Centre’s New Agri Policy Would Reincarnate Three Aborted Farm Laws

The Union Ministry of Agriculture recently circulated a new draft for a policy framework concerning agricultural marketing. Faiz Ahmed Kidwai, additional secretary in the ministry, proposed the draft to revamp the existing framework. According to the government, the proposed universal tax on agricultural produce will increase farmers’ incomes. The committee has suggested replacing the state-supported market yards, laws on bulk storage, and regulations governing direct purchases by large private entities with a new framework for agricultural marketing mechanisms. A committee comprising state agricultural ministers, similar to the empowered GST committee, will be established to facilitate the direct collection of taxes from the Union government.

The new proposals will eliminate existing public market yards, enable corporations to engage directly in bulk buying and storage. Critics, however, argue that the proposed policy is anti-farmer and will facilitate the backdoor entry of the aborted ‘three Farm Bills’ which had triggered the farmer’s protests.

The Union government developed a marketing framework based on 12 market reforms recommended by a committee established in 2003 by the NDA government.

The 12 reforms include the establishment of private wholesale markets, wholesale direct purchases by processors, e-exporters, organised retailers, and bulk buyers at the farm gate, declaring warehouses, silos, and cold storage facilities to replace the current market yards, implementing a onetime levy of market fees across the state, and introducing a single unified trading license that is valid throughout the state.

Key Proposals of Draft: (1) Establish an empowered agricultural marketing reform committee comprising state agricultural ministers similar to the present GST panel to create a unified national market for agricultural produce. (2) Improve farmer market linkage: Declare many need-based warehouses/cold storage as sub-market yards, and expand & consolidate eNAM markets beyond Agricultural Produce Market Committees (APMC) and marketing sub-yards. (3) Agricultural produce and Food refinement activities: Promote them and collect taxes/ fees. (4) Value Chains: Strengthen value chain centric infrastructure using AI technology, etc, with private sector participation. (5) Price Insurance: Launch a price insurance scheme for farmers’ income when sowing itself. (6) Ease of doing Agri-Trade: Promote digital automation of all mandi processes, digital issuance of licences, and registration of traders and major private players.

The draft trade reforms aim to undermine stable, supported market yards and weaken the Agricultural Produce Market Committees (APMCs), providing price protection for small farmers against manipulation by private trader syndicates. The reforms will encourage the reintroduction of large corporate market players, such as ITC, Adani, and other major exporters. According to the clauses in the new draft, these private companies will be allowed to purchase directly from farmers at the farm gate.

Furthermore, transferring produce warehouses and cold storage units, previously managed by APMC market yards, to private companies eliminates crucial provisions for storing produce—especially perishables like tomatoes, fruits, and onions—during price crashes and other difficult situations.

Farmers are not allowed to negotiate for the minimum support prices (MSP) set by the government, contributing to their disadvantage regarding bulk purchases by corporate players directly at the farm gate. The provision for unlimited bulk purchases allows large companies to hoard agricultural produce without adhering to the Essential Commodities Act. Major corporations such as Reliance and Adani have established significant warehouse facilities and private railway lines in areas like Sirsa, Haryana, Ludhiana, and Punjab.

These regulations encourage supermarkets and online grocery platforms, like Big Basket and Amazon, to buy directly from farmers during harvest, often at artificially low prices, circumventing the MSP. In the following months, these companies sell the hoarded produce to consumers at much higher prices, leading to volatile market conditions. For instance, tomatoes were around Rs 60 per kilogram a month ago, but they plummeted to Rs 1 per kilogram during the harvest in Madapalli, Andhra Pradesh.

Previously, the centralised e-NAM electronic market left farmers vulnerable to national open markets, often denying them the Minimum Support Price (MSP) available in APMC market yards. Regular auctions allow farmers to obtain prices that exceed MSPs in these market yards. However, with eNAM, digital markets, and bulk purchases, farmers are increasingly subject to the price dictates of corporate buyers.

Bulk purchases made directly from farmers significantly reduce the Food Corporation of India’s (FCI) procurement process, which operates by paying Minimum Support Prices (MSPs). This reduction risks maintaining food grain stocks necessary for the Public Distribution System. As a result, farmers, workers, and ordinary consumers end up facing higher prices for food items.

Agricultural marketing is a state subject, as outlined in Entry 28 of List II of the Seventh Schedule under Article 246 of the Constitution. The decreasing role of government-supported APMC and the collection of taxes at mandis through platforms like e-NAM and other digital markets enable the central government to collect taxes directly from the central pool, similar to the Goods and Services Tax (GST). With the introduction of GST, states have lost a significant source of revenue and have become dependent on the central government for regular financial assistance. Since agriculture is a state subject under the Constitution, this situation challenges the federal structure, making state governments financially vulnerable.

Three years ago, farmers nationwide engaged in a historic and militant struggle for 13 months at the Delhi borders, ultimately forcing the Union government to repeal the anti-farmer laws. Both farmers and workers continue to wage ongoing struggles against their common class enemy—corporations— demanding guaranteed legal purchases of all agricultural produce and fulfilment of other promises made to them.

The proposed draft agricultural market framework reintroduces three previously rejected farm laws and seeks to hand over the markets, storage, and distribution sectors to a few corporate players. Farmers must be aware of these government policies and actively resist them to regain control over input supply, marketing, storage, and distribution within the supply value chain, which has become dominated by a few major corporations. (IPA Service)

The author is an agricultural scientist.