Samiksha Punamiya is a Chartered Accountant and currently pursuing CFA. Currently she is working as an Independent Economist. Her previous stint was with Reliance Securities where I worked as an Economist mostly covering Indian Economy. She has a collective experience of about 3 and a half years. She is passionate about understanding economics and how it affects policymaking.
The Farmers’ Bill 2020, consisting of three bills namely, 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 and Essential Commodities (Amendment) Bill were passed in the parliament on September 20, 2020. It was a much-required step, rightly taken by the government. The Bills as we speak of clearly intended to improve the current state of Indian Agriculture and is called to be a watershed moment in the history of Indian agriculture.
Let us look at all the bills separately:
The Farmers’ Produce Trade and Commerce (Promotion and Facilitation) Bill, 2020:
This bill aims at providing an ecosystem for farmers and traders to choose competitive alternate trading channels, which prove to be remunerative to the farmers. It also specifies promoting efficient, transparent and barrier-free inter-State and intra-State trade and commerce of farmers’ produce outside the physical premises of markets or deemed markets notified under various State agricultural produce market legislations and to provide a facilitative framework for electronic trading. It is very important to understand here that the APMCs are not denied of their trade activities. This bill evidently attracted a lot of accusations from the opposition on account of the threat to the APMCs which it may impose. When we look at the cost structure, approximately, an additional cost of 8.5% including commission and other charges are added to the procurement price when dealing with APMCs. Needless to say, the farmers will have an edge over APMCs when exploring other mediums of trading. The government is acting as a facilitator in this regard, which is being perceived as handing a prize to the Big Businesses of India Inc. What are we looking to save here- Millions of marginal farmers versus a few thousands of APMCs? States of Punjab, Haryana and Madhya Pradesh have shown serious critics against this bill as it can harm their well established APMCs. Countries like the US and China have already adopted contract farming. We have seen their agriculture productivity rise three to four times as against India. The advent of technology has made it almost imperative to rejig the Agri trade-market structure. Given this fact, I consider it is an absolute necessity to provide for a platform of a much easier, hassle-free and price-efficient trading opportunities to our farmers, which this bill wants to provide.
The Farmers (Empowerment and Protection) Agreement of Price Assurance and Farm Services Bill, 2020
This bill entails the working mechanism for contract farming and providing a framework for agreements of sale and purchase of farm produce at remunerative pricing. The price assurance part deals with protection to farmers against price exploitation. It however does not provide any framework for fixation of prices as it was in case of Minimum Support Prices (MSP). MSP is the minimum price guaranteed by the government to farmers in APMCs to ensure a safety net for farmers. Again, there are critical apprehensions against this bill as to price exploitation of farmers. What we need to look out for in this Act is the emphasis on transparency and fair dealing between farmers and other parties. Remunerative pricing defined by means of a considerable benchmark with regards to APMC or electronic trading platform etc. Precautionary steps are taken by this Act to provide farmers with protection by way of conciliation board in case there is a dispute with the agreement. It also highlights the fact that the government has devised the bill to protect the interest of the farmers with respect to checking quality standards and delivery. The onus has been shifted to the sponsor from the farmer. The bill also mentions that the farmers are protected from any intent of encroachment on their lands. In this regard, any agreement relating to taking away their farmlands by way of mortgage or any other means is strictly prohibited by the Act.
Essential Commodities (Amendment) Bill:
There has been a major amendment in the erstwhile Essential Commodities Act which laid down provisions on stocking limits of essential commodities. It is pertinent to note that cereals, pulses, oilseeds, edible oils, onion and potatoes have been eliminated from the list of essential commodities. Also, the stock limits can be imposed if retail prices surge 50% for non-perishable products 100% for perishables above the average price of the last five years or preceding twelve months, whichever is lower. The amendment brings deregulation of production, storage, movement and distribution of these commodities at every value addition stage. It is very much implied that this amendment has been brought about looking at the COVID-19 situation. This act does impose a threat in terms of unprecedented hoarding and subsequent volatility in inflation in the short to near term. Notwithstanding otherwise, this Act shall help fast-track, mobilize and create efficient pricing environment for the commodities since the restrictions have been eliminated from the list of essential commodities. It is particularly beneficial for exports. The main take away from this amendment is deregulation in the production of these commodities. It also brings to light that farmers can focus on the production of commodities they want to produce or are conducive for production, giving effective returns.
In my opinion, the bill is for the greater good for the farmers and is well intended to motivate them to have the freedom to trade and earn more income. It will go a long way in educating farmers and making them aware by giving more power to them. It also takes into account the issues relating to the marketing of the product which was the missing link in the Agri sector. Increasing opportunities will help farm produce to be better marketed tending better deals. I think it is time that nation views the Agri sector as important as any other business and it should be. Agri sector has the largest number of employed persons and contributor to the rural economy. The risks involved are the exploitation of farmers by the hands of big corporates and dooming of well-monopolized APMCs. How beneficial will it turn out to be for Agri sector as a whole will need to be seen in the coming months. Leverage of technology and digital media augurs well for employment opportunities which are a clarion call for the Indian Government at this time. The farmers ‘bill will change the face of the Agri sector in the years to come. The turnaround in the sector will be tremendous as we hope to see the farmers earn more income with increased mobility.
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