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New farm laws cannot promote farmers welfare, should be repealed: CRRID Professor

Nirmesh Singh| New Delhi, 25 Aug 2021

The new farm laws should be repealed and new laws be made in consultation with states, farmers and experts. Professor Sucha Singh Gill of the Centre for Research in Rural and Industrial Development (CRRID) in Chandigarh said in his article ‘New Farm Acts and Emerging Market Forms: Implications for Farmers’ published in a reputed academic journal.

He said, “The farm laws be repealed and new laws be formed in consultation with states, farmers and experts.”

He added, these farm laws cannot promote the welfare of farmers through price realization by corporate players in production, marketing, storage and processing. Our country has nearly 11 crore cultivators with 85 percent of them having small and marginal holdings and depending for their livelihood mainly on agriculture.

According to the Periodic Labour Force Survey 2017-2018, agriculture employs 44% of the total workforce of the country as farmers and agricultural labourers.

“Any displacement of these small and marginal holdings, will release a large proportion of the workforce from agriculture which cannot be absorbed in non-agricultural activities in the foreseeable future”, he said.

He also wrote that agriculture should be reorganized through cooperative farming and farmer producer organizations (FPOs) as the success of Amul and Milkfed have indicated that farmers were able to get a higher share of consumer price when cooperatives are in place and corporate intervention is not allowed.

Criticizing the current minimum support price (MSP) policy, he said it is guided by national politics and international geopolitics and fails to ensure remunerative prices to farmers. MSP is inadequate and is much lower than the recommended formula by the Swaminathan Commission and is effectively available to only 6 percent of farmers and confined to wheat and paddy, and only partially to cotton.

He also highlighted the recent case of Indian sugar mills where they purchased cane at the announced prices but delayed paying farmers their due amount for four-five years and neither state governments nor Union government could force these mills to pay the due amount to farmers on time.

 Farmers receive fair prices only in a perfectly competitive market. In imperfect market forms such as oligopoly and monopoly, the buyers of agricultural produce can use their superior market power to pay less to farmers and charge more from consumers, said Professor Gill.

 “Globally over time, markets have been transformed from perfectly competitive to imperfectly competitive,” he added. US experience of agricultural oligopolies shows that consumers are made to pay higher prices while suppliers of raw agricultural produce obtain a small proportion of the distributive margin.