Monday, November 28th, 2022 11:19:26

Need to reform new agricultural laws

By Dr. Ashwani Mahajan
Updated: October 5, 2020 11:33 am

On 5 June 2020, the Central Government brought three ordinances related to agriculture. Later in a brief monsoon session of Parliament, these three ordinances were presented in the form of Bills, and were passed in the Lok Sabha and the Rajya Sabha. After the assent given by the President, these bills have become the law.  The first bill is ‘The Essential Commodities (Amendment) Bill, 2020’. The aim of this bill is to liberalise and smooth the agricultural trade by amending the Essential Commodities Act. It is important to note that in the past; most of the agricultural commodities had been kept in the category of essential commodities, so that traders do not hoard them improperly and cause their prices to rise by creating artificial scarcity.. This was good for those times, when there was a shortage of agricultural food items like grains, pulses, oilseeds, edible oils, potatoes, onions etc. in the country. Those were the days, when traders used to inappropriately hoard agri products and profiteer from the scarcities, by stopping goods to enter markets. But this law has not only become redundant now, but has actually become a hindrance for agricultural development, because companies were wary of storing as the same would be a cognizable offence. This has been coming in way of development of warehousing infrastructure for agriculture produce. It was considered that today when agricultural production has increased considerably and they are in surplus, Essential Commodities Act needs to be amended, to encourage storage infrastructure for agri products. New law excludes grains, pulses, oilseeds, edible oils, potatoes, onions, etc., from the list of essential commodities, so as to encourage large storage of large quantities of agri produce in the private sector by developing storage infrastructure. This bill was the first to have been passed in both houses of the parliament.

The second bill is ‘The Famers Produce Trade and Commerce (Promotion and Facilitation) Ordinance, 2020’. According to this bill, changes were made in the system of agricultural trade. According to this bill, now the purchase and sale of agricultural produce will also be allowed outside agricultural markets. As of now, the farmer brings his produce to the government-controlled Agricultural Produce Marketing Committee (APMC) mandi and sells it through ‘Aadti’ and traders in agricultural Mandis. Government or private traders used to purchase agricultural commodities from the APMC market itself. However, now according to this bill, the purchase and sale of agricultural commodities will also be allowed outside APMC Mandis; in private mandis, or directly from farmers by companies or individuals. The government argues that under the new system, farmers will get freedom from intermediaries and will not have to pay market fees and commissions of intermediaries while selling in the open market and will have more options. The argument of the government is that this will give the farmers more money in return for their produce. However, the government has made it clear that government procurement of agricultural commodities will continue at the minimum support price (MSP) in APMC Mandis as before, and there will be no change, so far as MSP is concerned. However, farmers fear that because their bargaining capacity is very low, the new system will be dominated by private companies and large buyers, therefore there will be more risk of farmers being forced to sell at a lower price.

The third bill is the ‘The Farmers’ (Empowerment and Protection) Agreement Price Assurance and Agricultural Services Bill, 2020′. The bill provides for contract farming agreement between farmers and private companies or individuals for production of agricultural commodities. While this is a progressive step, the problem in this ordinance is that in the event of a dispute, systemic problems may arise coming in way for the farmer to get the right solution. The role of Sub-Divisional Magistrate (SDM) has been given the utmost importance in dispute resolution. This is not the appropriate system, because the farmer is vulnerable to exploitation in the hands of companies due to his weak economic conditions. It should not be forgotten that most of our farmers cultivate on one to two acres of land and the average size of farm holdings in India is less than one acre, so it is not possible for the farmer to confront power of companies. It is an inequitable system, which needs to be improved.

Though, many political parties and farmers’ organizations are opposing these bills, it is believed that the government’s intention in bringing new agricultural bills is good. However, there are some amendments needed to overcome the drawbacks in the bills, plug the shortcomings and allay the fears and doubts about the new bills. The intention of ‘The Farmers Produce Trade and Commerce (Promotion and Facilitation) Bill, 2020’ is seemingly that farmers get the right price for their produce in the absence of intermediaries.

But there is a doubt in this regard that the in the absence of ‘Mandi Fee’ buyers will be naturally encouraged to buy out of the APMC markets. In such a situation, the APMC Mandis will no longer be generally preferred by private players; and thus farmers will also be forced to sell outside the APMC Mandis. In such a situation, big procurement companies may exploit the farmers. In such a situation, it would be appropriate that when laws are being made and purchases are being allowed outside the APMC markets, minimum support price (MSP) is guaranteed to the farmer and purchases below the MSP are declared illegal. Not only the government, should private parties also be barred to buy at less than MSP.

According to the new provisions, when any buyer can buy from the farmer by showing his PAN card, the payment should be made immediately as soon as the farmer’s produce is lifted or the government should guarantee the payment.

Though, it’s good for the farmers to have more options to sell their produce, however in reality if one large company or a few companies dominate, the bargaining power of the poor farmer will be badly affected. The government had earlier said that 22 thousand agriculture Mandis would be established. This task should be completed on fast track basis.

There should be a judicious dispute resolution mechanism for the farmers engaged in contract farming. The ‘Dispute Resolution Mechanism’ proposed by the ‘The Farmers (Empowerment and Protection) Agreement on Price Assurance and Farm Services Bill, 2020’, related to contract farming is very complex for the farmers. Already over burdened Sub-Divisional Magistrate has been placed in key role in dispute resolution. Due to this, it would be extremely difficult for the farmers to get justice in the event of a dispute. Establishment of  Farmers Courts on the lines of Consumer Courts would be a plausible solution.


By Dr. Ashwani Mahajan

Comments are closed here.