By: Dr. Parveen Kumar, Dr. D. Namgyal
The year 2020 will be regarded as a watershed year for the Indian agriculture. The year witnessed the reversal of the policy direction of the past many decades. Thanks to some very bold decisions by the government which helped redraw a new development pathway. These reforms were long pending and were an urgent necessity too for the farming community to be liberalized in the true sense. The decisions also required immense political backing to thwart the lobbying pressure from various market players both in the media as well as academia.
The COVID-19 pandemic came as a blessing for the agriculture sector. The lockdown and the restriction on any type of movement to contain the spread of COVID-19 came at a time when the farming community was to go for harvesting of ‘rabi’ crops. The lockdown pressurized the farm incomes and disrupted the farm-to-fork supply chain, brought to the limelight severe
lacunas in our marketing structure and exposed the vulnerability of the farming community.
Although, full exemptions were given to the farm sector even during lockdown, but farmers had to suffer. The situation called for structural reforms which were large overdue. The reforms in agriculture marketing, management of marketable surplus, access of farmers to institutional
credit and freeing agriculture sector of various restrictions were already the priority area of the PM. These reforms are also a part of preparations for a new normal post COVID-19.
On June 05, the government came up with the three ordinances which finally become acts. The Lok Sabha approved the bills on 17 September 2020 and Rajya Sabha on 20 September. The bills finally became acts with the asset of the Hon’ble president of Indian republic Ram Nath Kovind.
The three new farm acts aimed at facilitation, liberalization and
empowerment of the farming community and are described as below:
ESSENTIAL COMMODITIES AMMENDMENT ACT 2020:
The act has its roots in the World War II, when Winston Churchill diverted our food grains to feed the soldiers fighting the World War II. Stocking of food commodities was therefore not allowed. After independence, the same thing continued under the Essential Commodities Act 1955. After six decades, the 1955 act was replaced by the Essential Commodities Amendment Act 2020. By 1955 act, the government had the power to regulate the supply of essential commodities which deprived the producers to store their produce.
Now with the amendments to Essential Commodities Act, it will enable farming community to enable better price realization for farmers which will result in the deregulation of prices for foodstuffs including cereals, edible oils, oilseeds, pulses, onions and potato. It would also help in
attracting investments and making agriculture sector competitive. The stock limits, another feature of the old act is now to be imposed under very exceptional circumstances like during national calamities like famine that see a surge in prices.
A stock limit must be imposed only if there is 100 percent increase in retail price of horticulture produce and 50 percent increase in retail price of
non perishable agriculture food items
THE FARMING PRODUCE TRADE AND COMMERCE (PROMOTION AND
FACILITATION) ACT 2020:
In simple language, it is the APMC bypass act. It is not binding upon the farmer to sell their produce only in the APMC mandis. The APMC act that ushered in during the 1960s saw most of the states having their own law which required the farming community to only sell to licensed middlemen in notified markets, usually in the same area as the farmer, rather than
directly to buyers elsewhere. Although we are a democratic country with all the freedom, but the farmers did not had the freedom to sell their produce at their own choice. His marketing decisions were guided by the APMC act of different states.
Although the APMC act was brought to protect the farming community from being forced into distress selling, yet over the years, it has proved to be a breeding ground for layers of intermediaries, spanning the farm-to-fork supply chain. This resulted in a ‘large price spread’ or the fragmentation of profit shares due to the presence of many middlemen. To provide adequate choices to farmer to sell produce at an attractive price and for barrier-free interstate trade, the cabinet has also approved ‘The farming produce trade and commerce (promotion and facilitation) act 2020’. It will also set up the framework for e-trading of agriculture produce.
The move is aim to end fragmentation of markets available to farmers who are currently forced to sell only to licensed APMC marketers. It will help create an ecosystem where the farmers and traders will enjoy freedom of choice of sale and purchase of their produce of both interstate as well as
intrastate. The Act allows farmers, farm producer organizations as well as anyone who buys farmers’ produce for wholesale trade, retail, end-use, value addition and processing, manufacturing, export, or consumption, to engage in such intra-state or inter-state trade. To trade in scheduled farmers’ produce an entity must be either a farmer producer organization or agricultural cooperative society, a person having permanent account number under the Income Tax Act or any other document notified by the central government, a person in contravention of the provisions regarding the trade of scheduled farmers’ produce will be subject to a penalty between Rs 25,000 and five lakh rupees, In case of continuous contravention, such person may be subject to a further penalty of
up to Rs 5,000 per day.
THE FARMERS (EMPOWERMENT AND PROTECTION) AGREEMENT ON PRICE ASSURANCE AND FARM SERVICES ACT 2020:
In simple language, it is the contract farming act. By this act the government wants the farming community to engage with processors, aggregators, large retailers and exporters with a level playing field and without fear of any sort of exploitation. This will ultimately transfer the risk of market unpredictability from the earner to the sponsor and enable the farmers to have access to better technology and better inputs. It will act as a catalyst to bring private sector human investment in creating value chains of their produce to global markets.
The agreement will be for a minimum period of one crop season/one production cycle of livestock to a maximum period of five years. The price of farming produce and process of price determination should be mentioned in the agreement. For prices subject to variation a guaranteed price for the produce and a clear reference for the additional amount above the guaranteed price including bonus orpremium must be specified in the agreement. The new act also provides for establishment of a registration authority to provide for e-registry and registration of farming agreements.
Farming agreement may be linked to an insurance or credit instrument under any scheme of the centre or state to ensure risk mitigation to both and also Prohibits sponsors from acquiring ownership rights or making permanent modifications on farmers land or premises. For dispute redressal, the farmer does not need to go to courts; the dispute will now be settled by Sub Divisional Magistrate of the area.
By these acts, the government seems to get away with the model of economic growth which has relied solely on wealth creation. The model that has only widened the rural urban income gap, that has sucked income from the bottom to the top, that has enabled the rich to become richer and the poor to become poorer, that has witnessed debt traps amongst the farming community and where farm suicides have become the new normal. All the new three acts have the potential to reform the agriculture sector; giving farmers the full freedom to decide the fate of their produce; will give them an ecosystem where they will not be at the mercy of the middlemen or commission agents and ultimately will pave the way for their empowerment.
The authors are Scientist and Head at KVK-Leh; can be reached at [email protected]