Three Revolutionary Farm Sector Bills

C M Sharma
The plight of farmers, especially the small and marginal ones, under the prevailing marketing regime in Jammu agriculture, has always remained depressing. Because of inadequate infrastructure and other reasons, the benefits of Minimum Support Price (MSP) have not been provided to farmers adequately. Even the reformist ‘Model APMC Act’ has not been adopted.
The opening of a few seasonal mandis by the FCI and launching of procurement programmes on MSP for rice and wheat by the J&K Government during the past decade 2010 – 2020 have however deterred the private mill owners from procurement of these food grains from the farmers at very low and non-remunerative rates. Comparatively better rates are now being given to the farmers by private traders fearing competition from the public sector in procurement system. That is just a token arrangement however and not enough.
For procurement of major crops like maize, pulses or oilseeds, there is still no Government intervention in J&K. Therefore, the latest passage of three latest Farm Sector Bills by the Lok Sabha granting freedom of marketing of their fresh as well as processed crop produce at the most feasible rates at any time, to any person and at any place of the producer farmer’s choice, without disturbing Mandi system, appears to be a healthy and revolutionary change. The Bills are now awaiting final discussion for passage in the Rajya Sabha.
We have often heard and seen the producer farmers from all distant and nearer villages complaining about the torture they face at the hands of middlemen, the Arhtiyas and commission agents, in the lone Narwal Mandi. While spending sleepless nights and laboring hard through the previous evenings up to the early morning hours in plucking/ uprooting/ harvesting, sorting, grading, washing, packing, loading and dispatching the mature vegetable crops for the said regulated Mandi, the petty small and marginal farmers with almost no substantial bargaining power keep struggling for hours together to strike a reasonable price for their produce at the hands of well knit and organized traders and commission agents. Ultimately, as the day advances and the appetite of anna data, the food producer grows stronger, whether it is during the chilling winter colds or scorching summer heats and rainy monsoons, the farmers give in to the bargaining strength of organized traders and commission agents. After settling for meager price for their produce under duress, the farmers return home – exhausted and hungry.
The produce sold by farmers in the mandi is then diverted to the retail market by the whole sale traders/ commission agents where it sells to the consumers at rates 5 to 10 time higher. Ironically, many a times it is redirected to producer villages themselves. This vicious cycle has remained the bane of Indian Agriculture. The share of producer farmer in consumer’s rupee remains 10 percent to 20 percent and the long chain of middle men takes the maximum.
It is this injustice with the farmers, particularly those belonging to small and marginal category, which the three Farm Sector Bills seek to mitigate. The Bills are:
i.) The Farmers Produce Trade and Commerce (Promotion and Facilitation) Bill, 2020;
ii.) The Farmers (Empowerment and Protection) Agreement on Price Assurance and Farm Services Bill, 2020; and
iii.) The Essential Commodities (Amendment) Bill, 2020.
The key provisions of the proposed legislation are intended to help small and marginal farmers (86% of total farmers) who don’t have means to either bargain for their produce to get a better price or invest in technology to improve the productivity of farms.
The bill on Agri market seeks to allow farmers to sell their produce outside APMC ‘mandis’ to whoever they want. The ‘trade area’ is defined under the Section 2(m) of The Farmers Produce Trade and Commerce (Promotion and Facilitation) Ordinance, 2020 as any area or location, place of production, collection and aggregation including (a) farm gates; (b) factory premises; (c) warehouses; (d) silos; (e) cold storages; or (f) any other structures or places, from where trade of farmers’ produce may be undertaken in the territory of India. Therefore, anyone can buy the produce, even at the farm gates.
Some political parties and farmer organizations are on the streets protesting against these reforms. They point out that the definition of trade area does not include “the premises, enclosures and structures constituting physical boundaries of principal market yards, sub-market yards and market sub-yards managed and run by the market committees formed under each state APMC (Agricultural Produce Market Committee) Act”. They say that it also excludes “private market yards, private market sub-yards, direct marketing collection centres, and private farmer-consumer market yards managed by persons holding licenses or any warehouses, silos, cold storages or other structures notified as markets or deemed markets under each State APMC Act in force in India”.
The government of India however asserts that an additional trade area outside of mandis have been created under the Bill which will provide farmers the freedom of choice to conduct trade in their produce.
As per the first Bill, any trader with a PAN card can buy the farmers’ produce in the trade area. Section 2(n) of this ordinance defines a “trader” as “a person who buys farmers’ produce by way of inter-State trade or intra-State trade or a combination thereof, either for self or on behalf of one or more persons for the purpose of wholesale trade, retail, end-use, value addition, processing, manufacturing, export, consumption or for such other purpose”. In the present mandi system, arhatiyas (commission agents) have to get a license to trade in a mandi. The protesters say arhatiyas have credibility as their financial status is verified during the license approval process. They argue that it may not be readily possible for a farmer to trust a trader under the new law!
Section 6 of the ordinance too favours the farmers as “no market fee or cess or levy, by whatever name called, under any State APMC Act or any other State law, shall be levied on any farmer or trader or electronic trading and transaction platform for trade and commerce in scheduled farmers’ produces in a trade area”. This provision has been made by the government to reduce the cost of transaction and will benefit both the farmers and the traders. However, the opponents of the Bill say that by removing the fee on trade, the government is indirectly incentivizing the big corporate. They fear that the corporate sector may offer better prices to farmers in the initial days, but when the APMC mandi system collapses in due course, they will monopolise the trade.
The votaries of reforms are however questioning as to why the states do not make transactions in mandis cost-efficient and why the states can’t provide a free facility to farmers for selling their produce?
In case of a dispute arising out of a transaction between the farmer and a trader, the Dispute Resolution mechanism under Section 8 provides that parties may seek a mutually acceptable solution through conciliation by filing an application to the Sub-Divisional Magistrate, who shall refer such dispute to a Conciliation Board to be appointed by him for facilitating the binding settlement of the dispute. Opponents fear that the proposed system can be misused against farmers since the Bill does not allow farmers to approach a civil court.
The legislation on contract farming will allow farmers to enter into a contract with agri-business firms or large retailers on pre-agreed prices of their produce. This will help small and marginal farmers as the legislation will transfer the risk of market unpredictability from the farmer to the sponsor. However, the farmers shall be able to take full advantage of the provision if they organize themselves into Farmer Producer Organization (FPO) like bodies.
The third Essential Commodities (Amendment) Bill, 2020, seeks to remove commodities like cereals, pulses, oilseeds, edible oils, onion and potatoes from the list of essential commodities. The legislation will do away with the imposition of stock-holding limits on such items except under extraordinary circumstances such as war and natural calamities. This provision will attract private sector/foreign direct investment into the agriculture sector.
To quote Shri Ramesh Chand, member of NITI Aayog “Almost all agriculture experts and economists were batting for these reforms in the agriculture sector. The Centre was also persuading states to implement the Model APMC Act, 2002-03, but the states did not fully adopt it. Therefore, the Centre had to adopt the ordinance route… It will lead to helping farmers realize a better price. This is very forward-looking legislation and it is a win-win situation for all farmers, consumers and entrepreneurs,”
Experts are of the belief that though ‘commission agents’ of the ‘mandis’ and states could lose ‘commissions’ and ‘mandi fees’ respectively, but farmers are envisaged to get better prices through competition and cost-cutting on transportation, etc. The Bills seek to revolutionize agri marketing for good.
(The author is (Dy. Director of Agriculture, (Retd) Jammu)