In May this year, the government announced important reforms in agricultural markets. These included deregulation of farm foods from the Essential Commodities Act (ECA). Farmers were also allowed to sell their produce outside government-regulated markets, or Agricultural Produce Market Committees (APMCs). Another set of changes allowed farmers to enter contract farming. While the government claims that these reforms will help farmers in getting a better price for their products, farmers’ groups have been agitating against these changes. Why are farmers opposing policies which are designed to help them? There are three factors which could explain these protests.

Farmers do not trust big capital, and for good reason

The entire logic of abolishing the monopoly of APMCs is that they artificially depress prices for farmers; allowing corporate players will guarantee better returns to farmers, the argument goes. Whether or not this happens cannot be said today. But farmers have a good reason to be circumspect about claims of growing presence of corporates being unambiguously good for them. Agricultural input markets , such as seeds, pesticides etc. have seen a large-scale corporatisation in the past decade, but this has been accompanied by a sharp rise in prices of intermediate inputs in agriculture. Data from the ministry of agriculture shows that a rising cost of intermediate goods has been the biggest reason for stagnation and eventual decline in terms of trade for farmers. Given this experience, the suspicion towards growing footprint of big capital leading to a squeeze in earnings cannot be dismissed just as dogma. It is not very difficult to understand why this happens. Farmers are often hard-pressed for resources against traders and end up selling their output when prices are lower. Replacing local traders with big capital will only increase this gap in bargaining power.