New farm laws: Need for reform

Dr Jigmet Yangchan

Despite economic liberalization, there is a gap between agriculture and other industries. Fragmented and inadequate markets with high fees & charges for the market. Knowledge asymmetry in insufficient networks and credit facilities. Licensing constraints.

Farmer’s Produce Trade and Commerce (Promotion and facilitation) Act, 2020

Equality of Option of selling & purchase of farmers’ produce at remunerative rates. Efficient transparency and barrier-free trade and trade beyond the physical premises of APMCs between and within the state. APMCs will continue to work: Act offers added marketing platforms to farmers. No MSP payment shall be made to farmers on the same day or within 3 working days, if so necessary by the procedure. Permits trading online. The legal framework for pre-harvest arrangements between farmers and sponsors for the purchasing of agricultural produce and the provision of farm services. Central Government Guidelines for Model Farming Agreements. The price of the product will be specified explicitly in the contract. Clearly set up mechanism for dispute resolution: protection of the interests of both farmers and buyers

Benefits of Farm Reforms

Unified Single Market. Freedom for farmers to sell to whoever they like and where they want their produce. Start of the monopoly of APMC cartels. The MSP continues to work as a farmers’ safety net. A legislative mechanism to protect the interests of farmers. Business fee elimination, taxes etc. and better price discovery. Developing infrastructure close to the gate of the estate. Agriculture contracts: a form of price assurance and the strengthening of ties with the food processing sector. Farming can become profitable even for small & marginal farmers.

Increase in Procurement from Farmer

MSP payments have risen by 2.4 times for paddy (Rs. 4.95 lakh crores) over the last 5 years compared to 2009-10 to 2013-14, 75 times for pulses (Rs. 49,000 crores), ten times for oilseeds and copra (Rs. 25,000 crores), 1.77 times for wheat (Rs. 2.97 lakh crores).

Myth vs Reality

Myth Reality
Farmers will not benefit from Farm Laws Farmers can choose their buyers and decide their price
No scope for dispute resolution for farmers Act promotes dispute resolution in a time bound manner with minimum cost at the level of local SDM’s
Farmers won’t get timely payment Buyers to pay farmers on the same day or within 3 days on agreement
Farmer organisations will not benefit All Farmer Organisations will be treated as “Farmers” and they will get the same benefits
MSP will not continue MSP will continue as before
FCI will stop procurement from farmers FCI and other Government agencies will continue procurement from farmers as before

Consultation Process

Consultations between stakeholders on agricultural issues have been continued by various governments over the past two decades. Under Shri Shankarlal Guru, the Expert Committee (2000) recommended, among other things, the repeal of the Essential Commodities Act, 1955, the promotion of direct marketing and the participation of the private sector in the marketing of extension services. Recommendations from the Inter-Ministerial Task Force (2002) include revitalising the marketing programme, updating the APMC Act and supporting contract farming. The 2003 APMC Model Law on Agricultural Marketing, drawn up in consultation with State Governments: the 2007 APMC Model Law. Model Act of the APMC, adopted by 18 States in 2003. Under Shri M.S. Swaminathan, the promotion of the Single National Sector was suggested by the National Agriculture Commission (2006). The Committee of State Ministers in charge of agricultural marketing has held extensive consultations (2010). Formulation of the 2017 APLM Model Law to eliminate market fragmentation and promote agricultural products in the national market. Adopted by 5 Countries. Frequent interaction with states continued prior to the implementation of the Farm Ordinances (June 2020). Extensive steps to raise awareness among farming communities, FPOs and cooperatives about One Nation, One Market.

Dr Jigmet Yangchan is Programme Coordinator at KVK Nyoma, Leh-II

What do you think?


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