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Bills On Agriculture In 2020

Introduction | Bills On Agriculture In 2020 

Three Bills on agriculture reforms were introduced in the Parliament to replace the ordinances issued during the lockdown

  • The Farmers’ Produce Trade and Commerce (Promotion and Facilitation) Bill, 2020
  • The Farmers (Empowerment and Protection) Agreement of Price Assurance and Farm Services Bill, 2020
  • The Essential Commodities (Amendment) Bill, 2020

Provisions of The Farmers’ Produce Trade and Commerce (Promotion and Facilitation) Ordinance 

  • Opens up agricultural sale and marketing outside the notified Agricultural Produce Market Committee (APMC) mandis for farmers
  • Removes barriers to inter-State trade
  • Provides a framework for electronic trading of agricultural produce.
  • Prohibits State governments from collecting market fee, cess or levy for trade outside the APMC markets.

Provisions of The Farmers (Empowerment and Protection) Agreement of Price Assurance and Farm Services Ordinance relates to contract farming

  • Provides framework on trade agreements for the sale and purchase of farm produce.
  • The mutually agreed remunerative price framework envisaged in the legislation is touted as one that would protect and empower farmers.
  • The written farming agreement, entered into prior to the production or rearing of any farm produce, lists the terms and conditions for supply, quality, grade, standards and price of farm produce and services.

Provisions of The Essential Commodities (Amendment) Ordinance 

  • Removes cereals, pulses, oilseeds, edible oils, onion and potatoes from the list of essential commodities. The amendment will deregulate the production, storage, movement and distribution of these food commodities.
  • The central government is allowed regulation of supply during war, famine, extraordinary price rise and natural calamity, while providing exemptions for exporters and processors at such times as well.
  • Imposition of any stock limit on agricultural produce must be based on price rise. A stock limit may be imposed only if there is a 100% increase in retail price of horticultural produce; and a 50% increase in the retail price of non-perishable agricultural food items

Cooperative federalism | Bills On Agriculture In 2020 

  • Since agriculture and markets are State subjects – entry 14 and 28 respectively in List II – the ordinances are being seen as a direct encroachment upon the functions of the States and against the spirit of cooperative federalism enshrined in the Constitution.
  • The Centre, however, argued that trade and commerce in food items is part of the concurrent list, thus giving it constitutional propriety.

Reasons for opposition to these bills

  • Entry of two of the biggest corporate groups (Adani and Reliance) in food and agricultural retail
  • Removal of MSP
    • Critics view the dismantling of the monopoly of the APMCs as a sign of ending the assured procurement of food grains at minimum support prices (MSP).
    • To the Centre’s ‘one nation, one market’ call, critics have sought ‘one nation, one MSP’.
    • Critics argue that ensuring a larger number of farmers get the MSP for their produce and addressing weakness in the APMCs, instead of making these State mechanisms redundant is the need of the hour.
  • Against the Spirit of Cooperative federalism
    • Since agriculture and markets are State subjects – entry 14 and 28 respectively in List II – the ordinances are being seen as a direct encroachment upon the functions of the States
    • The provisions are viewed as against the spirit of cooperative federalism enshrined in the Constitution.
  • Food security undermined
    • Easing of regulation of food items would lead to exporters, processors and traders hoarding farm produce during the harvest season, when prices are generally lower, and releasing it later when prices increase.
    • This could undermine food security since the States would have no information about the availability of stocks within the State.
    • Critics anticipate irrational volatility in the prices of essentials and increased black marketing.
  • No mechanism for price fixation: Contract farming:
    • Contract farming is not a new concept to the country’s farmers – informal contracts for food grains, formal contracts in sugarcane and poultry sectors are common.
    • The Price Assurance Bill, while offering protection to farmers against price exploitation, does not prescribe the mechanism for price fixation.
    • There is apprehension that the free hand given to private corporate houses could lead to farmer exploitation.
    • Critics are apprehensive about formal contractual obligations owing to the unorganised nature of the farm sector and lack of resources for a legal battle with private corporate entities.

Framework for contract farming

  • The Farmers (Empowerment and Protection) Agreement of Price Assurance and Farm Services Ordinance relates to contract farming, providing a framework on trade agreements for the sale and purchase of farm produce.
  • The mutually agreed remunerative price framework envisaged in the legislation is touted as one that would protect and empower farmers.
  • The written farming agreement, entered into prior to the production or rearing of any farm produce, lists the terms and conditions for supply, quality, grade, standards and price of farm produce and services.
  • The price to be paid for the purchase is to be mentioned in the agreement.
  • In case of prices subjected to variations, the agreement must include a guaranteed price to be paid for such produce, and a clear reference linked to the prevailing prices or any other suitable benchmark prices for any additional amount over and above the guaranteed price, including bonus or premium.
  • The method of determining such price, including guaranteed price and additional amount, will be provided in the agreement as annexures.

Farmer’s concern | Bills On Agriculture In 2020 

  • Farmers are apprehensive about getting Minimum Support Price for their produce. Other concerns include the upper hand of agri-businesses and big retailers in negotiations, thus putting farmers at a disadvantage. The benefits for small farmers from companies are likely to reduce the engagement of sponsors with them. The farmers also fear that the companies may dictate prices of the commodities.
  • What farmers need and are asking for is legally guaranteed remunerative prices, that the government should commit within the same legislation to maximum procurement of various commodities tied with local food schemes, market intervention from the state, agri-credit reforms to benefit small and marginal holders and particular neglected regions, as well as reforms in crop insurance and disaster compensation. It is also important to empower FPOs as enabled players in the market and keep them out of the purview of overzealous regulation.

Conclusion | Bills On Agriculture In 2020  

  • According to PRS, the bills require that imposition of any stock limit on agricultural produce must be based on price rise.
  • The way to liberalize agricultural marketing is to create more accessible markets and choice for the farmer. There will be rules to regulate such markets.
  • We need to enlarge the market for agriculture produce while preserving the ‘safety net’ principle through MSP and public procurement.

 

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