Why is a private member Bill of 2018 relevant to the farmers today? It seeks guaranteed remunerative MSP, regulated costs, grievance mechanism and compensation

08, Jan 2021 | Adeeti Singh

Swabhimani Shetkari Sanghatana (SSS) chief and former Member of Parliament Raju Shetti has said that the farmers and the Union can reach a consensus only if the Prime Minister guarantees a Minimum Support Price (MSP) for farmers to cushion them from unexpected calamities and volatile market changes. SSS is one of the prominent unions under the umbrella of AIKSCC who is in deadlock with the Centre over the three farm laws, currently.  

Raju Shetti’s SSS was a part of the National Democratic Alliance (NDA) from 2009 till it joined the United Progressive Alliance (UPA) in March 2018. The same year, he introduced two private member bills in the Lok Sabha namely “The Farmers’ Right to Guaranteed Remunerative Minimum Support Prices for Agricultural Commodities Bill” and “Farmer’s Freedom from indebtedness Bill”. Despite the farmer’s demands for MSP that dates back to 2018, the Bill was not discussed in the Parliament.

The Bill on MSP is now in focus again during the “Dilli Chalo” protest of the farmers where they have been demanding that both the Bills be discussed and adopted in a special 21-day session of Parliament to loosen the deadlock. So, what does this Bill provide and why is it still relevant after 2 years?

Purpose of the Bill

True to its name, the Farmers’ Right to Guaranteed Remunerative MSP for Agricultural Commodities Bill was introduced in August 2018 to “confer a right on every farmer to guaranteed remunerative minimum support prices for agricultural produce with minimum fifty percent profit margin above comprehensive cost of production upon sale of agricultural commodities and for matters connected therewith or incidental thereto.” The Bill also encompasses the constitutional provisions ensuring the Right to Livelihood of the agricultural sector that is an extension of Right to Life under Article 21.

Farmer’s definition

The Bill’s definition of farmers is wider than the one provided in the 2020 Act introduced by the Central Government which only includes individuals engaged in the production of farmers’ produce by self or by hired labour and farmer producer organisations.

But the 2018 Bill includes a person who grows crops or other primary agricultural commodities who may or may not own land including all agricultural ‘operational holders’, cultivators, agricultural labourers, sharecroppers, tenants, poultry and livestock rearers, fish workers, beekeepers, pastoralists, non-corporate planters and planting labourers, forest-produce gatherers, women farmers, and farmers’ groups, producer cooperatives or self-help groups cultivating collectively-owned or leased land under the ambit of farmers.

Grievance Redressal

The Bill also mandates the State Commission to constitute a three-member committee at the taluka level to address any grievance of the farmers. A farmer who is not paid the guaranteed remunerative MSP by a trader is entitled to compensation equal to the difference between the MSP and the price obtained for his agricultural commodity from the trader under section 27 of the Bill.

Under the same provision, if any farmer fails to acquire instant and direct payment that fully covers the total value of the agricultural commodity sold at guaranteed remunerative minimum support price from any buyer including Government procurement agencies, they shall be entitled to get compensation fixed at fifteen per cent on the total payment due from the buyer for such delay every month.

Cost of Production for farmers  

The Bill acknowledges that the food prices for consumers, especially those who are poor, have been secured at affordable rates through at least two legislations in the country—the Food Security Act, 2013 and the Essential Commodities Act, 1955. Therefore, there is every reason for price determination for farmers to take the sole mandate of securing adequate net returns to a farmer, over and above the comprehensive cost of production.

So, the Bill obligates the Central government to regulate and decrease the cost price of farm inputs including diesel, seeds, fertilizers, insecticides, machinery and equipment, by promoting low-cost sustainable methods of agriculture under section 23. It includes:

Paid-out costs– which include the costs of human, animal and machine labour; annual maintenance costs of animals and machinery; expenses on inputs such as seeds, fertilisers, manure, pesticides, insecticides, weedicides and irrigation; depreciation on implements and farm buildings; land revenue and other taxes; rent of leased land; interest on credit obtained; insurance premiums; and processing, transport and marketing costs.

Imputed costs that include the cost of family labour (at wage rates for that area); rent of owned land; interest on fixed and working capital; a risk margin of 10 per cent over the cost of cultivation per hectare; and managerial costs.

Projected costs which are calculated using a Composite Variable Input Index that is based on the rate of inflation of different inputs. This should be applied to fixed costs and to any other costs resulting from the increase in the use of a particular input.

Offences and Penalties prescribed in the Bill

Section 26 lays down that if any trader (including one in a contract farming agreement) who purchases a commodity below the guaranteed MSP or refuses to buy it at the MSP, commits a cognisable offence and can be imprisoned for a period of three months to one year depending on the frequency of the commission of the crime.

Section 26 (2) penalises any public servant or authority guilty of not initiating action against traders for purchasing agricultural commodities below the MSP, intervening in the market, or not providing compensation to farmers who can be fined his/her one month’s salary and imprisoned for six months.

Section 17(2) provides that if any agreements (oral or otherwise) between purchasers/traders or commission agents that limit, control or suppress the sale prices of agricultural commodities which, in turn, adversely affects the MSP, are also illegal and can lead to penalties or imprisonment.

Statement of Objects and Reasons

As per the Statement of Object and Reasons for the Bill, it states that more than fifty-five per cent of India’s population is principally dependent on agriculture for their livelihood and in the past two decades, since 1995, India has recorded more than 3,00,000 cases of suicides by farmers. The Indian Government data shows 12,602 farmers killed themselves in 2015 alone, mostly owing to economic distress and indebtedness.

It reads, “Data reveals that very often, even the cost of production is not recovered by farmers in realized prices, whereas the farm family has living expenses in addition to investments in farming. At present, the Commission on Agricultural Costs and Prices, for determining the Minimum Support Price (MSP), considers (1) Demand and supply; (2) Cost of Production; (3) Price trends in the market, both domestic and international; (4) Inter crop price parity; (5) Terms of trade between agriculture and non-agriculture; (6) Likely implication of MSP on consumers of that product. Using these various parameters, MSP is often fixed even below the cost of production, ignoring the right to life and livelihood of the producer.”

Hence, this Bill was proposed in 2018 by Shetti to uphold the right to life and livelihood of farmers by regulated prices, guaranteed remunerative minimum support prices for sale of all agricultural Commodities, a redressal and compensation mechanism. Dr Darshan Pal of Krantikari Kisan Union, also a member of the AIKSCC told the media, “Along with our demand of repealing these three anti-farmers Bills, our demands today are similar to what we drafted in the 2018 Bill.”

Seven rounds of talks between the farmers and the Centre have remained inconclusive with the eighth round that is scheduled for today, January 8. Undeterred, the farmers have stood their ground demanding legal guarantee on MSP and repeal of the three laws.

The 2018 Bill may be read here:

Image Credit: Picture shared by Framers Movement from Delhi Borders


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