FARM BILLS – 2020

     

The Farm Bills 2020 is a combination of three agricultural bills passed by the Indian parliament in September 2020. The three bills are : 1] Farmers’ Produce Trade and Commerce (Promotion and Facilitation) Bill, 2020 2] Farmers’ (Empowerment and Protection) Agreement on Price Assurance and Farm Services Bill, 2020 3] Essential Commodities (Amendment) Bill, 2020.    

 

These bills were introduced by Mr. Narendra Singh Tomer, the Minister of Agriculture and Farmers Welfare. First enacted by Lok Sabha on 17th September, 2020 and then by Rajya Sabha on 20th September, 2020 and Accent was given by the President Ram Nath Kovind on 24th September, 2020. These three bills have been passed by the parliament aiming at introducing reforms in the agricultural sector. 

These reforms are considered to be important since 60% of the population works in the agriculture industry. This sector also contributes about 18% of the country’s GDP. The laws claim to bring farmers closer to the market by changing where they can sell, the ability to store produce and whether they can enter into contracts.  

 

FARMERS’ PRODUCE TRADE AND COMMERCE (PROMOTION AND FACILITATION) BILL’, 2020

This law allows farmers to sell anywhere within the country under the ‘One Nation One Market’ concept. The ECA initially restricted farmers from selling anywhere other than government-approved  mandi’s. These government approved mandis’ are called ‘Agriculture Product Market committees’ [APMC]. An APMC is a state-operated market where farmers are allowed to sell their produce to traders or middlemen. These middlemen then sell their produce to consumers throughout the country. 

According to this Act any person with a “PAN card” is able to enter in direct trade with farmers whether through e-commerce platforms or physical trade. Farmers will not be charged any levy for sale of their produce. 

 

Key Features : 

Trade of farmers produce: The Ordinance allows intra-state and inter-state trade of farmers’ produce outside the physical premises of market yards run by market committees formed under the state APMC Acts and other markets notified under the state APMC Acts.  Such trade can be conducted in an ‘outside trade area’, i.e., any place of production, collection, and aggregation of farmers’ produce including farm gates, factory premises, warehouses, silos, and cold storages. 

Electronic trading: The Ordinance permits electronic trading of scheduled farmers’ produce (agricultural produce regulated under any state APMC Act) in the specified trade area.  An electronic trading and transaction platform may be set up to facilitate the direct and online buying and selling of such produce through electronic devices and internet.  The following entities may establish and operate such platforms: (i) companies, partnership firms, or registered societies, having permanent account number under the Income Tax Act, 1961 or any other document notified by the central government. (ii) a farmer producer organisation or agricultural cooperative society. 

Market fee abolished: The Ordinance prohibits state governments from levying any market fee, cess or levy on farmers, traders, and electronic trading platforms for trade of farmers’ produce conducted in an ‘outside trade area’. 

Efficient payment mechanism : According to this act, the trader shall pay on the same day as delivery of farming produce, if not payment shall be done within three working days and a receipt should be given on the same as of delivery. 

 

THE FARMERS (EMPOWERMENT AND PROTECTION) AGREEMENT OF PRICE ASSURANCE AND FARM SERVICES BILL, 2020:

This bill ensures that farmers are allowed to enter into contracts with buyers. Farming will be carried out on the basis of agreement between buyers and producers. One of the greatest advantages that the farmers receive through this is the price assurance even before sowing his crops. The scope of contract farming is huge as MNC’s regularly get into contracts with farmers in order to ensure they receive specified types of produce. For eg., Mcdonalds uses only a specified kind of potatoes for their Fries and gets them grown accordingly. Similarly, other chains too require specified produce and would prefer to be directly in touch with farmers rather than traders to ensure that they are organic and fresh. 

 

Key Features : 

Farming agreement: The Ordinance provides for a farming agreement between a farmer and 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 is five years, unless the production cycle is more than five years. 

Pricing of farming produce: The price of farming produce should be mentioned in the agreement.  For prices subjected to variation, a guaranteed price for the produce and a clear reference for any additional amount above the guaranteed price must be specified in the agreement.  Further, the process of price determination must be mentioned in the agreement. Dispute Settlement: A farming agreement must provide for a conciliation board as well as a conciliation process for settlement of disputes. The Board should have a fair and balanced representation of parties to the agreement.  At first, all disputes must be referred to the board for resolution.  If the dispute remains unresolved by the Board after thirty days, parties may approach the Sub-divisional Magistrate for resolution.  Parties will have a right to appeal to an Appellate Authority against decisions of the Magistrate.  Both the Magistrate and Appellate Authority will be required to dispose of a dispute within thirty days from the receipt of application.  The Magistrate or the Appellate Authority may impose certain penalties on the party contravening the agreement.  However, no action can be taken against the agricultural land of farmer for recovery of any dues.

 

ESSENTIAL COMMODITIIES (AMENDMENT) BILL, 2020:

Of all the 3 bills that have been passed, it is the ECA which was long overdue. The ECA has its roots in World War II where laws were implemented by the British to exploit the supply within the country. The bill places restrictions on the storage of essential commodities like pulses, oilseeds, onions, etc but has now been amended. The amended ECA reduces the power that states and the center have. 

 

Key Features :

Regulation of food items: The Essential Commodities Act, 1955 empowers the central government to designate certain commodities (such as food items, fertilizers, and petroleum products) as essential commodities. The central government may regulate or prohibit the production, supply, distribution, trade, and commerce of such essential commodities. The new Ordinance provides that the central government may regulate the supply of certain food items including cereals, pulses, potatoes, onions, edible oilseeds, and oils, only under extraordinary circumstances. These include war, famine, extraordinary price rise and natural calamity of grave nature.

Stock limit: The Ordinance requires that imposition of any stock limit on agricultural produce must be based on price rise. A stock limit may be imposed only if there is: (i) a 100% increase in retail price of horticultural produce; and (ii) a 50% increase in the retail price of non-perishable agricultural food items. The increase will be calculated over the price prevailing immediately preceding twelve months, or the average retail price of the last five years, whichever is lower. 

 

What were the reasons for protests ?  The farmers have been apprehensive about these bills. The biggest concern here is the Minimum Support Price (MSP). The government offers to buy 23  products at MSP to support farmers. But in reality, only wheat and rice are purchased by the government. Haryana And Punjab are the biggest benefactors of this scheme. With permission to trade outside mandi, traders will only trade outside because there is no provision of MSP while dealing with private players. This might lead to farmers being underpaid again.  

Farmers have this fear that’s why protests are happening. But with relating to MSP only 6% of farmers in India know about this provision and they get to benefit from this. The implementation is really not good. Farmers are also concerned about the upper hand of the agri-businesses and big retailers in negotiations. They feel this would put them at a disadvantage. They also say that the companies may dictate the prices and the benefits of small farmers may reduce due to engagement of sponsors with them. One of the reasons why there has been a lot of uproar throughout the country is due to the unconstitutional way in which the laws were passed as it is the state governments that regulate these aspects. 

 

The government should have included the opposition and also taken into account the voice of farmers in order to plug the loopholes in the bills.This would not only create an assisted approach towards privatizing the sector but also avoid further exploitation. But unfortunately, the bills due to not being communicated appropriately have created an air of mistrust between the ruling, opposition, and the farmers. 

 

Who were protesting ?

Farm organisations like Bharatiya Kisan Union (BKU) and big agricultural bodies like the All India Kisan Sangharsh Coordination Committee (AIKSCC) and some section of farmers are opposing the bill. They say these bills will help no one, except big corporates and destroy farmers’ livelihood. v Protests are largely limited to Punjab, Haryana and Madhya Pradesh. This is because it is in these states that farmers rely on MSP and have strong market systems based on APMC’s. 

Thousands of farmers in Punjab, Haryana and several other states are on the roads to protest against three farm ordinances which were presented in the Lok Sabha. The opposition and many farmer unions have threatened to protest till the controversial ordinances are withdrawn. Bihar, Kerala, and Manipur do not follow the APMC system at all. In India, the state governments have the power to regulate agricultural markets and fairs. Hence different states have different approaches towards this. Besides the farmers, the commission agents are also opposing these ordinances. They also fear that the new laws will bypass their business and they will be rendered jobless. State governments also seem to be opposing the bills as they will lose mandi tax which is a huge source of revenue. 

 

Impact on the economy:

Agriculture plays an important part in India’s economy and at present, it is among the top two farm producers in the world. This sector provides approximately 42% of the total number of jobs available in India and contributes around 15 % to the GDP. GDP shrank by a whopping 23.9 % according to the National Statistical Office’s released estimates for the first quarter. It was expected due to COVID-19 pandemic and the near cessation of economic activities. But what comes as a silver lining is the exceptional show of the agriculture sector. If India has to come out of the serious economic crisis, the answer does not lie in the economies of the urban or of the extractive economies of the capital. The answer lies in the revival of rural India with dignity and respect. The country cannot survive if the rural sector falls and chances of such an event happening today can only be prevented with policies initiated with empathy and care. 

 

India’s agricultural sector has been liberalized and sort of privatised by the new Farmers bill 2020 by eliminating the dangerous middlemen, facilitating better realizations for farmers, attracting investment and enhancing technology in the sector. The three Farm bills are expected to bring revolutionary changes to the agrarian context and help double farmers’ incomes. There is a need to restore the shaken confidence of the agrarian sector and by implementing the three farm bills, they will break the monopoly of APMC markets/mandis and they will allow private companies to get into the agricultural produce supply chain by offering competitive prices and it will give a choice to the farmers to sell their produce for higher prices. It will also help introduce new technologies in the agriculture sector through private investment. 

This move is being hailed as the liberalization of agriculture trade and is being compared with 1991 economic reforms. New farm bills limit government intervention as the government cannot ban exports when the prices of a commodity increase and this will ensure more money to the farmers. The new farm bill will help the farmers who are debt-ridden and starved of funding by providing them with a competitive market. The three Agri bills if taken together can-do wonders for open agriculture trade and have the potential to double farmers income and will definitely feed the Indian economy. 

 

Conclusion:  

The purchase by organised retailers curtails the length of the supply chain, giving better prices to farmers and asking for lower prices from consumers. It is witnessed that middlemen charge higher prices than organised retail players. Also, contract farming by corporates implies that the corporate will provide technology to the farmers to improve their yield. This benefits both, the farmer through increased yield and the corporate, who can get higher production from suppliers. So the new Farmers bill will be a boon for the economy.   However, these 3 acts will prove beneficial only if the government addresses the loopholes of these acts. 

The loopholes of these acts are quite concerning and the government should discuss the same with farmers to be more efficient and effective. The government should form a proper mechanism for contract farming so no farmer is exploited by big greedy corporates. To solve disputes between farmers and traders the government should establish a different regulatory body rather than Sub-Divisional Magistrate. The MSP  system is flawed and even though the government recently said that they are not repealing MSP but still they need to address the fact that only 6% of Farmers are getting benefits. 

                                                                                       The government should Implement this scheme more effectively by spreading awareness with the help of Gram panchayat so that the smallest of farmers will know about this and will get the benefit. Farmers in our country are not united. Just like AMUL or National Egg Coordination Committee farmers should form a nationwide group or local groups to deal with big traders. Effective implementation is necessary. Right now, India is going through a food surplus still people are going to sleep hungry. This is because of the mismanagement of the government.