The Indian Government’s Framework to Become Cannabis Farmers

The Kush

Hi! Welcome to the 13th edition of The Kush, our newsletter written specifically for Mondays and Tuesdays. If you’re reading this for the first time, then welcome. Today’s morning didn’t begin well, because someone stole our Economic Times (ET) newspaper right off our front porch, and this sucks because our Monday morning cold coffee with ET at sharp 7:15 a.m is what we believe, heralds the ideal beginning to a new week. But there’s no time to wallow in our grief, because grief sucks. It’s time to move on, to much greater things. Let’s blaze. 

India’s New Farmer-focused Bills will help long-term Cannabis reform 

This is the best piece of news we’ve read in a long, long time even though the current government in power may not have done a good job of communicating what these bills mean over the long-term for India’s farmers, 86% of whom own less than 2 acres of land. Yesterday, (yes, on a Sunday) the Rajya Sabha (India’s ‘upper’ house to ratify the passage of all bills and acts before being sent to the President for them to become law) passed two bills : 

  • The Farmers Produce Trade and Commerce (Promotion and Facilitation) Ordinance, 2020
  • The Essential Commodities (Amendment) Ordinance, 2020

A third farmer-focused bill which hasn’t been taken up by the Rajya Sabha (yet) is : 

  • The Farmers (Empowerment and Protection) Agreement on Price Assurance and Farm Services Ordinance, 2020

Quoting from the Indian Express now to simplify this for us and lead the conversation towards what we’re interested in predicting with regards to Indian cannabis: 

The first thing to do is to simplify the names of these ordinances as agriculture economist Sudha Narayanan (of the IGIDR) has done. So, think of “The Farmers Produce Trade and Commerce (Promotion and Facilitation) Ordinance, 2020” as the APMC Bypass Ordinance. Treat “The Essential Commodities (Amendment) Ordinance, 2020” as “The Freedom of Food Stocking by Agribusinesses Ordinance”, and “The Farmers (Empowerment and Protection) Agreement on Price Assurance and Farm Services Ordinance, 2020” as the Contract Farming Ordinance.”

“On paper, what the first one attempts to do is allow farmers to sell their produce at places other than the APMC-regulated mandis. It is crucial to note that the idea is not to shut down APMCs but to expand a farmer’s choices. So, if a farmer believes a better deal is possible with some other private buyer then he can take that option instead of selling in the APMC mandi. The second Bill proposes to allow economic agents to stock food articles freely without the fear of being prosecuted for hoarding. The third Bill provides a framework for farmers to enter into contract farming — that is signing a written contract with a company to produce what the company wants in return of a healthy remuneration.”

So far so good! 

To summarize the point of all three bills (out of which the first two have been passed and will become law when the President signs off on it), it is time to liberalize the farm markets for the farmers and empower them to make their own decisions with regards to the crops they want to grow and with regards to whom to sell their crops to. Long live, my farmer.

Sounds great. 

To complement the Indian Express, here’s the superb public policy blog called ‘Anticipating the unintended’

“Despite the obvious failures of the state in the farming sector, successive governments balked at reforms. The entrenched ‘aristocracy’ of rich farmers, commission agents and farmer leaders thwarted all attempts. This time is different. For once the numerical advantage of this government and the political capital of the PM are being put to use for structural reforms that will serve us well in the long-term. The small and marginal farmers have suffered under the benevolent tyranny of the state. These reforms will liberate the sector.”

The blog made four key observations about the current system: 

  • Farmers can only sell their produce at the state APMC (Agriculture produce market committee) registered mandis. There is no freedom to sell produce outside of the mandis. There’s no freedom to conduct inter-state trade for the farmers. There is only a single buyer – the state. There is no competition. The state sets the price of the produce.”
  • The state has its approved ‘middlemen’ to facilitate the process of buying from the farmers. Since the farmers are often small and poor, their ability to reach the mandi, to negotiate the byzantine paperwork of license fees and commission, and store their produce is limited. There’s a long chain of small and big traders and commission agents who fill in to provide these services. This is a deeply entrenched cartel that buys low from the farmers and bids up the price to the wholesaler.”
  • “There’s no freedom for the farmer to sell their labour for a price through a contract. This is a freedom guaranteed by the constitution to every citizen. Except the farmer. So, small and marginal farmers can’t enter into contracts with private buyers of farm produce to aggregate their produce and sell it at a predetermined price.”
  • There are restrictions on how much stock of ‘essential commodities’ can be held by a farmer or a trader. The essential commodities include cereals, potatoes, onions, oilseeds and pulses. So, the market mechanism of stabilising price through supply management and storage isn’t available. There’s no incentive for players to set up modern warehouses and cold supply chains for these commodities. The result is frequent price fluctuations and criminal wastage of food.”

They summarize:

Who in their right minds would want this structure to continue? Who has it helped except entrenched cartels and a few dynasties of ‘farmer leaders’ who have built a system of patronage? It is the established rural structures that’s protesting. That doesn’t want to let go. They must be ignored.”

Here’s how interested Indian farmers can begin cultivating cannabis for medical and industrial purposes: 

  • Lobby the State Government very hard to include cannabis as an essential commodity. Tell them that cannabis will be used by Indian private companies as raw material to make medicines, clothes, edible oils, protein powder etc. Go to the agriculture ministry, the health ministry, the textile ministry and the excise department and tell all of them. Make them understand.
  • Read the above three acts from the central government’s website very very carefully
  • Get on the ground – buy land yourself in a faraway place or become friends with a farmer and convince the farmer to go for cannabis as his or her chosen cash crop and how you will help them make money by selling their cannabis harvest to private companies (explain how cannabis has a short-growth cycle and its uses).

Let’s keep blazing. 

Have a great day 🙂 

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