Some legislations are being passed by the parliament which led to a major outbreak for the farmers. These legislations passed were much against the farmers that the farmers can be seen on roads, protesting for the same. Through this article the author would like to highlight the detailed reason for the protest by the farmers, the main provisions of the bills and the clarifications given by the government of India in respect to those bills. The demands or the complaints done by the farmers against the Indian government are also being highlighted in this article.
From the last few weeks farmers protest is an alarming issue to be debated about. The main reason for the protest by the farmers is the demand for withdrawal of acts (laws) being passed by the government. The Acts are- “The farmers produce Trade and Commerce (Promotion and Facilitation) Act, The farmers (empowerment and protection) Agreement of Price Assurance and farm Services act and The essential Commodities act”. Here a new concept has evolved namely “Private market concept”. The idea of such markets are described in the farmers produce trade and commerce promotion and facilitation act 2020. The concept of private markets is not new in India and perhaps the most experiments of these were seen in Maharashtra. In 2005-06 the chief minister of Maharashtra “Vilasrao Deshmukh” sanctioned the setting of private markets and collection centres too through the issuance of Direct marketing license (DML’s).
The private markets also known as alternate markets or trade areas are known to be the wholesale markets or mandis, set up by private entrepreneurs while collective centres were for aggregators like Big Basket and Reliance fresh who procured directly from farmers at the farm gate.
Reforms in Maharashtra
Private markets as the name suggests are the markets set up by private entrepreneurs for the facilitation of trade in the agricultural sector. The state government’s director of marketing issues licenses for setting up these markets. A minimum of 5 acres of land is required for setting up these kinds of markets along with the infrastructure like auction halls, sheds, waiting halls, motorable roads, etc. Barring the land cost, the initial investment towards such markets is around 4-5 crore.
How many private markets are being set up?
Till the date, 18 private markets are being set up which deal with commodities like cotton, soybean, chana, etc. Markets like Ramdev Krishi Bazar in Washim district of the state deal in multiple commodities like wheat, tur, etc. While other markets like ACF Agro marketing in Bhuldana district deal only in a single commodity like cotton. In 2019-20 these markets have noted a turnover of 4,357.88 crores and traded 1000.88 lakh quintals of commodities. Every year the license to sell the product directly is to be renewed and in case of complaints of fraudulent activities, the director of marketing can take action against the markets by revoking their bank guarantees.
Bill no. 1 ( The farmers produce Trade and Commerce bill 2020)
- The new legislation will create an ecosystem where the farmers and traders will enjoy the freedom of choices of sale and purchase of agri-produce.
- The farmers produce Trade and Commerce (Promotion and facilitation) bill allows the barrier-free inter and intrastate trade and commerce outside the physical premises of markets notified under state agricultural produce marketing legislations.
Previously, farm produce was sold into notified wholesale markets or mandis run by 7000 Agricultural produce marketing commodities (APMC’s). Each APMC has licensed middlemen who would buy the commodities from farmers at prices set up at auction before selling to institutional buyers like retailers and big traders.
- The farmers would not be charged any kind of cess or levy for sale of their products and will not have to bear transportation costs.
- The bill also proposes electronic trading in the transaction platform for ensuring a seamless trade electronically.
- In addition to mandis, freedom to do trading at farmgate, cold storage, warehouses and processing units, etc.
- Farmers will be able to engage themselves into direct marketing thereby eliminating intermediaries resulting in full realization of price.
Clarifications by the parliament-
- Procurement at Minimum support price will continue, farmers can sell their produce at MSP for Rabi season and will be announced soon.
- Mandis will not stop functioning, trading will continue here as before. Under the new system, farmers will have the option to sell their produce at other places in addition to the mandis.
- The e-NAM(electronic trading) trading system will also continue in mandis.
- Trading in farm produce will increase on electronic platforms. It will result in greater transparency and time-saving.
New style- farmers can eliminate middlemen and can directly sell their produce to the institutional buyers at the price agreed between them. However, the farmers are worried about the same as they would be directly exposed to the corporates who have more bargaining power and resources than small or marginal farmers.
- Alternate private mandis will lead to the closure of existing APMC mandis.
- Removal of geographical restrictions- small farmers may find it difficult to avail potentially better prices at market further away because of constraints on travel and storage.
- No tax on private markets is the statement given by the government but the existing APMS do have to give tax.
Bill no. 2 (The farmer’s agreement on price assurance and farm services bill)
- The new legislation will empower the farmers for engaging with processors, wholesalers, aggregators, large retailers, exporters, etc on a level playing field. Price assurance to the farmers before sowing the crops. In case of higher market price, farmers will be entitled to this price over and above the minimum price.
- It will transfer the risk of market unpredictability from the farmer to the sponsor. Due to prior price determination, farmers shall be shielded from the rise and fall in market prices.
- It will also enable the farmers to access modern technology, better seed and other inputs.
- It will reduce the cost of marketing and improve the income of farmers.
- Effective dispute resolution mechanism has been provided for with clear timelines for redressal.
- Imputes to research and new technology in the agricultural sector.
Clarifications by the parliament-
- The farmer will have the full power in contract to fix a sale price of his choice for the produce. They will receive the payment in a maximum of three days.
- 10000 farmer producer organizations are being formed throughout the country. The FPOs will bring together the small farmers and work to ensure remunerative pricing to farm produce.
- After signing the contract the farmer would not seek out the trader. The purchasing consumer will pick up the product directly from the farm.
- In case of dispute, there will be no need to go to the court repeatedly. There will bee a local dispute redressal mechanism.
Bill no. 3 (The Essential Commodities Bill)
- The Essential Commodities (Amendment) Act,2020 with provisions to remove commodities like cereals, pulses, oilseeds, edible oils, onions and potatoes from the list of essential commodities.
- The EC(Amendment) act 2020 aims to remove fears of private investors of excessive regulatory interference in their business operations. The freedom to move, hold, distribute and sully will lead to the harnessing of economies of scale and attract private sector/foreign direct investment into the agricultural sector. It will help to drive up the investment in cold storages and modernization of the food supply chain.
- The government while liberalizing the regulatory environment, has also ensured that the interests of consumers are safeguarded. It has been provided in the amendment that in a situation such as war, famine, extraordinary price rise and natural calamity, such agricultural foodstuff can be regulated. However, the installed capacity of a value chain participant and the export demand of the exporter will remain exempted from such stock limit imposition to ensure that investments in agriculture are not discouraged.
Earlier reforms by the current government in the agricultural sector
- Agricultural produce and livestock marketing (promotion and facilitating) act (APLM), 2017
- Doubling the farmer’s income by 2022
- Significant Changes in fixation of minimum support price (MSP)
Agricultural produce and livestock marketing (promotion and facilitating) Act (APLM), 2017
The Model Agriculture Produce and Livestock Marketing (Promotion and Facilitation) Act, 2017 (APLM act) was proposed in April 2017 to replace the APMC Act (Agricultural Produce Marketing Committee) 2003. The act strives to be an agricultural reform to assist farmers to directly connect buyers to enable them to discover the optimum price for their commodities. In this article, let us look in detail about the Act.
Numerous farmers have raised their voice against these three above mentioned bills, they have come on roads for doing the protest against the same. The complaints or the demands of the farmers are as follows-
- The bills(laws) are favourable for the private entities (private companies) but not for the farmers moreover these acts are not empowering them(farmers) too.
- According to the surveys of the government, only 6% of the farmers are benefited out of Minimum Support Price (MSP) but not all of them, therefore, their (farmers) demand to the government is to declare the right of MSP as legal that is a legally binding right for every farmer.
- Thirdly the farmers are saying that the middlemen will not go away as the dismissal of middlemen will not resolve the issue for the farmers.
To conclude, many of the economists have advised the Indian government to bring reforms in the agricultural sector and have also advised raising the living standard of the farmers by providing them more in exchange of their products and for the same arrival of the private sector is not required.