Decoding Farm Bills: Pros And Cons

INTRODUCTION:

The following article deals with the three agriculture-related bills passed by the Parliament namely the Farmers' Produce Trade and Commerce (Promotion and Facilitation) Bill, Farmers (Empowerment and Protection) Agreement on Price Assurance and Farm Services Bill and Essential Commodities (Amendment) Bill. A large number of farmers across the country continue to stage their protests in various states, including farmers from Punjab and Haryana against the legislations. Opposition parties claim these legislations would prove to be the ‘‘death warrant'' for the agricultural sector. The legislations relax regulations on the sale, pricing, and storage of agricultural produce. They allow farmers to sell their produce to private players outside of the mandis or markets notified by Agricultural Produce Market Committees set up by the state government. The government believed that the bills would transform the agricultural sector.

FARMER'S PRODUCE TRADE AND COMMERCE (PROMOTION AND FACILITATION) BILL, 2020

The Bill seeks to create an ecosystem in which farmers and traders will enjoy the freedom of choice to sell and purchase their farm produce outside registered 'mandis'. It permits inter-state and intra-state trade of farmers' produce without hindrance outside the physical premises of Agricultural Produce Market Committee (APMC) markets and other notified markets under the state APMC Acts. It will permit electronic trading of farmer's produce in the specified trade area and it will also provide a seamless and facilitative framework for electronic trading. It also aims to facilitate remunerative prices to the farmers through competitive alternative trading mechanisms. The farmers will not be charged any cess or levy for sale of their agricultural produce and will not bear transportation cost. Farmers will have the freedom to enter into ‘written agreements' with anyone, including a company and as per the terms of the agreement, sell their produce to their contractual parties for a short period of time. Therefore farmers can engage in direct marketing and selling their products while regulating their price, standards and quality thereby eliminating middlemen resulting in full realization of price.

CONS:  THE FARMER'S PRODUCE TRADE AND COMMERCE (PROMOTION AND FACILITATION) BILL, 2020

Oppositions argue that the Bill is aimed to end Minimum Support Price for farmers for their produce. If farmers sell their produce outside registered APMC markets, mandis will stop functioning and the State will lose revenue as they won't be able to collect 'mandi fees'. It is not clear as to what is the future of government electronic trading portal like in e-NAM. If farmers are able to enter into agreements with agri-business companies and giant retail sectors, farmers may be in a disadvantageous position as companies or retail sectors may dictate the price and benefits to small marginalized farmers. The farmers are apprehensive of the upper-hand of the companies and giant retail sectors in negotiations.

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

The farmers can enter into a contract with agribusiness firms, processors, wholesalers, exporters, or large retailers for farm services and sale of future farming produce at a mutually agreed price. It provides for a three-tier dispute settlement mechanism with redressal timelines: the conciliation board, Sub-Divisional Magistrate and Appellate Authority. The marginal and small farmers accounting to 86% of total population of farmers in India, with land less than five hectares, can gain via aggregation and contract. It will end the monopoly of traders over farm produce. The farmers can get the full price of their produce by engaging in direct marketing without the interference and exploitation of intermediaries. It will transfer the risk of market unpredictability from farmers to sponsors and also enable the farmers to access and use modern technology to get better results. It will reduce the cost of marketing and increase the farmers' income. The Act will boost investment from the private sector for building supply chains for the supply of agricultural produce from surplus regions to deficit regions easily and it will also attract global investment.

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

The farmers are anxious that they would not get the Minimum Support Price for their produce as provided to them by APMC markets at present. There might be connectivity issues and the cost incurred in transit will be more than that paid to APMC's. Activists are worried that as farmers are accustomed to mandis if they have to conduct trade outside of the APMC marketplace, then they would not make enough income. The farmers rely on MSP and they have strong markets based on APMC. In India, agricultural marketing is a subject falling under the State List and the State governments have the power to regulate agricultural markets, mandis, and fairs. Hence the different states across the country have different approaches in dealing with this. The freedom of choice of farmers will have no value if the farmers' interests cannot be secured.

THE ESSENTIAL COMMODITIES (AMENDMENT) BILL, 2020

The Parliament passed the Essential Commodities (Amendment) Bill, 2020 which replaced an Ordinance promulgated in June 2020 and amended the Essential Commodities Act (ECA), 1955. This bill seeks to remove commodities like cereals, pulses, oilseeds, edible oils, onion, and potatoes from the list of essential commodities. It aims to remove the fears of private investors of excessive regulatory interference in their business operations. It ensures the interests of consumers by regulating the agricultural produce in situations such as war, famine, natural calamity, and any other situation giving rise to an extraordinary price hike. The Essential Commodities Act was first introduced several decades back in 1955 with a view to controlling the production, supply, and distribution of certain essential commodities. Therefore if an item comes under the purview of the protection under this Act such as a food item or drug, then neither government nor supermarkets can hoard their supply and distribution in times when there is a shortage of these items and they are also not allowed to increase their price by artificially creating a shortage. The present Bill seeks to do away with the imposition of stock limits on essential commodities that were done to restrict the movement of any such commodity deemed essential. It aims to bring price stability as well as investment for farm infrastructure in the form of cold storages, warehouses, etc. The Essential Commodities (Amendment) Bill, 2020 is passed by the Parliament to create a competitive market environment and reduce wastage of farm produce.

CONS: THE ESSENTIAL COMMODITIES (AMENDMENT) BILL, 2020

The Opposition protests that the new amendments proposed to the already existing Essential Commodities Act infringe the Constitutional rights of States since it is a highly centralizing law. According to them, the new law will help the hoarders and black marketers dealing with essential commodities. The relaxation of the stock hoarding limit may lead to more hoarding and black-marketing of the produce rather than benefitting the small farmers. The new Act seeks to remove foodstuff produce such as pulses, cereals, potato, onions, edible oilseeds, and oils from the extensive list of essential commodities except under extraordinary circumstances like such as war, famine, natural calamity, and any other situation giving rise to an extraordinary price hike. This will result in an increase in inflation and the monopoly of a few individuals over the price of certain essential food crops and items.

CONCLUSION

The government hopes that the new legislations will provide farmers with better choices, with a competitive market environment leading to better prices. It will result in an increase in private sector investment/FDI in agricultural infrastructure, processing and marketing. The new Bills are said to increase the framer's income across the country and make them independent of markets controlled and run by the government and fetch them a better price for their agricultural produce. Further, the Bills will encourage intra-state trade and this proposes to reduce the transportation cost. The Acts will bring sweeping changes benefitting the framers and helping them to sell their agricultural produce in any market of their choice across the country at the price agreed with the purchaser without the involvement of the middlemen, money-lenders, and market operators. The ease of doing business will help farmers in discovering the price and receive higher market margins which are now being enjoyed by the traders.

However, a few critics pointed out that this Bill is a draconian law. There has been no consultation between State and Centre before the passing of such Bills by the Parliament. The Centre has ignored that agriculture is in the State List and till now States feel that the trade in agriculture is their exclusive domain. The farmers are apprehensive that the Bills will eventually stop the wholesale market and the assured market prices leaving them with no backup. They are worried about the Minimum Support Price (MSP). Most farmers are of the opinion that the private players including the companies and big retailers will have the upper hand and exploit the farmers at their own sweet will by deciding the price of their produce and they cannot be able to return to mandi or use it as a bargaining chip in negotiations.

More than half of the population are dependent for their livelihood on agriculture. Though the reforms in agriculture were long pending, the new bills are thought to bring little relief for the farmers' troubles. The new bills propose to provide independence and the power to control the production, marketing sale of the agri products in the hands of the farmers. But in a country like India, where millions are engaged in agricultural sector, the only solution cannot be leaving the farmers' fates on the moods of the market.