Part-2: Agriculture Marketing Reforms - Constitution Ignored - Farmers exploited

Part-2: Agriculture Marketing Reforms

(To read earlier parts, please search on this blog with keyword 'Marketing')

Constitution Ignored - Farmers exploited

By
Vijay SARDANA, 
Advocate, Delhi High Court
Techno-legal Expert on Agribusinesses 
& Consumer Products Industries
& 
Priyanka Sardana, Advocate, Supreme Court of India
& 
Aastha Sardana, Researcher on Legal Matters

The Constitution of India secures the freedom of Trade, Commerce and Intercourse within the Territory of India under Article 301, subject to reasonable restrictions & public interest ranging from Article 302-307. It is worth mentioning that Part XIII (Article 301-307) is in addition to Articles 14 & 19.

The purpose of the APMC Act for farmers has not explained anywhere, why?

Why Indian farmers were allowed to sell or trade their products freely anywhere in the country when the constitution permits this? When every other product and the commodity is allowed to be traded anywhere in the country why restrictions were imposed on the farmers? 

What was the motive behind these restrictions; it is not explained in any APMC Act of any state government. Please read all the APMC Acts of all states it says:

1.  to regulate the marketing of agricultural and certain other products in market areas and markets, 

2.  to confer powers upon Market Committees; 

3. to establish Market Fund for purposes of the Market Committees. 

Nowhere it is mentioned what is the purpose of APMC markets for farmers and consumers. How they will help farmers in their welfare.

Existing Agriculture Marketing Rules are against Indian farmers 

India has accepted free and fair-trade regime as a member of WTO i.e. "One World- One Market", why the same is not accepted as "One Country - One Market" in India?

As a country, we have agreed to free and fair marketing environment at the global stage, but we are not keen to offer the same to the farmers for their own agriculture produce for the benefit of farmers and consumers of India. The same we have decided for all other sectors within the country and to facilitate that we introduced GST taxation system. Why the same benefit is not there for Indian farmers and why this discrimination in the agriculture sector? 

This is one of the single most reason for acute poverty in rural India where farmers live and work hard but never get due share of their hard work. The exploitation of farmers by licensed cartels promoted and supported under the outdated laws of the state governments is the biggest tragedy of India. These laws were created when India was in short supply and there was no infrastructure and no mobile technology. The world has changed but exploitation of farmers continues because laws created for exploitation remain in force. No amount of justification to continue with the existing system has any logic. Let APMCs’ compete with open market buyers and let farmers decide which is the right place for them to sell their produce. Why APMC traders’ cartel wants a monopoly on farmers’ crop?

In India, Imported farm produce enjoy the freedom the produce of Indian farmers, Why?

Imported wheat, rice and pulses can e traded without any restrictions, but Indian farmers’ wheat, rice and pulses have to go through outdated and exploitative APMC mandi system route, Why? 

Why there is no level playing field for farmers of India?

Articles 301 & 304 (a) rings a bell or two regarding a well- known concept in International trade i.e. Regional Trade Agreements or Free trade Agreements (RTA or FTA) & National treatment.

The GATT- WTO regime has put in place a well-organized system of free trade/ trade without barriers amongst member Nations. India is a founder member of this treaty, but when it comes to Indian farmers, we do not provide them with the same free and fair market environment.

The tragedy in India is imported agriculture produce, as per WTO agreements, which can move freely within India without any restrictions, but the farm produce of Indian farmers cannot move freely within India. This is a unique example in the world where state governments in India are creating a problem for their own products and own trade against the imported products.

This is making the Indian economy inefficient by increasing the cost of the transaction and by creating legal hurdles for investments and employment generation. 

Existing APMC law violates fundamental rights:

Article 19 (1) (g), a fundamental right confers on the citizens the right to carry any profession or carry on any lawful occupation trade or business. State APMC Acts violates this fundamental right for both buyer and seller of farm produce. Should we restrict any transaction between farmer and buyer of his crops? The state laws are imposing restrictions on free trade in India between various citizens of India located in various parts of India. The legality of the state laws should be questioned. Who is benefiting from these trade restrictions?

Misinterpretation of constitutional provisions by States created an exploitative environment: 

The list mentioned under Article 246, Schedule VII is not a source of power. The decision by the Constitutional Bench in the case of Ujagar Prints vs Union of India, reported in [1988 (38) ELT 535 (SC)] is a classic milestone. Arguments by Stalwarts and Erudition of the Bench had brought to light certain foundational principles.

The Hon'ble Supreme Court had laid down the following principle: Entries to a legislative list are not sources of legislative power but are merely topics or fields of legislation and must receive a liberal construction, inspired by a broad and generous spirit and not in a narrow pedantic sense. (para 18)

Let us now analyze what are provisions in the legislative lists:

In our view, these legislative lists are defined for better governances and to enhance the welfare of the people of India, not for the exploitation of them. 

> Union List: Entry 42: Inter-State Trade and Commerce: Agriculture and Livestock Produce is a commodity for trade. Farmers are growing crop and livestock for trade. Union government is duty-bound to ensure that transactions between farmers and buyers are unrestricted within India. Union Law should facilitate the same. There is no exception given in this regard in this list.

> State List: Entry 14: Agriculture, including agriculture education and research, protection against pests and prevention against diseases. This is clearly defined that agriculture i.e. pre-harvest activity. It means crop production is the domain of the state.  The state may advise farmers, based on agro-climatic consideration and to conserve natural resource state, which crop should be promoted or discouraged, can be decided by the state. 

The post-harvest output like grains, oilseeds, fodder, cotton, jute, etc. is not agriculture. They are commodities for trade. The drafting team of the constitution understood this because food has to travel for consumption. Food security of citizens cannot be at the mercy of one state when other states are suffering due to shortage or inflation. That is why trading of agriculture outputs was placed in Union list.

> State List - Entry 28: Markets and fairs: It is true that state governments are allowed to frame the law in these domains. Let states create mandies, fairs and markets and manage them as their state assets. If they are useful and beneficial farmers and traders will use them. If they are not, states cannot force them to use them or pay for them. The government can collect user changes from those who use but cannot force mandatory user chargers from those who do not want to use them because of poor location or bad infrastructure or unsuitable to do fair trade.  

According to the constitution, these rules and regulations must not infringe the fundamental rights of the citizens. The Constitution Chapter-13 says actions of the states must not restrict trade and commerce and should not kills the entrepreneurial spirit of the people of India. Any law which acting against this spirit must be reviewed and challenged in the national interest.

> Concurrent List: Entry 7: Contracts, including partnership, agency, contracts of carriage and other special forms of contract, but not including related to agriculture land. Union government can make laws to promote contracts between buyer and seller of agriculture commodities. The contract can be verbal or in writing. The scope of the contract is a mutual decision of the parties involved.

> Concurrent List: Entry 33: Trade and commerce in, and the production, supply and distribution of,-

(a) the products of any industry where the control of such industry by the Union is declared by Parliament by law to be expedient in the public interest, and imported goods of the same kind as such products

(b) foodstuffs, including edible oilseeds and oils

(c) cattle fodder, including oilcake and other concentrates

(d) raw cotton, whether ginned or not ginned and cottonseed; and

(e) raw jute.

All output from farms will fall in the above categories. The union government has the power to frame the law in this regard.

While discussing farmers right to trade let us serious study the full chapter of Constitution of Trade and Commerce.

What are the options before the Union Government?

In the interest of the welfare of people and the development of India, the Union government can always frame a law under various provisions. 

State Governments are always free to improve the free market, in place of having restrictions, which may hurt the welfare of the citizens of India. Any restrictive practices to hurt the interest of farmers and consumers by any state must be opposed by all.

The Way Forward:

All state should be ranked base on restrictive agriculture trade laws. The ranking of the state should suffer for creating and supporting cartels, rent-seeking mindset and increase in transaction costs.

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