Modi’s Farm Reforms will free the farmers from the clutches of middlemen and a corrupt system

Lalit Shastri

Photo by Maria Orlova on

The ongoing agitation, mainly by farmers from Punjab, Haryana and Delhi, against the new farm laws introduced by the Modi led NDA Government at the Centre to free the farmers from the clutches of middlemen and to ensure they get the best price for their produce through a free market, was obviously ignited and is being fuelled by politics rather than real concerns for the benefit and welfare of farmers as maximum number of farmers who have joined the agitation are from Punjab, where Congress is now in power and the main Opposition party, the Shiromani Akali Dal (SAD) has also quit the BJP led ruling National Democratic Alliance.

The allegation against the opposition parties opposing the farm reforms is that they were the real beneficiary as their leaders and their henchmen and cadres were pocketing the major part of the booty that was being generated by the alleged siphoning away of thousands of crores from money being spent by the government on procurement of farm produce under the minimum support price (MSP) regime and rampant corruption at the mandis (regulated agriculture produce market yards) where the farmers were mandated to sell their produce.

Harsimrat Kaur Badal of SDA was the first to lodge protest against the farm reforms by quitting the Cabinet.

Union Home Minister Amit Shah has held talks with the agitating farmers. Agriculture Minister Narendra Singh Tomar who has also held several round of talks with the farmers’ representatives has even written a letter to the striking farmers, who have partially blocked several highways connecting Delhi with neighbouring States. The Supreme Court, has deferred a plea seeking removal of the road blockade by the farmers. In the meanwhile, Delhi Chief Minister joined the protest by tearing copies of the new farm laws in the Delhi Assembly.

The farm reforms introduced by the Modi Government at the centre are related to three agricultural Bills that were passed by the Parliament on 27 September 2020 and have been approved by President Ram Nath Kovind. Together the these Acts seek to provide farmers with multiple marketing channels and a legal framework for contract farming beside other things. 

Along with the need to benefit the farmers, the reforms were also necessary if India wants to join the Trans-Pacific Partnership (TPP), and other Free Trade Zones that require Farm and Agriculture subsidiaries’ visibility.

The three farm laws being contested by a section of farmers are:

  • The Farmers’ Produce Trade and Commerce (Promotion and Facilitation) Act
  • The Farmers (Empowerment and Protection) Agreement on Price Assurance and Farm Services Act, and
  • The Essential Commodities (Amendment) Act 

Is the agitation by farmers justified?

The concept of a agriculture produce market regulation programme in India dates back to the British days when the British were more concerned about ensuring raw cotton reaches the textile producers at Manchester (in UK) at low rates. Consequently in 1886, the first regulated market was established at Karanja in 1886 under the Hyderabad Residency Order (legislation – the Berar Cotton and Grain Market Act of 1887). Then came the recommendation of the Royal Commission on Agriculture for regulation of marketing practices and establishment of regulated markets in 1928.

Post-Independence, it was during the decades of the 60s and 70s of the 20th Century that the organized agricultural marketing was systematised and mandated through government regulated markets and mandis. Most states thereafter began enacting and enforcing the Agricultural Produce Markets Regulation (APMR) Acts.

Agricultural Produce Market Committee (APMC) is a marketing board established under APMR.

Agricultural Markets in most parts of the Country were established and regulated under the State APMC Acts.

Before the Modi government came up with tbe farm reforms, the first sale of agriculture produce could occur only at the mandis of APMC. The new Farmers Produce Trade and Commerce (Promotion and Facilitation) Act allows farmers to sell outside APMC mandis where only those registered under the APMC Act are allowed to buy agricultural produce. These registered persons or commission agents, who have maintained a vice-like grip on the market, are called “Aadhatiya” in the native jargon.

It is common knowledge how the trader-aadhatiya-government officer nexus has been looting and exploiting the farmers. The new farm reform is mainly aimed at freeing the farmers from the present corrupt system and allowing them to take full advantage of free market driven economy.

When the farmer brings his produce to the mandi, the buyers i.e. the middlemen get together and buy the farmer’s crop at a very low price. The produce then reaches the consumer at a very high price.

The farmer, who is the loser at the Mandi and at the hands of the corrupt cartel that operates it, also is required to shell out money to pay several taxes and commission under the APMC Act. For example, the farmer who sells his crop at the “Krishi Upaj Mandi” pays something like 3% as market fees,3 % rural development cess and 2.5% commission (the taxes vary across states), beside labour and transportation charges. The farmers also have to account for about 10% wastage and often face the menace of crop theft. Short or under weighing is also common in mandis. At times the crop keeps lying and is not sold for several days, while the farmer is left at the mercy of the officers and middlemen who dictate the price for produce like vegetables that are not covered under MSP. The farmers also were not allowed to take their crop to mandis outside their own State

The APMC Act applies to all agricultural produce whether it is vegetables, fruits or grains. Now take for example a farmer in Madhya Pradesh would be selling onion at Rs 2 or 4 a kg and it would reach the consumer at 10 times the price at which the middlemen procure it at the first point of sale. Similarly, in Himachal Pradesh, apple would be selling for Rs 10 rupees per kg but the consumer would get it at Rs 100 per kg or at a much higher price. So the crux of the problem is that the profit in between gets pocketed by a handful of people.

Under the new farm laws, the farmers can sell their crop both outside the mandi to any person having the PAN card and also at the mandi. The farmers would stand to gain additionally if they sell outside the mandi as they would not be required to pay the mandi tax in that case.

Under the new regime, farmer also will be free to do contract farming. Contrary to widespread fear and baseless speculation, the MSP system will remain intact and the Mandis will continue to function. The major benefit being offered to the farmer under the new regime is that it will not be mandatory for the farmers to sell their produce at the mandi.

Download Brief History of Marketing Regulation

Union Agriculture Minister Narendra Singh Tomar writes to farmers

Neither will I eat nor will I let others eat: Narendra Modi

Addressing a rally at Kargil in Jammu and Kashmir in 2014, Prime Minister Modi had said, “Na khaoonga, na khane dunga” (neither will I eat nor will I let others eat). The PM is living up to his words and the Farm Sector Reform initiated by his Government amply validates this. Besides, ensuring farmers get their due in terms of profit on their produce, the new farm laws will also go a long way towards eliminating corruption. To drive home the point, I would like to reproduce an investigative news story I had done 12-years ago to expose huge corruption in procurement at the Krishi Upaj Mandi.

Exclusive story published on 24 May 2008

Large-scale corruption in procurement; Civil Supplies Minister seeks action against the corrupt

Official reports, including one sent to the Chief Minister’s Secretariat by the District Collector of Hoshangabad on April 4, reveal massive corruption and mismanagement of the wheat procurement process in Madhya Pradesh.

Food and Civil Supplies Minister Akhand Pratap Singh’s recent initiative of handing over the public distribution system (PDS) outlets to rural panchayats in order to “free the system from the clutches of black-marketeers and middlemen” has also come in for sharp criticism within the ruling party.

Red wheat
The Minister revealed that even sub-standard red wheat that was being sold at the subsidised rate of Rs.8.50 per kg through the PDS outlets was being siphoned away for sale in the open market. Now when the Mukhya Mantri Annapurna Yojna was being implemented in the State for distributing foodgrains at highly subsidised rates, it would be more profitable for the black-marketeers to further exploit the system, he pointed out.

Chief Minister Shivraj Singh Chouhan also noticed large-scale irregularities during a surprise inspection of the Krishi Upaj Mandi at Itarsi on April 18 and directed the district Collector to submit a report about procurement of wheat at the official support support price.

The Collector, G. P. Tiwari, confirmed irregularities and pointed out in his report that of the 499,991 quintal of wheat procured by the Itarsi Mandi between March 1 and April 17 this year, only 187,620 quintals had been purchased at support price, while 2,225,380 quintal of wheat was purchased below procurement price and the bonus of Rs.100 above the procurement price, announced by the State Government, was paid to procure only 86,991 quintal of wheat. There were four government agencies involved in the procurement process: the State Civil Supplies Corporation, the Food Corporation of India, the Marketing Federation and NAFED.

The Collector pointed out in his report that it had been established that the wheat was wrongly declared as unfit for procurement by official agencies. The same pattern was noticed in Bankhedi, Piparia, Sohagpur and Semriharchand mandis, according to the Collector. He also underscored the need for a strict vigil to ensure that the wheat purchased from farmers by traders was not brought back to the mandi to be sold at the official procurement price.

The Collector also placed on record that there was a shortage of storage space in the mandi as railway rakes were not available between April 10 and 16 to transport wheat.

Earlier, the Minister for Food and Civil Supplies had raised the issue of irregularities in management of wheat procurement. Responding to allegations of large-scale irregularities as well as complaints that farmers were neither getting support price nor immediate payment for the purchase of their wheat, he had asked the State Secretary/Commissioner Food and Civil Supplies to furnish information regarding wheat procurement and also directed him on April 15, three
days before the Chief Minister’s surprise visit to Itarsi to resolve various issues linked with wheat procurement, its storage and transportation.

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