ZT WEB TEAM
Srinagar: The union cabinet today cleared an ordinance to enable buyers to purchase directly from farmers outside the regulated mandis anywhere in India just with the help of PAN card.
Significantly, such transactions will not be subjected to any sort of tax by Centre or state, a step that could bring it in direct confrontation with several states.
If implemented in Jammu & Kashmir as well, this could mean anyone from outside J&K can now buy agricultural commodities at both small and large scale, like apples, pears, saffron, etc. directly from the farmers without any tax obligations on the inter-state movement of the same. And the buyer would not require any state or central license.
The cabinet also approved another Ordinance called as The Farmers (Empowerment and Protection) Agreement on Price Assurance and Farm Services Ordinance, 2020’ which will facilitate contract farming between farmers and processors, and traders.
It also decided to remove cereals; pulses, oilseeds, edible oils, onion and potatoes will be removed from list of Essential Commodities Act, but retained the power to include them in exceptional circumstances, which includes a steep rise in prices.
So what do the ordinances entail?
According to the Agriculture Minister Narendra Singh Tomar said that in case of first ordinance called as the ‘The Farming Produce Trade and Commerce (Promotion and Facilitation) Ordinance, 2020’ (that will enable direct purchase from farmers) henceforth anyone who possess just a PAN card could go and directly purchase from the farmers.
In J&K’s context, it might mean that big buyers can approach farmers or their groups directly and purchase big-scale commodities, like apple, saffron, etc.
The price that the buyer will pay to the farmer will have to be mutually decided and payable within three days. The buyer will immediately give him a receipt of the trade.
In case of any dispute in such form trade, the farmer will approach the SDM and if he isn’t satisfied with the decision, he could approach the Collector.
Both of them have to decide on the same within 30 days.
Safeguards for farmers
“In all such traders which will happen outside the precincts of the mandis, the buyer who can be anyone has mandatorily make the payment within 3 days of transaction and immediately issue a receipt so that the farmer isn’t duped,” Tomar said.
He said the ordinance also allows the setting up of electronic trading platforms outside the APMCs and rules for which will be decided by the Central government in due course. These mandis will be regulated by the Central government and in the event of any duping of farmers such platform will be immediately deregistered.
Contract Farming Ordinance
In case of the contract farming ordinance Tomar said that no encumbrance can be made on the land of the farmer and even in case of dispute between the buyer and seller, and decision which lead of confiscation of land of the seller (farmer in this case) would be null and void.
He said models of such agreements will be sent to all states for all commodities including fruits, vegetables and also proteins such as milk and eggs. The agreement will gurantee a minimum price to the farmers and will have a provision that if market price rises at the time of harvest farmers will get a share in the enhanced price as well.
“This ordinance will enable that when farmers enter into contract farming agreements with big companies or processors a minimum price is guaranteed to them in the event of a price fall while they get a share of the increased amount if the price rises more than the agreed amount,” Tomar said.
He said in case of any dispute the SDM will the authorized to take any decision but he cannot oblige the growers to pay anything more than what has been invested as inputs or advance by the buyer.
Can this be implemented on the ground?
“I think in principle these Ordinances are good and will unshackle the markets, but implementing them on ground will be mighty difficult and also what happens when these produce pass through state borders will state loose their right to tax them. I mean lot of legal challenges could come,” Mahendra Dev, Director of Indira Gandhi Institute of Development Research (IGIDR) told Business Standard.
In case of the third, which is amendments to the Essential Commodities Act, the cabinet said that it would be applied only in case of situations such as war, famine, extraordinary price rise and natural calamity.
The installed capacity of value chain participants and exporters will remain exempted from the EC Act.
With inputs from TBC