue to maintain it, that infrastructure is now in a dilapidated condition. The large number of migrants from Bihar whose painful trek to and fro during the pandemic has exposed the lack of income and livelihood options in Bihar of which more than 70% are farmers.
• Undemocratic passage of bills: infringement of Parliamentary procedures in getting the Bills passed like the refusal of a division of votes following the debates on the Farm Bills and passing through voice vote have driven the opposition’s resistance. This has resulted in a huge political and public criticism against the manner of passing the Bills.
• Supreme Court intervention: The apex court has stayed the implementation of the Farm Laws and set up a Committee to report on these Laws. This decision has effectively stopped the operationalization of the Laws. It is also held that the court is playing the role of “parliament” which would lead to unnecessary delays and complications.
• Administrative Adjudication: The dispute settlement system takes away the role of Civil Courts which functions on strict principles of Law. While the proposed system will have the Executive (SDM and Collector) as the enforcer, adjudicator and the interpreter of Law. This is a violation of separation of power which is a basic feature of the constitution.  The Bar Council of Delhi has termed the transfer of judicial powers to the Executive as “dangerous and a blunder.” The Council notes its impact on the legal profession, it says that “It will substantially damage District Courts in particular and uproot the lawyers.”
• Policy Flaw: The high rate of indebtedness among the small and marginal farmers decreases the bargaining power to negotiate the price of the farm produce with the sponsors. Another factor is the transportation and transaction cost involved in selling the produce from APMCs to the chosen buyer. Thus the Acts fail to take account of these considerations, which are critical for price assurance and empowerment.
• Food Security: The FCI procurement under MSP is the core of buffer stock of food grains which ensures food security in India. In Covid times, the PDS system and new schemes related to free food grains became possible only because of this institutional structure. The Farm Laws may pose great challenge to the food security by curtailing the FCI role and promoting unregulated agriculture markets that feed on profiteering.            

PUBLIC POLICY: CLARIFYING THE CONCEPT AND MEANING

MEANING OF PUBLIC POLICY

• Public policy is the policy made by the Government. It deals with what the Government choses to do or does not chose to do. In a nutshell, the elected Government translates the needs, wishes and aspirations of the public into concrete measures through formulation of public policies. Once enacted, the administration implements them in accordance with the intent of the policy.

PUBLIC POLICY PROCESS

• The public policy making is conceived as a process or a cycle which involves multiple stages. The actual policy making and its implementation are only two stages in this cycle (see the diagram). It means the success or failure of the policy impinges on not only formulation and implementation but also on other stages.

POLICY DISCOURSE

• Policy discourse means the process of exchange of ideas among various stakeholders concerned with public policy. For instance, the civil society engagement with Government in the formulation of Lok Pal Act. The policy discourse cuts across the various stages of public policy cycle which contribute to evidence-based policy making.

EVIDENCE BASED POLICY MAKING

• It refers to using data and information collected through research studies and consultation for decision making. Evidence thus collected will determine whether a proposed policy is needed at all or whether the policy needs changes etc. NITI Aayog, in Indian context conducts studies and produces reports which contribute to evidence-based policy making.

POLICY ANALYSIS

• Policy analysis is a process of enhancing the effectiveness of a policy. It aids in evidence-based policy making. It refers to identifying the problems requiring policy action and then developing alternative policy options to address the problem. Finally, the pros and cons of these alternatives are also evaluated so that the best course of action can be adopted.

ACTORS IN PUBLIC POLICY PROCESS

• The various actors and institutions involved in policy process includes Legislature, Executive, Judiciary, bureaucracy, civil society organizations like NGOs, trade unions, farmers groups, individual citizens, media etc.

THE FARM LAWS AND THE PUBLIC POLICY PROCESS: AN ANALYSIS

The three Farm Laws made by the Parliament has been criticized on account that they have been made without following a policy cycle approach. The Government of India has denied this and reiterated that it has conducted wide ranging consultations with stake holders. Let us examine these claims in detail

THE GOVERNMENT’S STAND

• The Committee of Chief Ministers constituted on reforming Indian agriculture by Government of India in July 2019 has recommended changes in these Laws. They have undertaken extensive consultations with stakeholders on the ground
• Many State Governments have already amended the Laws dealing with agriculture trade, contract farming etc. long before. For instance, around 16 States have abolished APMC system. These actions point out that there is a general consensus on the reforms. Also, the National Agriculture Policy 2000 has suggested greater private sector involvement in agriculture sector.
• NITI Aayog, has drafted Model Laws on contract farming, free trade in agriculture, land leasing etc. in 2015. These Model Laws have been at the centre of intense scrutiny, discussions and feedback.
• Economic Survey 2019-20 has provided empirical evidence especially in the case of Essential Commodities Act 1955 and shown how the Act has become a tool for harassment, victimization and stifling private investment in agriculture.
• Post enactment of the Laws, the Government has held series of meetings with farmer unions and their leaders and even agreed to amending the Laws after their concerns and apprehensions. This shows the Government was willing to use post policy consultation and feedback to reformulate public policy

CRITIQUE OF THE GOVT’S STAND

• The Govt has used the opportunity of the pandemic to push through these Laws in the form of Ordinances. Ordinance is meant for emergency purpose and there was no emergency for the Govt to enact these Ordinances. No effective engagement with the stake holders was possible in the time of pandemic.
• Pre-Legislative Consultation Policy 2014 provides for comprehensive consultation and eliciting public opinion before policy making. But in the case of these Laws this requirement was observed in the breach
• Agriculture being a State List subject requires States’ consent in Law making. The Committee of Chief ministers constituted by the Government does not replace the role of deliberation in all State Legislatures. Their inputs and suggestions would have provided invaluable evidence for effective policy making.
• The farmers group are the most important constituent of the civil society opposing these Farm Laws. More than 80 percent of the Indian farmers are small and marginal and the pace with which these Laws have been enacted make it impossible for holding any meaningful consultation with these pressure groups.
• The Parliament is the most crucial actor in the public policy cycle. The manner of pushing these Bills by violating procedures and without any proper debate or scrutiny by the Standing Committees has made the policy process myopic.

A POLICY PERSPECTIVE TO THE HISTORICAL QUESTION OF AGRI REFORM

THE BRITISH INDIA

• The farmers and the colonial regime had fought many battles due to the oppressive agriculture   policies of the British.
• For instance, the Indigo revolt against contract farming resulted in colonial Government instituting an Indigo Commission who recommended that farmers should not be compelled to grow Indigo
• Similarly, the Pabna agrarian revolt forced the British to enact Bengal Tenancy Act.
• The point stressed here is that when a colonial Government can listen to the farmers and bring changes in policies, a democratic Government should do more in addressing the farmers concerns by walking an extra mile.

THE POST INDEPENDENCE

• After Independence, the country has seen many incidents of the farmers protesting against legislative and administrative measures.
• Arguably, the biggest among them was 1988 Boat club siege of Delhi by farmers of Punjab, Haryana and Western UP. Around 500000 lakh farmers stayed put in and around the Boat Club for more than 3 weeks.
• Among their demands were the waiver of power and water bills and higher price for sugarcane. The Government has held discussions with the farmers They left only after some of their demands were met.
• Thus, the Government of Rajiv Gandhi which had a brutal majority at the Centre, has engaged with the farmers and incorporated their agenda/inputs for improving the public policy cycle.

MAKING A GOOD PUBLIC POLICY: HOW TO GO ABOUT IT?

PROBLEM DEFINITION

• The Public policy is goal oriented which means it is aimed at solving a problem. Accurate and comprehensive identification of the problem is critical in ensuring the success of a policy. This requires evidence gathering from multiple sources through consultation, research and analytical studies.

CONSENSUS BUILDING

• The actors in policy process have differing motivations to engage in policy process. For instance, in a labour policy the management and workers may have conflicting interests. In a disinvestment policy the staff of PSUs and the Government may not agree on key aspects of the policy. The point is simple. Consensus building across political, federal, civil society and pressure groups and other sectors can’t be wished away.

ADMINISTRATIVE CAPABILITY

• Often the administration is blamed for failure of a policy due to poor implementation. But the crucial point missed here is how a badly formulated public policy can be successfully implemented? So criticizing the administration for poor policy outcome is unfortunate in such a situation.  Secondly, the capacity of the Civil Services in areas like human resource, finance, infrastructure and technology must be enhanced.

PRINCIPLE OF SUBSIDIARITY

• As per the principle of subsidiarity, nothing that can be done at a lower political/administrative level should be done at a higher level. It means if a public policy can be best formulated and implemented at the state level, then the Centre should not interfere in it. The Schedule 7 of the Indian Constitution List 1 and 2 is based on this principle. Scrupulously following this principle is must for successful public policy.

POLITICAL WILL

• Public policy reflects the preferences of the Government and the party that forms the Government. Thus ideology plays vital role in policy making which makes consultation or concession difficult. Another dimension is the resourcefulness of the Government to formulate and implement what is required on the ground. A weak or a “Soft State” lacks this will and the skill and thereby public policy becomes an exercise in “muddling through” (ad hoc solutions)

CONTINUOUS FEEDBACK

• It is said that a policy is being made as is being implemented and is being implemented as is being made. This means that the policy process is a cyclic process and thus the feedback mechanism from the actors in the policy process must be captured in real time. Tools of e governance has revolutionized the speed and scale of feedback and response mechanisms today.

POLICY SCIENCE

• Policy science is an inter disciplinary approach that systematically studies public policy process. It uses scientific techniques and tools to objectively study the policy problems and suggest alternatives course of options to policy makers. The idea behind policy science is to add “some science to the value laden political process” of public policy. Institutions like National Statistical Office, National Council for Applied Economic Research, Institute for Defense Studies and Analysis and non-profits like Centre for policy research etc need to strengthened in this regard.

SPECIFIC MEASURES FOR MOVING OUT OF THE IMBROGLIO CREATED BY THE FARM ACTS

GRAB THE LOW HANGING FRUIT

• The most contentious issue seemed to be the possible dismantling of APMCs. Thus, the Government can repeal the Farmers’ Produce Trade and Commerce (Promotion and Facilitation) Act, 2020. Then begin drafting a new Act on this subject through comprehensive consultative process. This will create much good will and create a conducive environment for resolution of other issues.

POLITICAL ENGAGEMENT

• States must be taken onboard by engaging with them in a structured manner either through NITI Aayog or by reviving the Inter State Council. Allaying the apprehension of the States can help build political support for reforms.

EARLY HEARING IN THE SUPREME COURT

• The apex court should hear the challenges to these Laws as early as possible and decide them. This will provide a clear view on the future of Farm Laws and end major disputes regarding legislative encroachment and the like.

FARMERS’ APPROACH

• The farmers must give up the attitude of “my way or high way” and must be more open to engagement with the Government. For instance, agreeing to the suspension of the Laws for 18 months can be a good beginning point.

COMMITTEE ON FARM LAWS

• The SC appointed Committee has submitted report to the court. The findings and suggestions of the Committee can open up informed discussion in the Parliament and in the public domain which can be harnessed to generate further momentum on possible solutions.

NATIONAL OVERSEEING AUTHORITY

• Farmers cannot be left to the free will of competitive markets due to skewed asset distribution. A national body, National Agricultural Marketing authority similar to TRAI and SEBI, needs to be created to enhance the bargaining power of farmers and protect them, along with purchasers, sellers and consumers from possibilities of exploitation.

ISSUE OF MSP

• A legislative back up for MSP can be a great act of statesmanship from the part of Union Government which for all practical purposes can remove the trust deficit with respect to the intention of the Government. It will also make the farmers more receptive to reforms and allay concerns of small and marginal farmers.

THE WAY FORWARD: THE POLICY DISCOURSE

The issues related to Farm Bills can also be seen from policy discourse perspective. Any radical reforms in democracy will demand consensus building. In contemporary practices, when there is increasing emphasis on participation, evidence-based policy making, Pre-Legislative Scrutiny and Legislative Impact Assessment then in such scenario, bringing any radical policy change without meeting such standards will be like not learning anything at all from the developments of standards of policy making and promises often made through various platforms by the governments so far.

Therefore, in this article, we will not emphasize about the number of steps to be taken in the Way Forward, rather on the subject of policy discourse. The NITI Aayog has stated in past that the development should be jan aandolan, it seems more on paper than in reality. It is prudent to have policy discourse, so that, the differences in views can be addressed at early stage rather than at the trail-end of the process.

Today, there is not only concept of deliberative democracy but also its practice through RTI, e-governance, social audit and social media. Ballot box democracy is a thing of past, hence, the governments should not behave as if we are still living in that past era. Therefore, proper consultation, deliberation, legislative scrutiny and public view are sine-quo-non for any good policy, otherwise for what all such brouhaha that there should be policy research and discussion.

Now it is a well-known fact that only a good policy doesn’t make good implementation. For effective implementation, effective consultation is also needed with all stake-holders, so that, we can elicit their cooperation at implementation stage and then there will be effective implementation.

THE CONCLUSION: The commercialization of agriculture in colonial India reflected ruthless exploitation by East India Company and resulted in destruction of Indian agriculture. The lessons of history can create morbid fears among the people. Also, the opaque, hasty and undemocratic passage of the Bills have created mistrust among farmers. Recently, the Chief Justice of India has emphasized upon the quality of Law making through quality of discussion in the Legislature. These events show the importance of procedural modalities in a democratic polity and the relevance of policy process. The Government should have been more forthcoming in opening a channel of communication with the States, political parties, farmer community etc before the passage of Bills. What is needed now is to find a middle ground that addresses the legitimate concerns of all stakeholders by adopting a “post public policy cycle”.