Since the tail end of November 2020, a recent encampment of over 300,000 lower to middle-class farmers sprawled across the Delhi-Meerut Expressway in Ghazipur, India. The farmers are protesting three new laws known as the 2020 Indian agriculture acts passed in September by the current ruling party, the Bharatiya Janata Party, in an attempt to modernize the agriculture industry and deregulate farming markets and transactions to bolster economic growth.
Frustrated with the lack of progress, protests in India’s capital, New Delhi, have become more violent with protesters brandishing long swords, pitchforks and using tractors to dismantle police barricades. Sometimes met with baton beatings, the violence shows no sign of stopping, with neither side backing down. The BJP continues condemning the protests day after day, with Prime Minister Narendra Modi especially denouncing the protests and calling the storming of a historic fort in Delhi “an insult to the [Indian flag].”
In actuality, these laws ended up exacerbating the struggles of poor farmers by abandoning the established market system in favor of a deregulated market space where corporations can easily trap farmers into unfair and restrictive contracts and business deals.
India’s agriculture system is split into three main parts: markets, auctions and consumer purchasing. The process begins with the farmers, who grow cash crops and bring them to wholesale markets, or “mandis.” Next, from these mandis, the farmers’ crops are sold off in relatively transparent auctions with clear prices to traders, who can then decide whether to transfer the crops to secondary markets like grocery stores or store the crops away for future sale. In addition to the markets, the government also sets a minimum support price at which the government will purchase crops if farmers wish to sell to them. Even though a small percentage of crops in the market are bought by the government, the MSP still serves as a benchmark price through the industry and gives farmers some leverage against unfair trade deals.
Within the current system, farmers have been struggling financially for years, with about 52% of all farmers in debt. This debt crisis has led to a sharp uptick in suicide among farmers, with over 20,000 deaths in the last two years alone. Due to the increasingly terrible conditions in the agriculture industry, farmers have been demanding reforms for years.
In response, the BJP passed the 2020 Indian agriculture acts, instead of helping struggling farmers who need reforms the most, deregulated the agriculture market, allowing large corporations and rich traders to take control of the supply chain. The three laws deregulate different aspects of the market, leaving farmers with less leverage in bad deals and removing the already meager economic safety net the MSP provided.
The first bill creates free, unregulated trade spaces outside of and immune to the laws of the market system. In these spaces, farmers and traders do business directly instead of via the mandis. Trade outside the system was not uncommon before these acts, but they were still regulated by the MSP acting like a benchmark. However, outside the system, this new law leaves farmers without government assistance to fall back on, meaning large corporations can restrict and control farmers with unfair contracts and deals. Not only that, but farmers can be easily attracted to trading outside the market as more and more traders leave the mandis for trade spaces with less oversight, leading farmers to fall victim to the second act.
The second law creates a framework for deals and contracts between farmers and traders and leaves business agreements strictly between farmers and traders, with little oversight. This gives farmers fewer options to back out or fight bad deals and leaves them in the hands of large corporate players. If traders leave the agriculture market system, the mandis will collapse as they see less and less market activity. If the mandis collapse, the only choice farmers have would be to become dependent on big corporations, leaving them trapped in unfair contracts, or booted from the industry altogether and left without income.
The third act, while not directly affecting the market system or business deals, still does nothing to help struggling farmers while giving corporations even more power over the industry. The third law removes the storage limits previously set by the government, so now traders can store as much as the goods they buy as they want, where previously there was a limit to how much they can store before they must sell their goods off. Now, anyone with enough money can stock up on crops, and, without any oversight, can begin to dictate the prices of the goods when they reach the market.
All together, these three laws do not help struggling farmers and only serve to fragment the existing market system, leaving more room for corporate players to take control over the farmers and the agriculture industry.
