farm laws essay upsc

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"THE 400 DREAMS" (ALL INDIA SCHOLARSHIP TEST)

Courses test series, our selections, topic : the three farm laws- lessons for policy discourse and evidence based policy making.

• Compiled by Lukmaan IAS
• July 29, 2023
• Editorial Discussion

Table of Contents

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: A griculture 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”.

UNDERSTANDING INDIA’S PROPOSED MOVE FROM MINIMUM WAGE TO LIVING WAGE

Topic- analysing the sc verdict on same-sex marriage, topic- an analysis of the israel-palestine conflict, topic – why are earthquakes frequent in the indian sub-continent region.

Significance and Issues associated with Farms laws

ForumIAS announcing GS Foundation Program for UPSC CSE 2025-26 from 18th June. Click Here for more information.

Source :  The  Hindu

Syllabus:  GS3: Issues related to Direct and Indirect Farm Subsidies and Minimum Support Prices

Context : Recently, the President has given his ascent on the three farm Bills.

What are the issues with the bill?

• No clarity on MSP: the Bill does not specify that the contract price should be above the Minimum Support Price (MSP) declared by the government.
• Corporatization and private hoarding: Farmers may earn less and consumers may pay more due to private hoarding.
• Loss of revenue: Governments will lose mandi tax, which is a major source of revenue. Bihar failed in 2006 when APMCs were dismantled, resulting in farmers facing challenges in selling their produce at a good price.
• No security to farmers: according to the Bill, companies are not required to have a written contract with the farmer, making it difficult for farmers to prove terms.
• Weak positions for farmers: as per bills, contracts need not be registered with the government.

What are the significances of the bill?

• Widens farmers’ choices: Sell anywhere to anyone at any price.
• Promote agri-business : farmers and farmer collectives, agri-businesses and traders can manage post-harvest facilities without such interference by the government.
• Socialistic reforms : Chakravarthi Rajagopalachari believed in maximum individual freedom and minimum interference by the state. These reforms are largely  Gandhian .
• Better prices : reforms will allow farmers to get good prices for their produce at the farm gate.
• Improve farm practices : Farm advisories will create better crop planning and troubleshooting.
• Reduce risk : Climate protected farming will reduce the business risk of agriculture. Reduced business risk will encourage the insurers to insure crops.

What are the key dimensions to reform agriculture sector?

• Ensure MSP: MSP should continue in its current form, till markets show that they can deliver results for the farmers, even without the MSP.
• Reform APMCs : For APMCs to stay relevant, they should become more competitive and transparent. Start-ups like Ninjacart and Waycool are proving a win-win model by reaching tens of thousands of horticulture farmers.
• Universal basic income through direct benefit transfer mode : The free-market may increase the market-risk for farmer families in the short-term. Therefore, the government should double DBT from the current level of ₹70,000 crore.
• e-Nam to become a ‘Unified Payment Interface’ equivalent for agri markets : National Agricultural Market should take learnings from UPI and provide a seamless application programming interface (API) for innovators, generally agri start-ups and businesses.
• Feedback loop: ensure that the reforms feed into a constructive feedback loop that actually benefits farmers.
• Policy predictability: it is important to have predictability and consistency in this philosophy. If the government exercises arbitrary power in a coercive manner, the private sector will speak with their money by reducing the investments.
• Farmer forum for dispute resolution : Contract farming will be a transaction between a weak party called a farmer and a strong party called the corporation. Farmers need a ‘consumer forum’ equivalent at a district or block level.

India needs to combine the power of markets and technology as we have a unique opportunity to change the lives of India’s poor for the better.

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Contract Farming Law

• October 29, 2022

Context: The Farmers (Empowerment and Protection) Agreement on Price Assurance and Farm Services Act, 2020 is an important legislative landmark in the context of Indian agricultural policy.

• The dramatic repeal of the three controversial farm laws in November 2021 provided a unique opportunity for policymakers to critically examine the calls for reforming India’s agricultural marketing regulatory framework from a stakeholder point of view.
• A study critically examines the various provisions contained in the act to assess its potential in mitigating the key concerns of adopting the CF practice in India.

About contract farming:

• Contract farming can be defined as agricultural production carried out according to an agreement between a buyer and farmers, which establishes conditions for the production and marketing of a farm product or products.
• Typically, the farmer agrees to provide agreed quantities of a specific agricultural product. These should meet the quality standards of the purchaser and be supplied at the time determined by the purchaser.

Regulatory structure on contract farming in India:

• Initially, contract farming regulated under the Indian Contract Act, 1872.
• However, due to resistance from commission agents, States were lukewarm towards promoting Contract farming.
• In 2004, the MS Swaminathan-headed National Commission on Farmers (NCF) recommended the design and implementation of a comprehensive code of conduct on contract farming.
• The National Policy for Farmers 2007 , based on the recommendations of NCF, also encouraged Contract farming practices and promised to prepare a code of conduct for contract farming.
• In February 2018, Ministry of Agriculture came out with a draft Model Contract Farming Act, 2018 . The draft Model Act seeks to create a regulatory and policy framework for contract farming. Based on this draft Model Act, legislatures of states can enact a law on contract farming
• Currently, contract farming requires registration with the Agricultural Produce Marketing Committee (APMC) in few states. This means that contractual agreements are recorded with the APMCs which can also resolve disputes arising out of these contracts.

Benefits of Contract farming:

Contract farming is looking towards the benefits both for the farm-producers as well as to the agro-processing firms. The key advantages are the

• Crop diversification;
• Higher crop yield;
• Reduction in price uncertainty;
• Better price and assured market for farmers;
• Increase in profit and income of farmers;
• Supply of quality farm inputs,
• Including farm credit technology and scientific know-how to farmers;
• Reduction in transportation costs;
• Growth of food processing industry;
• Integration of farmers into the industry and global market.

Disadvantages of Contract farming:

Some of the key disadvantages of Contract farming practices are:

• Neglect of small and marginal (S&M) farmers by firms,
• Dominant role by firms in price fixation,
• Delay in making payments to farmers,
• Non-purchase of contracted produce on quality and other grounds,
• Manipulation of grading standards,
• Breaking away from contracts by either party,
• Difficulty of legal enforcement of contracts,
• Lower long-term commitment among corporates for rural development.

Challenges:

• Contract farming arrangements are often criticized for being biased in favour of firms or large farmers, while exploiting the poor bargaining power of small farmers.
• Problems faced by growers like undue quality cut on produce by firms, delayed deliveries at the factory, delayed payments, low price and pest attack on the contract crop which raised the cost of production.
• Contracting agreements are often verbal or informal in nature, and even written contracts often do not provide the legal protection in India that may be observed in other countries.
• Lack of enforceability of contractual provisions can result in breach of contracts by either party.
• Single Buyer – Multiple Sellers (Monopsony).
• Adverse gender effects – Women have less access to contract farming than men.

Stakeholders views on contract farming:

• Therefore, the CF Act has opened the avenue for collective engagement among farmers with a provision to engage aggregators, including FPOs (Farmer Producer Organisations), in CF.
• A predominant section of the stakeholders surveyed, including three-fourths of the farmers, believed that the collectivisation of farmers through FPOs would help smallholders adopt CF.
• However, farmers suggested arranging quality inspection in their presence and a scheme for educating them on quality standards.
• The CF Act stipulates that farmers can opt for a contract for one crop season or a mutually agreeable period. This provides freedom for farmers to change their choice of firms.
• The CF Act stipulates that the prices may be determined in advance and indicated in the contract. If prices fluctuate, the agreement must include a guaranteed and reference/benchmark price.
• Compulsory registration would encourage written agreements and the entry of only serious players.
• Another suggestion supported by three-fourths of the stakeholders was the levy of a small facilitation fee on the firms and establishing a dedicated official agency to oversee and facilitate the working of the CF Act.
• The agency was expected to handhold the farmers through training and capacity-building programmes using the fee proceeds and bridge the trust deficit between farmers and firms.

Way Forward:

• It has been observed that if the market price rises higher than the contracted price, the farmers are tempted to sell the produce to someone else for a higher price.
• On the other hand, if market prices were to fall below the contracted rate, the buyer often fails to honour the commitment.
• It is also necessary to remember that for growers agriculture is a livelihood issue and for processors and aggregators it is business.

Hence the Government should play the role of a facilitator to promote as well as to develop a healthy system of farmer-corporate relationship for mutual benefit and development of the agriculture sector in India.

Source:  The Hindu

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How we can ease the implementation of our farm laws

Context : In the context of ongoing farmers protest, the government should provide legislative clarity on various contentious issues and publish a few model farms contracts to show the farmers advantages of these reforms.

Agricultural reforms in India

• Historical background : Land reforms and the Green Revolution were few significant agri-reforms of the first few decades after independence.
• New farms Acts: three Acts were enacted by the parliament.
• Allows farmers and traders to engage in both intra- and inter-state trade.
• Allows persons to establish and operate an electronic trading and transaction platform—to facilitate intra- and inter-state trade.
• The Farmers (Empowerment and Protection) Agreement on Price Assurance;
• One where the ownership (and consequently risk) of the farm output rests with the farmer, and the sponsor makes a purchase in accordance with the agreement.
• The other where, the farmer is paid for his farming services, but the production and its risks are the sponsor's responsibility.
• It also allows for a farming agreement to be linked with insurance or credit instruments.

Way Forward for the Acts

• Legislative clarity needed : Provide more detailed modalities for such trade. This would be a welcome move from a governance and compliance perspective.
• Involving a private sector technology expert : Technical expertise from the private sector could help as it is analogous to e-commerce market models.
• Legislative clarity needed: Strictly defining the definition of a trader to eliminate the possibility of misuse of the Law. (The term "person" itself includes an individual as well)
• Provisions of neutral third-party inspection for quality, grade and standards : can be undertaken by private players.
• Private players like private-sector insurers, agricultural-credit companies or non-banking finance companies can be roped in for providing insurance.
• Additional third-party aggregator: could work either at the farmers' end or the sponsors' end. (e.g. an agri-tech company or expert private sector player).
• Provide model formats for farming agreements: would go a long way in generating awareness of the changes.
• Presently, the farm sector acts contain a provision for protection from prosecution, which extends to not just governments or its officers, but also to "any other person".

Conclusion : Sufficient thought needs to be applied to the finer details of implementation, especially the rules and guidelines that would govern the same. This is too important a sector for loose ends.

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International Relations

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India-Russia Ties: The Art of Diplomacy

• 30 Dec 2023
• 12 min read
• GS Paper - 2
• Bilateral Groupings & Agreements
• Groupings & Agreements Involving India and/or Affecting India's Interests
• Effect of Policies & Politics of Countries on India's Interests
• International Treaties & Agreements

This editorial is based on “ Net Zero Sum ” which was published in The Indian Express on 29/12/2023. The article discusses the visit of India's foreign minister, Jaishankar, to Moscow which holds significant importance in strengthening India-Russia relations.

For Prelims : The Indo-Soviet Friendship Treaty of 1971 , Declaration on the India-Russia Strategic Partnership , Special and Privileged Strategic Partnership, Kudankulam Nuclear Power Plant (KKNPP) , Agreement on the Programme for Military-Technical Cooperation, MiG-21 , Su-30 , Ukraine Crisis

For Mains: Strategic Significance of India- Russia Relations, Key Issues and Way Forward.

The recent Moscow visit by India's Foreign Minister is of considerable significance in the framework of India-Russia relations, extending beyond the established special and privileged partnership. In the evolving global geopolitical landscape a high level of political engagement on international issues and bilateral matters is expected.

Why the Relationship Between India and Russia is Strategically Significant?

• Collaboration since Cold War: During the Cold War , the Soviet Union, as a superpower, held a key position in the partnership, while India, part of the "developing" nations and a leader in the Non-Aligned Movement , collaborated closely.
• The Indo-Soviet Friendship Treaty of 1971 : In the wake of the Indo-Pak war (1971) Russia supported India while the US and China supported Pakistan
• Declaration on the India-Russia Strategic Partnership: In October 2000, India-Russia ties acquired a qualitatively new character with enhanced levels of cooperation in almost all areas of the bilateral relationship
• Special and Privileged Strategic Partnership: During the visit of the Russian President to India in December 2010, the Strategic Partnership was elevated to the level of a “Special and Privileged Strategic Partnership”.
• India is actively engaged in importing hydrocarbons from the Russian Far East.
• The Kudankulam Nuclear Power Plant (KKNPP) is being built in Tamil Nadu with the technical assistance of Russia.
• Russia is India’s seventh-biggest trading partner.
• The bilateral trade has reached USD 45 billion already surpassing the target of bilateral trade of USD 30 billion by 2025
• The two countries intend to increase bilateral investment to USD 50 billion by 2025.
• Counterbalancing Chinese Aggression: The Chinese aggression in the border areas of eastern Ladakh, brought India-China relations to an inflection point but also demonstrated that Russia can contribute to defusing tensions with China.
• Moscow has long supported India's desire to expand the circle of permanent members of the Security Council and to enter into the Nuclear Suppliers Group - which Beijing is blocking.
• However, historically it accounted for 65% of arms imported by India.
• The overwhelming majority of India’s armored force consists of Russian tanks—the T-72 and T-90S— and so does its fleet of ground-attack aircraft—variants of MiG-21, Su-30, and MiG-29.
• The BrahMos missile of India has been developed jointly with Russia.
• In October 2018, India signed a 5.43 billion USD deal with Russia for the S-400 Triumf missile.
• Over half of India’s conventional submarines are of Soviet design.

What are the Key Issues in India-Russia Relationship?

• For Russia, with its long border with China and adversarial relations with the West, avoiding a two-front confrontation is a key imperative.
• As Russia and China enhance their military cooperation, engage in joint economic initiatives, and align on various diplomatic fronts , it introduces a geopolitical dynamic that may impact India's traditional strategic considerations.
• In recent years, Russia has tried to improve its relationship with Pakistan. It might be a response to the US-India relationship.
• India has now signed all four foundational agreements with the USA. India has bought USD 20 billion worth of arms over the last two decades
• India’s great power calculations create the dilemma to choose between “comprehensive global strategic partnership” with the US on one hand, and its “special and privileged partnership” with Russia on the other .
• The invasion of Ukraine by Russia has resulted in a global imposition of sanctions as Russia's actions are widely perceived as a violation of the territorial integrity of a sovereign nation and a breach of international law.
• However, India faced significant criticism in the West for refraining from condemning the Russian invasion of Ukraine and for its continued expansion of energy and economic cooperation with Moscow.
• Declining Defense Imports: There has been a gradual decline in the orders of India from Russia because of its desire to diversify its defense imports and therefore a heightened competition for Russia with other suppliers.
• Poor Post-Sale Services: Dissatisfaction in India with post-sales services and maintenance being offered by Russia.

What Should the Way Forward?

• Enhance Defense Collaboration: Continue the strategic defense partnership, with a focus on modernizing and diversifying the defense collaboration.
• For instance,India and Russia have formed a joint venture for production of Brahmos missiles.
• Diversification of Economic Ties: Both countries should focus on diversifying and expanding their economic relations. This includes exploring new sectors for collaboration, increasing trade volumes, and encouraging investments.
• Trade Facilitation: Both countries should work towards reducing trade barriers and simplifying trade processes . Enhance economic collaboration by creating a conducive environment for businesses from both countries to operate smoothly.
• Rupee-Ruble Mechanism: Both sides need to resort to the Rupee-Ruble mechanism to safeguard bilateral trade from the impact of Western sanctions.
• Multilateral Engagement: Coordinate closely in multilateral forums such as BRICS and the SCO. Collaborate on global issues, advocate for shared values and principles, and work together to address common challenges on the international stage.
• Institutional Mechanisms: Strengthen institutional mechanisms for regular dialogue and collaboration. This includes enhancing the effectiveness of existing agreements and creating new platforms for engagement at various levels, from government officials to business leaders.
• Innovation and Technology Cooperation: Foster collaboration in emerging technologies, including artificial intelligence , space exploration, cybersecurity , and renewable energy. Joint research and development initiatives can lead to technological advancements beneficial to both countries.
• Energy Security : Explore opportunities for cooperation in the energy sector, including joint ventures in oil and gas exploration, renewable energy projects, and the development of energy infrastructure. Addressing energy security concerns can be mutually beneficial.
• Yoga and Cultural Diplomacy: Leverage the popularity of Yoga in Russia to enhance cultural diplomacy. Promote cultural events, language education, and exchanges to deepen the understanding of each other's cultures.
• Public Diplomacy: Engage in public diplomacy efforts to create awareness and understanding of the bilateral relationship among the citizens of both countries. Utilize media, social platforms, and cultural events to promote positive narratives

Conclusion 

India-Russia relationship stands resilient amid global shifts, grounded in trust and common interests. Amidst these dynamics, fostering resilience, open communication, and a shared commitment to global peace will determine the success of India-Russia relations in the years ahead. The Indian Foreign Minister rightly held that “Geopolitics and strategic convergence will always keep India-Russia ties on a positive trajectory.”

UPSC Civil Services Examination Previous Year Question (PYQ)

Q. Recently, India signed a deal known as ‘Action Plan for Prioritization and Implementation of Cooperation Areas in the Nuclear Field’ with which of the following countries? (2019)

(a) Japan (b) Russia (c) The United Kingdom (d) The United States of America

Q. What is the significance of Indo-US defence deals over Indo-Russian defence deals? Discuss with reference to stability in the Indo-Pacific region. (2020)

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RSTV: THE BIG PICTURE- INDIA-RUSSIA PARTNERSHIP

Introduction:

Russian Foreign Minister Sergey Lavrov was in New Delhi on a two-day visit to India and held delegation level talks with his Indian counterpart.

Background :

• Relations with Russia are a key pillar of India’s foreign policy, and Russia has been a longstanding time-tested partner of India.
• Both countries signed “Declaration on the India-Russia Strategic Partnership” in October 2000.
• Traditionally, the Indo-Russian strategic partnership has been built on five major components: politics, defence, civil nuclear energy, anti-terrorism co-operation and space.

Why Russia is Important for India?

• The historical character of the bilateral relationship.
• Even as India is diversifying its defense trade partners, Russia still dominates the Indian defense inventory to the tune of about 70 per cent.
• Russia remains the only partner that is still willing to give India critical technologies, such as a nuclear submarine.
• The emerging Russia-China strategic relationship has important security consequences for India.
• Russia also reaffirmed its “unwavering support” to India for a permanent seat in an expanded UN Security Council.
• Russia expressed its support for India’s membership of the Nuclear Suppliers Group.
• Both countries have mutual benefits in supporting struggle against terrorism, Afghanistan, climate change; organisations like SCO, BRICS, G-20 and ASEAN..

Economic ties:

• Russia-India trade has not grown to great heights despite the encouragement of both states.
• Russia sees India – one of the fastest growing economies in the world – as a country that could alleviate Russia’s economic problems.
• Make in India initiative has welcomed Russian companies from the public and private sectors.
• Russian firms have shown a willingness to invest in India in construction, major infrastructure projects such as dedicated freight corridors and industrial clusters, smart cities, and engineering services, sharing technologies and skills.
• Indian companies are exploring major investment options in Russia, especially in natural resources such as coal, fertilizers, hydrocarbons, minerals, and rare earth metals.
• Trade and investment relations are not up to the mark and this needs improvements.

Energy ties:

• The Russia-India investments in the oil and gas sector and exports to third countries need to be energised.
• Russia is an important partner in peaceful uses of nuclear energy and it recognizes India as a country with advanced nuclear technology with an impeccable non-proliferation record.
• Kudankulam Nuclear Power Plant (KKNPP) is being built in India with Russian cooperation.

Political ties:

• New Delhi needs Moscow’s support in the former’s bid for a permanent seat on the UN Security Council.
• The Russians have backed the Indian position on Kashmir.
• India and Russia are engaged in several multilateral efforts that are greatly favoured by Russia such as the BRICS and the Shanghai Cooperation Organisation.
• Annual Summit meeting is the highest institutionalized dialogue mechanism under the Strategic Partnership

Issues of terrorism:

• Counterterrorism is another area where both countries find a convergence of interest.
• Both countries strongly condemned terrorism in all its forms, stressing the need for an effective global effort in dealing with the terrorist menace.
• They also called for the elimination, once and for all, of all terrorist “safe havens,” presumably referring to Pakistan.
• India and Russia also share concerns about the aggravation of the security situation in Afghanistan, including along its borders.
• India openly shared Russia’s concerns over developments in Syria.
• India’s stance on Syria will certainly help cement its ties with Russia countering the earlier feeling that India was not coming forward to support Russia in difficult times.

Cultural Cooperation:

• There is a strong tradition of Indian studies in Russia.
• Apart from Hindi, languages such as Tamil, Marathi, Gujarati, Bengali, Urdu, Sanskrit and Pali are taught in Russian Institutions.
• There is general interest among Russian people in Indian dance, music, yoga and ayurveda.
• There are regular cultural initiatives to promote people-to-people contacts between India and Russia

Way Forward:

• India-Russian relationship is passing through an interesting phase.
• There are bilateral challenges that need to be overcome.
• The defense deals and nuclear energy cooperation should keep the India-Russia relationship afloat.
• India has to rebuild on its strengths and common concerns with the Russians.
• Need to focus on increasing trade and investment ties between India and Russia.
• India must attract Russian investors to tap the vast opportunities in India’s infrastructure space.

Conclusion:

• India and Russia have identified several new areas of cooperation.
• These range from deep sea exploration to building knowledge based economies based on science and technology, innovation, robotics and artificial intelligence, focussing on infrastructure, skill development, agriculture, shipbuilding, railways, aviation and greater connectivity, especially people-to-people contacts.
• The two countries decided to setup more than 20 Russian designed nuclear units in India in the next 20-years.
• Above all, the push to ‘Act Far East’ allows India to demonstrate its commitment to an area of concern for Moscow, thus reassuring its traditional partner that in an increasingly polarised world, India is confident of working with multiple alignments, even if they are at cross purposes with each other.

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