Agriculture Reforms (20 September 2020)
Agriculture Reforms (20 September 2020)
Why in News:
Rajya Sabha passed two bills related to Agriculture Sector Reforms today.
The Farmers' Produce Trade and Commerce (Promotion and Facilitation) Bill, 2020 and The Farmers (Empowerment and Protection) Agreement on Price Assurance and Farm Services Bill, 2020.
The ordinance basically aims at creating additional trading opportunities outside the APMC market yards to help farmers get remunerative prices due to additional competition
Except two to three states, in all other state, there is a APMC Act. That Act governs the rules regarding sale and purchase of notified commodities. According to APMC rule, a farmer is required to bring his or her produce to principal yards or sub yards or any area declared by APMC as a market for its sale and the produce in this market are sold through auction.
So, farmer whether he or she likes to sell their produce at the farm gate in some other city, in some other state or to some trader, processor, that freedom is not there according to APMC Act. Hence, according to rules of APMC Act, every farmer is required to sell their produce only and only through APMC channel.
From the last 18 years, this was being discussed that the changes in this APMC Act are required, farmers need to give wider option, choice and they should not have a force that they have to sell the produce only through one system.
The Farmers’ Produce Trade and Commerce (Promotion and Facilitation) Bill, 2020 and The Farmers (Empowerment and Protection) Agreement of Price Assurance and Farm Services Bill, 2020 were passed by Lok Sabha on 17th September 2020.
Summary of the Debate
The Farmers' Produce Trade and Commerce (Promotion and Facilitation) Bill, 2020:
- It allows intra-state and inter-state trade of farmers’ produce beyond the physical premises of APMC markets.
- State governments are prohibited from levying any market fee, cess or levy outside APMC areas.
- Private player will setup e-platform where farmers can register their reserve price and produce which they would like to sell.
- The Act defines “trade area” as any area or location, place of production, collection and aggregation. It includes:
- Farm gates
- Factory premises
- Cold storages
- Any other structures or places, from where the trade of farmers’ produce may be undertaken in the territory of India.
- In effect, existing mandis established under APMC Acts have been excluded from the definition of trade area under the new legislation.
- The farmers have the option, the private people offer to them for the delivery of the produce, whether it’s in factory, in warehouse or in any designated area based on the price which is agreed between the two parties.
- There is always one compliant of the farmer that agriculture is the only commodity where farmer cannot dictate his price, he is a price taker in the system of auction in the APMC. But according to this new Act, farmer can bargain.
- This new Act give this long sought after freedom to the farmers that you are free, you can enter into an agreement with a private trade and ask him to buy your produce in the farm gate, in your home or wherever you want.
- The farmers have remained only as producers but according to the new Act, they can themselves become trader. Their own children can integrate produce, collect the produce, take it to market, consumer, city or other states. So, entire ecosystem which free farmers completely from his winding to the APMC has been removed.
The Farmers (Empowerment and Protection) Agreement on Price Assurance and Farm Services Bill, 2020:
- In India, 30-40 percent cultivation done through the Tenancy farming. That is some kind of contract farming itself basically now and the Farmers (Empowerment and Protection) Agreement on Price Assurance and Farm Services Bill, 2020 gives a legal framework to that. It does not talk about landholding.
- The new bill provides for a farming agreement between a farmer and a buyer prior to the production or rearing of any farm produce.
- The minimum period of an agreement will be one crop season, or one production cycle of livestock. The maximum period will be five years.
- The price to be paid for the purchase of a farming produce will be mentioned in the agreement.
- A farming agreement must provide for a conciliation board as well as a conciliation process for settlement of disputes.
- It will allow private investment.
- It will reduce the transaction cost. Because of reduction, this will allow even the processor to access commodity from their own state.
- Quality of product will increase because of the contract farming system; the processor will ask for the quality products. So, this is the win-win for processor and the farmers.
- Farmers will get access to technology and advice for high value agriculture and get ready market for such produce.
Availability of a transparent, easily accessible, and efficient marketing platform is a pre-requisite to ensure remunerative prices for farmers. It can emerge as a viable alternative for agricultural marketing if they are provided with adequate infrastructure facilities.
Important points made by the Guests
Prof. Ramesh Chand, Member, Niti Ayog (Agriculture)
Alok Sinha, Former Addl Secretary, Ministry of Agriculture
Sandip Das, Senior Consultant, ICRIER