Ordinances to liberalise agricultural produce marketing:

Establishing domination of trading monopolies over farmers and their produce

On 5th June 2020, the President of India promulgated the two ordinances passed by the Union Cabinet two days earlier – ‘The Farming Produce Trade and Commerce (Promotion and Facilitation) Ordinance, 2020’ and ‘The Farmers (Empowerment and Protection) Agreement on Price Assurance and Farm Services Ordinance, 2020’. The Union Cabinet had also approved an amendment to the Essential Commodities Act (ECA) on 3rd June.

‘The Farming Produce Trade and Commerce (Promotion and Facilitation) Ordinance, 2020’ – aims to open up agricultural marketing, removing restrictions of trade within the state and also removing barriers to inter-State trade. It is aimed at establishing “One India, one agricultural market”. While agriculture and trade and commerce within the state are state subjects, the Centre has used the fact that trade and commerce in foodstuffs is part of the Concurrent List to push through its ordinance. It provides the legal framework for capitalist monopolies in agricultural trade to bypass the APMC mandi system, and buy farmers produce from anywhere in the country. All that is required is for these companies to register themselves with the government.

The Farmers (Empowerment and Protection) Agreement on Price Assurance and Farm Services Ordinance, 2020’– provides the framework for agricultural trading monopolies, food processing companies, large retailers and exporters to strike agreements with farmers anywhere in the country for buying their produce in advance.

Farming produce includes:

  • Foodstuffs including edible oilseeds and oils, all kinds of cereals like wheat, rice or other coarse grains, pulses, vegetables, fruits, nuts, spices, sugarcane and products of poultry, piggery, goatery, fishery and dairy, intended for human consumption in its natural or processed form;
  • Cattle fodder including oilcakes and other concentrates;
  • Raw cotton, Cotton seeds and raw jute.

Capitalist trading companies can set contracts with farmers for their produce ranging from one crop season to a period of 5 years. It is clearly aimed at expanding the space for contract farming and futures trading. It will enable the capitalist trading monopolies to establish their control and domination over trade in all kinds of farming produce.

As a result of these measures farmers will be at the mercy of the capitalist monopolies who will purchase the farming produce in quantities and at prices dictated by themselves. Experience with contract farming has shown that the food processing and monopoly trading corporations dictate what is to be grown and its quantity in pursuit of their interest to maximise their returns.

The government claims that the ordinances will allow farmers to sell their produce anywhere in the country and contribute to doubling their income. This is turning truth on its head. These Ordinances will disempower farmers further. They will ony advance the interests of the corporate trading and agro-processing enterprises, removing all existing restrictions on where they can trade and what they trade in. So the “empowerment” and “protection” is of the private capitalists and not the farmers.

A majority of farmers in India have limited quantities of produce for sale that they take to the closest mandi in their own state. The cost of transportation is a big constraint because of the distance. Why would they want to seek markets outside their own state? If at all there is a price advantage in another state, the costs of storage and transportation would cancel out most of that.

What farmers are demanding is that the state guarantees procurement of their produce and they can sell at a point closest to their farms. But the government is passing ordinances to eliminate this process altogether. This will only serve to put farmers at the mercy of the monopoly capitalist companies who are driven by their pursuit of maximum profits and not by any commitment to guarantee remunerative prices to the producers.

As part of the Covid-Relief package the government announced loans to finance investments by private companies interested in purchasing and marketing agricultural products. These loans will be advanced to private companies to make investments in cold storage facilities, food processing and other infrastructure. The government claims that this infrastructure will be located at the “farm gate”, i.e., where farm produce is harvested so that the farmers need not transport their produce. This claim is a fraud given that it is not in the interest of profit-seeking private companies to reach out to the majority of smaller farms. Moreover, whatever costs are incurred by the companies will be recovered from the producer or passed on to the retail price of the produce.

With the amendment to Essential Commodities Act, commodities like cereals, pulses, oilseeds, edible oils, onion and potatoes will be removed from list of essential commodities. This will remove all restrictions on hoarding and speculation by trading corporations on these essential items of mass consumption.

The official spokespersons and ministers have tried to pass of this move to legalise hoarding and speculation in such essential items as “pro farmer”.

According to these spokespersons, the ECA prevented farmers from realising remunerative prices for their produce and also discouraged investments in cold storage and warehousing facilities. The Central Warehousing Corporation and State Warehousing Corporations were set up for the stated purpose of supporting farmers with these facilities. Instead of strengthening these public institutions, the government wants to finance private companies to build such facilities for their narrow profit making. This clearly shows that the real intent of the amendment to the ECA is to benefit the big traders and speculators.

Union Agriculture Minister Narendra Tomar claimed during a press conference on 3rd June 2020, while introducing the ordinances – ‘It is a historic day today for agriculture. The country gained freedom in 1947, but farmers are getting freedom through this ordinance.”

Contrary to the claims of the government that these ordinances will go a long way in “giving freedom to farmers” and doubling the income of farmers, they will inevitably result in increasing the enslavement of the majority of the farmers to the big agro-business capitalist companies.

Through these ordinances, the state is completely withdrawing from its duty to procure all agriculture produce, ensure storage and transportation facilities and guarantee remunerative prices and ensure universal availability of food for the working population.

The Essential Commodities Act is an act of Parliament of India enacted in 1955. This Act was passed with the aim to ensure the delivery of certain commodities or products through control of hoarding or black marketing. It has been used several times over the decades by governments to regulate the production, supply and distribution of cereals, pulses, onions, potatoes, cooking oils and oilseeds, sugar and other commodities it declares ‘essential’ in order to make them available to people at fair prices. It has been an instrument for regulation of supply of essential commodities to the working population in the cities.


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