The Farm bills

News: Bills aimed at transforming agriculture in the country and raising farmers’ incomes.

  1. The Farmers’ Produce Trade and Commerce (Promotion and Facilitation) Bill, 2020
  2. The Farmers (Empowerment and Protection) Agreement of Price Assurance and Farm Services Bill, 2020.
  • Bills passed by Lok Sabha on 17th September 2020, were passed by the Rajya Sabha 20th September 2020.
  • The Bills were introduced in Lok Sabha on 14th September 2020 by Union Minister of Agriculture & Farmers’ Welfare, Rural Development & Panchayati Raj, Shri Narendra Singh Tomar,to replace ordinances promulgated on 5th June 2020.
  • Speaking about the Bills, Shri Narendra Singh Tomarsaid that the Government under Prime Minister Shri Narendra Modi has taken several landmark decisions in last six years to ensure that farmers get remunerative prices for their produce, and for raising farmers’ incomes and livelihood status.
  • He again clarified that the procurement at Minimum Support Price will continue, assurance for this has been given by Hon’ble Prime Minister himself, rate of MSP has been increased considerably during 2014-2020.

1. The Farmers’ Produce Trade and Commerce (Promotion and Facilitation) Bill, 2020

Background-

  • Farmers in India suffered from various restrictions in marketing their produce. There were some restrictions for farmers in selling Agri-produce outside the notified APMC market yards.
  • The farmers were also restricted to sell the produce only to registered licensees of the State Governments.
  • Further, Barriers existed in free flow of agriculture produce between various States owing to the prevalence of various APMC legislations enacted by the State Governments.

Why this bill?

This legislationis a historic-step in unlocking the vastly regulated agriculture markets inthe country.It will open more choices for the farmer, reduce marketing costs for the farmers and help them ingetting better prices. It will also help farmers of regions with surplus produce to get better prices andconsumers of regions with shortages, lower prices.

Main provisions –

  • The new legislation will create an ecosystem where the farmers and traders will enjoy freedom of choice of sale and purchaseof agri-produce.
  • It will also promote barrier-free inter-state and intra-state trade and commerce outside the physical premises of markets notified under State Agricultural Produce Marketing legislations.
  • The farmers will not be charged any cess or levy for sale of their produce and will not have to bear transport costs.
  • The Bill also proposes an electronic trading in transaction platform for ensuring a seamless trade electronically.
  • In addition to mandis, freedom to do trading at farmgate, cold storage, warehouse, processing units etc.
  • Farmers will be able to engage in direct marketing thereby eliminating intermediariesresulting in full realization of price.

Doubts –

  • Procurement at Minimum Support Price will stop
  • If farm produce is sold outside APMC mandis, these will stop functioning
  • What will be the future of government electronic trading portal like e-NAM

Clarification –

  • Procurement at Minimum Support Price will continue, farmers can sell their produce at MSP rates.
  • Mandis will not stop functioning, trading will continue here as before. Under the new system, farmers will have the option to sell their produce at other places in addition to the mandis
  • The e-NAM trading system will also continuein the mandis
  • Trading in farm produce will increase on electronic platforms. It will result in greater transparency and time saving

2.The Farmers (Empowerment and Protection) Agreement of Price Assurance and Farm Services Bill, 2020

Background

  • Indian agriculture is characterized by fragmentation due to small holding sizes and has certainweaknesses such as weather dependence, production uncertainties and market unpredictability.
  • This makes agriculture risky and inefficient in respect of both input & output management.

Why this bill?

  • This legislation will transfer the risk of market unpredictability from the farmer to the sponsor andalso enable the farmer to access modern technology and better inputs.
    Main provisions –
  • The new legislation will empower farmers for engaging with processors, wholesalers, aggregators, large retailers, exporters etc., on a level playing field. Price assurance to farmers even before sowing of crops. In case of higher market price, farmers will be entitled to this price over and above the minimum price.
  • It will transfer the risk of market unpredictability from the farmer to the sponsor. Due to prior price determination, farmers will be shielded from the rise and fall of market prices.
  • It will also enable the farmer to access modern technology, better seed and other inputs.
  • It will reduce cost of marketing and improve income of farmers.
  • Effective dispute resolution mechanismhas been provided for with clear time lines for redressal.
  • Impetus to research and new technology in agriculture sector.

Doubts –

  • Under contract farming, farmers will be under pressure and they will not be able to determine prices
  • How will small farmers be able to practice contract farming, sponsors will shy away from them
  • The new system will be a problem for farmers
  • In case of dispute, big companies will be at an advantage

Clarification –

  • The farmer will have full power in the contract to fix a sale priceof his choice for the produce. They will receive payment within maximum 3 days.
  • 10000 Farmer Producer organizationsare being formed throughout the country. These FPOs will bring together small farmers and work to ensure remunerative pricing for farm produce
    • After signing contract, farmer will not have seek out traders. The purchasing consumer will pick up the produce directly from the farm
    • In case of dispute, there will be no need to go to court repeatedly. There will be local dispute redressal mechanism.

Issues raised by farmers

  • The provisions in the Farmers’ Produce Trade and Commerce (Promotion and Facilitation) Bill, 2020, provides for unfettered commerce in designated trade areas outside APMC jurisdictions. Apart from this, the bill empowers the Centre government to issue orders to States in furtherance of the law’s objectives.
  • However, matters of trade and agriculture being the part of subjects on the State list, have caused resentment in States.
  • First the ordinance route and now the hastily attempt to pass the Bills without proper consultation adds to the mistrust among various stakeholders including farmers.
  • Also, by allowing ‘trade zones’ to come up outside the APMC area, farmers have become apprehensive that the new system would lead to eventual exit from the minimum support price.
  • Another issue that is raised by the farmers is that the proposed bills give the preference for corporate interests at the cost of farmers’ interests.
  • In absence of any regulation in non-APMC mandis, the farmers may find it difficult to deal with Corporates, as they solely operate on the motive of profit seeking.
  • While retail prices have remained high, data from the Wholesale Price Index (WPI) suggest a deceleration in farm gate prices for most agricultural produce.
  • With rising input costs, farmers do not see the free market basedframework providing them remunerative prices.
  • These fears gain strength with the experience of States such as Bihar which abolished APMCs in 2006. After the abolition of mandis, farmers in Bihar on average received lower prices compared to the MSP for most crops.

Steps needs to be taken

  • Discussions between the government and the farmers can be structured using a broad framework based on two focus points.

First,India needs an increase in the density of mandis, expansion of investment in mandi infrastructure and a spread of the MSP system to more regions and crops.

Second,we need not just more mandis, but also better mandis.

  • APMCs need internal reform to ease the entry of new players, reduce trader collusion and link them up with national e-trading platforms.
  • The introduction of unified national licences for traders and a single point levy of market fees are also steps in the right direction.

Conclusion

  • Government should massively fund the expansion of the APMC market system, make efforts to remove trade cartels, and provide farmers good roads, logistics of scale and real time information.
  • Rather than opting for heavy centralisation, the emphasis should be on empowering farmers through State Farmers Commissions recommended by the National Commission for Farmers, to bring about a speedy government response to issues. The Centre should reach out to those opposing the Bills, including farmers, explain to them the need for reform, and get them on board.
  • Without strong institutional arrangements, the free market may harm lakhs of unorganized small farmers, who have been remarkably productive and shored up the economy even during a pandemic.
  • The Farm Acts were legislative measures that were passed without elaborate discussion with stakeholders. Thus, government has to take steps to address the genuine fears of farmers

A combined effect of these bills will help in creating a ‘One Nation, One Market’.

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