Farmers Bill or Corporate Bill?
The Indian Parliament recently passed three agriculture acts—
1) Farmers’ Produce Trade and Commerce (Promotion and Facilitation) Act, 2020,
2) Farmers (Empowerment and Protection) Agreement of Price Assurance,
3) Farm Services Act, 2020, and the Essential Commodities (Amendment) Act, 2020
Amid the stiff opposition, there have also been voices that have come out in support of the acts with some stating that they would “unshackle” the workforce engaged in the agriculture sector. To cut through the noise, here are a few key points from each act that explain the changes proposed by them to the existing agriculture laws in the country.
Farmer’s Produce Trade and Commerce (Promotion and Facilitation) Act, 2020
This act allows farmers to engage in trade of their agricultural produce outside the physical markets notified under various state Agricultural Produce Marketing Committee laws (APMC acts). Also known as the ‘APMC Bypass Bill’, it will override all the state-level APMC acts.
- Promotes barrier-free intra-state and inter-state trade of farmer’s produce.
- Proposes an electronic trading platform for direct and online trading of produce. Entities that can establish such platforms include companies, partnership firms, or societies.
- Allow farmers the freedom to trade anywhere outside state-notified APMC markets, and this includes allowing trade at farm gates, warehouses, cold storage, and so on.
- Prohibits state governments or APMCs from levying fees, cess, or any other charge on farmers’ produce.
Farmers (Empowerment and Protection) Agreement of Price Assurance and Farm Services Act, 2020
The act seeks to provide farmers with a framework to engage in contract farming, where farmers can enter into a direct agreement with a buyer (before sowing season) to sell the produce to them at predetermined prices.
- Entities that may strike agreements with farmers to buy agricultural produce are defined as “sponsors’’ and can include individuals, companies, partnership firms, limited liability groups, and societies.
- The Act provides for setting up farming agreements between farmers and sponsors. Any third parties involved in the transaction (like aggregators) will have to be explicitly mentioned in the agreement. Registration authorities can be established by state governments to provide for an electronic registry of farming agreements.
- Agreements can cover mutually agreed terms between farmers and sponsors, and the terms can cover supply, quality, standards, price, as well as farm services. These include the supply of seeds, feed, fodder, agrochemicals, machinery and technology, non-chemical agro-inputs, and other farming inputs.
- Agreements must have a minimum duration of one cropping season or one production cycle of livestock. The maximum duration can be five years. For production cycles beyond five years, the period of agreement can be mutually decided by the farmer and sponsor.
- The purchase price of the farming produce—including the methods of determining the price—may be added in the agreement. In case the price is subject to variations, the agreement must include a guaranteed price to be paid as well as clear references for any additional amounts the farmer may receive, like bonus or premium.
- There is no mention of the minimum support price (MSP) that buyers need to offer to farmers.
- Delivery of farmers’ produce may be undertaken by either party within the agreed time frame. Sponsors are liable to inspect the quality of products as per the agreement, otherwise, they will be deemed to have inspected the product and have to accept the delivery within the agreed time frame.
- In the case of seed production, sponsors are required to pay at least two-thirds of the agreed amount at the time of delivery, and the remaining amount to be paid after due certification within 30 days of the date of delivery. Regarding all other cases, the entire amount must be paid at the time of delivery and a receipt slip must be issued with the details of the sale.
- Produces generated under farming agreements are exempt from any state acts aimed at regulating the sale and purchase of farming produce, therefore leaving no room for states to impose MSPs on such produce. Such agreements also exempt the sponsor from any stock-limit obligations applicable under the Essential Commodities Act, 1955. Stock-limits are a method of preventing hoarding of agricultural produce.
- Provides for a three-level dispute settlement mechanism: the conciliation board—comprising representatives of parties to the agreement, the sub-divisional magistrate, and appellate authority.
Essential Commodities (Amendment) Act, 2020
An amendment to the Essential Commodities Act, 1955, this act seeks to restrict the powers of the government with respect to production, supply, and distribution of certain key commodities.
- The act removes cereals, pulses, oilseeds, edible oils, onions, and potatoes from the list of essential commodities.
- The government can impose stock holding limits and regulate the prices for the above commodities—under the Essential Commodities, 1955—only under exceptional circumstances. These include war, famine, extraordinary price rise, and natural calamity of grave nature.
- Stock limits on farming produce to be based on the price rise in the market. They may be imposed only if there is: (i) a 100 percent increase in the retail price of horticultural produce, and (ii) a 50 percent increase in the retail price of non-perishable agricultural food items. The increase is to be calculated over the price prevailing during the preceding twelve months, or the average retail price over the last five years, whichever is lower.
- The act aims at removing fears of private investors of regulatory influence in their business operations.
- Gives freedom to produce, hold, move, distribute, and supply products, leading to harnessing private sector/foreign direct investment in agricultural infrastructure.
Past experiments with farm deregulation
The privatization of the sugarcane industry in 1998 and the deregulation of Bihar’s Agriculture Produce Market Committee (APMC) in 2006 led to no benefits for the farmers—sugarcane growers are still agitating for fair and timely payment of dues and Bihar’s agricultural infrastructure has not seen any sizeable private investment. Monika Mandal explains this in detail in this article.
What will the new agriculture system under the three reform acts look like?
In the new set-up, it will not only be fragmented markets with different sets of rules but also fragmented regulatory structures that will create a more uneven playing field for farmers.
The farm acts make agriculture as free as other sectors
The laws allow farmers to perform inter-state and intra-state transactions freely and increases competition between buyers providing better prices to the farmers.
Is it good for Farmers?
The fact is that our farmers in this country are in a state of agitation and concern as farmers’ bills have been bulldozed over the Indian parliament as well as on farmers across the country.
The farmers who benefit from MSP (Minimum Support Price) will be taken off by the new bill which may push farmers to a huge burden. Every farmer should need MSP to sustain and survive.
Also, the Mandys should be preserved as the same or in similar form without any fundamental changes, which are very essential for farmers as well as the state governments in order to procure and market the products easily and smoothly.
On top of that, it’s been witnessed, most of the places in northern India, where plenty of huge warehouses are under construction by the corporate to store the farming products even for many years without any damage, where they can keep and release the goods whenever they want. They can control or scramble the prices whenever they wish without any restrictions from the Government of India or Food Corporation of India.
Finally, if this bill does not help farmers, what is the usage of implementing this bill?
They are on the streets to protest against this bill and even ready to die for the same reason, then why is the so-called Farmers Government forced to pass this bill, where none of the farmers are friendly with this act?
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