Why Farmers Are Protesting in India ? : Farmer’s Protest and Their Economical Effects

Why Farmers are protesting in India ?

Why Farmers Are Protesting in India ?

First of All Understand What Are Farm Bills and Why Are the Farmers Against Each One of Them ?

Farmer’s Produce Trade and Commerce Bill, 2020 :-

Through this act a farmer can sell his produce in any mandi of India (if the state government agrees for the same).  Tax is levied on corporates and farmers together whenever a product is sold in Mandi. But when farmers and corporates meet outside they avoid the tax situation and save both of them a piece. This will take a hit to mandi earnings as they would miss their cut on deals made inside the mandi.

The law states that any person can become a trader if he or she has a Pan card number. Previously there were certain prerequisites fixed for becoming a trader. Also traders were needed to have trading licenses. The law states that the farmers get a credit limit for 3 days to pay for trades made outside the mandi.

Why Are Farmers Protesting Against Trade and Commerce Bill ?

The infrastructure is broken in Indian Farming system. APMC in India lacks infrastructural facilities which creates a difficult situation to store the farms produce. Also the number of APMC present is very less. As per reports for successful implementation of the Mandi system at  every 5-10 km an APMC market is needed which is far more than the present number of Mandis which is 7320. Only 15% of Mandis in India have cold storage facilities and more than 35% of them lack toilet facilities.

Government feels that the middlemen have created a hike in the prices of produce. Hence the aim is to remove them. But farmers think that if the middlemen are removed then corporates will take undue advantage of their capital power to remove APMC from the system. At first they will lure the farmers by giving them high prices and remove APMC from competition. Later on they will take advantage of monopoly and exploit the farmers.

The Farmer Agreement on Price Assurance and Farm Services Bill, 2020 :-

The farmer and big companies come together to a contract and determine a price before the cultivation is done. By this whether the price of x commodity increases or decreases due to any reasons the price and the quantity traded remains fixed. This in turn will ensure a fixed amount of money for farmers regardless of the situation. This concept is called contract farming.

Why Are Farmers Protesting Against Price Assurance and Farm Services Bill ?

The loophole is that companies may overpower farmers and make the contracts one sided and exploit farmers. Also companies need a thousands of tons of production and hence it will avoid dealing with a whole lot of farmers.

The dispute redressal system is weak in this system hence farmers are protesting against the same. Hence the farmers cannot get proper decisions if the corporates exploit them which is highly possible.

Also farmers think that contract farming will take away their land and give it to corporates whereas the clause in the act denies the same.

The Essential Commodities Bill, 2020 :-

Govt. makes a list of commodities which are essential in human existence. When any commodity is added to this list it results in ban on over storing the same above a limit. The Government fixes a cap limit on storing such products to avoid hoarding. The reason behind it is the abundance of demand for such goods against the supply. By this amendment the restrictions on storage of Cereals, Pulses, Oilseeds, Edible oils, Onions and potatoes has been lifted.

By all this the government wants to bring in price stability for farmers and consumers.

Why Are Farmers Protesting Against Essential Commodities Bill ?

Price limits set are very high and hence they will hardly be triggered ever. This act would give big companies the right to store the products they use in large quantities which would result in low prices for the farmers.

Minimum Support Price (MSP) :-

Government declares an MSP list which includes certain products that the government will buy directly from farmers at a fixed price rate. Such products are essential and hence the government buys them at MSP to ensure constant production of such products.

The maximum benefit of this rule is received by farmers of Punjab and Haryana.

Now the protests are aligned across this concept only. Due to new laws the farmers think that the government will remove the MSP and hence farmers of these two states will suffer the maximum. The suffering is caused because farmers won’t get assurance of buying for their production at a fair price.

Economic Disruptions :-

Due to the protests the entire supply food chain has been disrupted for a long time. The protests have continued for more than 2.5 months and the farmers have blocked the state highways of Delhi and Punjab. At many places the farmers have blocked the entire APMC as well.

Due to all this the food chain is disturbed and the economic rail getting on track after COVID hit is getting disrupted.

The daily loss due to this protest is aimed at 3000 crore Rs. due to lack of production and stoppage in manufacturing lines of companies due to lack of raw material.

Punjab, Haryana, J&k, Himachal Pradesh :-

The combined economy of all these states is almost 18 lakh crore. Farmers protesting are majorly from these states. The farmers have blocked the roads, toll plazas and have been doing large crowd gatherings. Due to large gatherings COVID is bound to spread more and also due to blockages the transport industry and factories inside these states are taking a serious hit.

Tourism industry of J&K and Himachal Pradesh was already suffering from COVID effects and the protests are just giving it another hit. The farmers’ protest in Punjab and Haryana has caused a stoppage of the food industry as both these states are the most agricultural states of India.

Transport Industry :-

Due to the highway blockages the trucks loaded with essential raw material are not reaching the factory units which is causing a stoppage into factory produce of many other goods indirectly. The containers are reaching at a delayed time of almost 60% to their destination and due to this reason the transport industry is also taking a hit as they cannot complete the targeted amount of rides.

Due to this the logistics segment is set to rise their rates by 10% and hence the price of finished products are going up by almost 20% due to the compounding effect of money and interest.

Hike in Prices :-

Due to this situation the overall prices in all the goods and services are increasing. The production plants are having a scarcity of raw materials and hence they can produce late. Also the set output is delayed. This in turn is directly affecting the market prices of finished products. Due to increase in storage and logistics cost the industrial produce from the above mentioned states is coming at a very high rate.

The price hike in all goods was already caused due to COVID. Now the protest is almost pushing the prices of every commodity and product by almost 20-30%.

What Is the Way Out ?

The protest has been going on for 2.5 months. But the real need is to come at a middle point and not ignore the voice of farmers. Also farmers should not constantly pressurize the government but have peace talks and resolve the issue.

The laws presented focus on Marketing and not the real problems of value degradation in soil and lower farmer margins with the major concern of APMC infrastructure.

Government should give assurance to farmers on their fears. The major reasons for Farmers protest in India are :

What if Corporations exploit farmers in the long run?

If Mandis becomes redundant what will happen ?

What if MSP declaration stops ?

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