The three farm reform bills passed by the Indian Parliament include:
- The Farmers’ Produce Trade And Commerce (Promotion And Facilitation) Bill
- The Farmers (Empowerment and Protection) Agreement on Price Assurance and Farm Services Bill, and
- The Essential Commodities (Amendment) Bill
The bills after passing have become acts.
The Farmers’ Produce Trade and Commerce (Promotion and Facilitation) Ordinance, 2020 along with The Farmers (Empowerment and Protection) Agreement on Price Assurance and Farm Services Ordinance, 2020 was promulgated by the Union Cabinet on 5 June 2020. The Lok Sabha approved the bills on 17 September 2020 and Rajya Sabha on 20 September 2020.
- Farmers’ Produce Trade And Commerce (Promotion And Facilitation) Act 2020
- The Farmers’ Produce Trade and Commerce (Promotion and Facilitation) Act, 2020 permits intra-state and inter-state trade of farmers’ produce beyond the physical premises of APMC markets and other markets notified under the state APMC Acts.
- It allows trading in an ‘outside trade area’ like farm gates, factory premises, warehouses, silos, and cold storages. Unlike earlier, agricultural trade could be conducted only in the APMC yards/ Mandis.
- It will also facilitate lucrative prices for the farmers through competitive alternative trading channels to promote barrier-free inter-state and intra-state trade of agriculture goods.
- The Act also permits the electronic trading of farmers’ produce in the specified trade area. It will facilitate direct and online buying and selling of such produce through electronic devices and internet.
- The act prohibits state governments from levying any market fee or cess on farmers, traders and electronic trading platforms for trading farmers’ produce in an ‘outside trade area’.
An Agricultural Produce Market Committee (APMC) is a marketing board established by a state government in India to ensure farmers are safeguarded from exploitation by large retailers, as well as ensuring the farm to retail price spread does not reach excessively high levels. Until 2020, the first sale of agriculture produce could occur only at the market yards (mandis) of APMC. However after the Farmers’ Produce Trade and Commerce (Promotion and Facilitation) Act, 2020 came into force it allows farmers to sell outside APMC mandis in India.
- The Farmers (Empowerment and Protection) Agreement on Price Assurance and Farm Services Act, 2020
- The Farmers (Empowerment and Protection) Agreement on Price Assurance and Farm Services Act, 2020 facilitates creating a national framework for contract farming through an agreement between a farmer and a buyer before the production or rearing of any farm produce.
- The bills aims at freeing farmers from restrictions on sale of their produce and ending the monopoly of traders.
- It has also opened the window for private capital by allowing farmers to enter into deals with large buyers such as exporters and retailers. This is expected to catalyse the sector, bring in much-needed private investment and boost rural incomes.
- It helps protect farmers engaging with Agri-business firms, processors, wholesalers, exporters or large retailers for farm services and sale of future farming produce by a mutually agreed lucrative price framework in a fair and transparent manner through a contract.
- The Act provides for a three-level dispute settlement mechanism by the conciliation board, Sub-Divisional Magistrate and Appellate Authority.
- The agreement must provide for a conciliation board as well as a conciliation process for settlement of disputes.
The purported benefits of the Act include ending the monopoly of traders, instilling competition among buyers, yielding better returns to farmers and raises incomes, allowing free movement of farm produce from surplus to deficit regions and creating national market; removing intermediation cost in the mandis and ensuring supply of better and cheaper products to consumers.
3.The Essential Commodities (Amendment) amendment Act, 2020
The amendment has led to the removal of cereals, pulses and staples from the Essential Commodities Act, 1955.The Essential Commodities Act 1955 deals with the control of the production, supply and distribution of certain commodities.
Main features of the amendment act:
- It removes commodities like edible oil, onion and potato from the list of essential commodities and oils.
- The government can regulate the supply of commodities including the supply of food stuff, including cereals, pulses, potato, edible oilseeds etc. or or include these item back into the list of essential commodities only under “extra ordinary circumstances.” and as the Central Government may, by the notification in the Official Gazatte, specify, may be regulated only under extraordinary circumstances which may include war, famine, extraordinary price rise and natural calamity of grave nature ( Sub Section 1-A)
- The limits to stock holding could be imposed only under exceptional circumstances like national calamities or famine with a surge in prices.
- Processors and value chain participants are exempted from the stock limit.
- It also says that any action on imposing stock limit will be based on price rise. An order for regulating stock limit of any agricultural produce may be issued under this Act only if there is (i) 100 percent rise in the retail price of horticultural produce, or (ii) 50 percent increase in the retail price of nonperishable agricultural foodstuff.
- The amended Act would remove fears of private investors of excessive regulatory interference in their business operations. Although some experts opine that the amendments to the Essential Commodities Act would boost some farmers’ income, but it may lead to impoverishment of large number of marginal and small farmers, who do not have the facilities or capacity to stockpile. In the end the consumers can also be victim of price manipulation due to stockpiling by traders and stockiest and releasing it in a strategically managed fashion.
Essential Commodities Act 1955
Section 3 of this Act empowers the Union government to control production, supply and distribution of the essential commodities. Though there is no specific definition for ‘essential commodities’, Section 2(A) of this Act states that an essential commodity means a commodity specified in the “Schedule” of this Act.
At present there are nine commodities in the list—drugs, fertilizers (organic, inorganic or mixed), foodstuffs including edible oil, hank yarn made from cotton, petroleum and petroleum products, raw jute and jute textiles, seeds of food-crops, fruits, vegetables, cattle fodder, cotton; face masks and sanitisers. The Act gives powers to the government to add or remove a commodity in the ‘Schedule’. Face masks and sanitizers were added to the list on March 13, 2020 in the wake of the COVID-19 pandemic outbreak. The law (Section A).
Opposition to the bills
All the opposition leaders including the Congress, Communist and Trinamool Congree parties opposed passing of these bills for various inadequacies. Farmers in Punjab and Haryana have been protesting against three farm reform bills — The Farmers’ Produce Trade And Commerce (Promotion And Facilitation) Bill, The Farmers (Empowerment and Protection) Agreement on Price Assurance and Farm Services Bill, and The Essential Commodities (Amendment) Bill — passed by the Parliament in the recently concluded Monsoon session. Last week, Union Minister Harsimrat Kaur Badal, an MP of the Shiromani Akali Dal (SAD), one of the BJP’s oldest allies, resigned from the Narendra Modi Cabinet, in protest against the bills.
What are the major fears?
The main fear is that the farmers do not have bargaining capacity or organized platforms to bargain for the price of their produce from traders and contractors. They may be exploited by the traders and stockists because farmers do not have warehousing facilities or they do not afford it. In the absence of MSP they might end of losing even the minimum guaranteed price in case of a glut. MSP could act at least as the floor price or reserve price while APMC has a system in which farmers’ representatives put forth points in farmer’s interest. This may not be the case in the open market sale of the produce. The amendment in the essential commodities act would also benefit the stockists and hoarders while farmers and consumers would lose as the former would end up selling at lower prices, while consumers would end up paying far higher prices. On the other hand all those who are engaged in marketing of the farm products right from the farms to Mandis (middlemen or intermediaries) would lose their jobs while the Aadhatia’s would lose their commissions.