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All you need to know about Farm Bills

Introduction

India is an agricultural nation. The tie of India with Agriculture needs no introduction. Agriculture is the primary source of livelihood for about 58 percent of India’s population. Gross Value Added (GVA) by agriculture, forestry, and fishing estimated at Rs 19.48 lakh crore (US$ 276.37 billion) in FY20(PE). Growth in GVA in agriculture and allied sectors stood at 4 percent in FY20. The numbers look good on paper, Yet farmers are still poor living in hand-to-mouth situations and at last commit suicide. The slogan Jai Jawan Jai Kisan, given by our second PM, Lal Bahadur Shastri, honoring soldiers and farmers, seems to fade over time.


The parliament recently passed three farm bill namely, Farmers’ Produce Trade and Commerce (Promotion and Facilitation) Bill, 2020, Farmers (Empowerment and Protection) Agreement of Price Assurance and Farm Services Bill, 2020, The Essential Commodities (Amendment) Bill, and they are in controversy since when they have been, passed.

Timeline

The green revolution brought APMP (Agricultural Produce Market Committee) MSP (Minimum Support Price) in 1965, the need for change in the agricultural sector after 55 years, Amending laws, Farmers Protest.

Background

Before the amendment, farmers who are willing to sell their produce had broadly, three modes for its sale.

1. The Mandis

Agriculture marketing is a State Subject. To facilitate marketing, ensuring transparency, protect farmers from exploitation, in 1965, the government enacted APMC (Agriculture Produce Market Committee). With this Mandis were formed so that farmers can sell their produce conveniently on a nearby market. Farmers had an opportunity to go through an auction for sale with the middlemen. APMCs, charge a market fee from buyers and a licensing fee from the commissioning agents who mediate between buyers and farmers.

2. Through MSP

Minimum Support Price is an incentive for farmers to remain in cultivation. The governmental bodies example, FCI, also buy produce from the farmer at a specified price and store them in their warehouses, cold stores, etc. The minimum support prices are announced by the Government of India, at the beginning of the sowing season for certain crops based on the recommendations of the Commission for Agricultural Costs and Prices (CACP). MSP is price fixed by the Government of India to protect the producer - farmers - against excessive fall in price during bumper production years. According to the Shanta committee report, only 6% of farmers take the benefit of MSP and majorly are from Haryana and Punjab.

3. through Private Players

Amendment Analogy

Farm bills were welcomed by the parliament nevertheless, farmers seem to disapprove. The bills were based on the recommendations of a committee headed by veteran BJP leader and former Himachal Pradesh chief minister Shanta Kumar.


Farmer’s Produce Trade and Commerce (Promotion and Facilitation) Bill, 2020

One Nation, One Market. A bill to provide for the creation of an ecosystem where the farmers and traders enjoy the freedom of choice relating to the sale and purchase of farmers produce which facilitates remunerative prices through competitive alternative trading channels. In simpler terms lessening the distance between trader and farmer, by this act, a farmer can sell its produce throughout the country by an electronic mode to the trader of their choice.

Section 3 of the bill states that any farmer or trader or electronic trading shall have the freedom to carry on the inter-State or intra-State trade and commerce in farmers’ produce in a trade area (farm gate, factory premises, warehouses, cold storage, etc).

Section 4(2) reads if the central government finds it necessary, they can prescribe a system for electronic registration for a trader, modalities of trade transaction, and mode of payment.

In case of any dispute arising out of a transaction between the farmer and a trader under section 4, the parties may seek a mutually acceptable solution through conciliation by filing an application to the Sub-Divisional Magistrate who shall refer such dispute to a Conciliation Board to be appointed by him for facilitating the binding settlement of the dispute as given in section 8(1).


Farmers (Empowerment and Protection) Agreement of Price Assurance and Farm Services Bill, 2020

A bill that provides for a national framework on farming agreements that protects and empowers farmers to engage with agri-business firms, processors, wholesalers, exporters, or large retailers for farm services and sale of future farming produce at a mutually agreed remunerative price.


It facilitates the culture of contract farming. Contract farming can be defined as an agreement between farmers and processing and/or marketing firms for the production and supply of agricultural products under forward agreements, frequently at predetermined prices [7].In simple terms, The entry of private companies creating contractual obligations with farmers upon predetermined rates, irrespective of Current Market Price. No governmental interference between the parties.

The Essential Commodities (Amendment) Bill

The bill seeks to amend the Essential Commodities Act, 1955 inserting, subsection 1(A) to Section 3 of the said act. deregulating commodities such as cereals, pulses, oilseeds, edible oils, onion, and potatoes.

That notwithstanding the provisions of sub-section (1) of the act,— (a) the supply of such agricultural foodstuff as is notified by the Central Government shall be regulated only under extraordinary circumstances which may include war, famine, extraordinary price rise, and natural calamity of grave nature;

(b) any action for imposing a stock limit shall be based on price rise, subject to the conditions and exemptions specified therein.

The Essential Commodities Act, 1955 was enacted to regulate the production, supply, and distribution of, and trade and commerce in, certain commodities which are declared as essential commodities and specified in the Schedule to that act. The said amendment partially defeats the purpose of enacting the law.

What benefit do amendments bring into the picture?

1. Removed cartelization, license raj by the middleman, trader.

2. Farmer can sell their produce from anywhere to everywhere, throughout the country. Although they could sell before the bill, they weren't backed by any statute law.

3. Elimination of Middleman, the farmer can directly visit governmental sites and sell their produce.

4. Traders will visit the farmers, and farmers will fix the price, not APMP.

5. Small farmers can now get a guarantee of their produce during the sowing of the crop.


What is wrong with Amendments?

1. Middlemen were registered, reliable government officials. Their elimination could lead to unemployment.

2. Complex dispute resolution system, through conciliation, no civil court has jurisdiction to entertain any suit.

3. The problem with contract farming is, if the market prices rise, the farmer still has to sell their produce at a lower rate.

4. Slow poison for MSP (Minimum Support Prices) to farmers.

5. Free market, no regulatory body.

Why are farmers protesting?

Many farmers who have hit the streets to protest have said the bills would end the minimum support price (MSP) regime and impact their incomes. Shanta Kumar said MSP only helps 6 percent of farmers who are “elite” and it is these elite farmers, propped up by opposition parties, who have been protesting, not small farmers

.

Despite the assurance by Prime Minister Narendra Modi the system of minimum support price and government procurement of crops would continue, after the passage of two farm sector Bills by Parliament. The farmers and opposition continue to protest as the contentions behind the passing of these bills are in suspicion.

The government is making trade lucrative by contending No tax outside APMC sale and purchase. They fear exploitation because there is no regulating body. Corporatization of Agriculture. The monopoly of MNC can exploit farmers. Moreover, they feel not educated enough to read and understand complex contracts formulated by big MNC and fight a legal battle against them. A recent example being PepsiCo filed a case against farmers in Gujarat.

The model of these bills is adoption from developed countries like England, America, European countries, but unfortunately, this was a big failure! Farmers are committing suicides even in countries of Europe.

Conclusion

Every coin has two sides. In the case of these amends, It somehow brings benefits to farmers, on the other hand, Haryanvi and Punjabi farmers, a beneficiary of MSP feel that these amends may not provide any good for them, as it slowly paves the path to eliminating Minimum Support Price regime. The provision added in The Essential Commodity Bill is almost of no use because the prime motive of the act was to control people from piling up stock in their warehouses, pricing, and inflation.

If we look into the present scenario, urbanization is happening. People are migrating from towns to cities to metropolitan cities. In cities, they look for work because they do not wish to be farmers or due to a lack of resources. In cities, of course, no one wants to be a Farmer despite the reality check that because of farmer community, we are living. No farmer, no food! To protect and promote their profession, the government should give them this much liberty to give a say upon matters which affect them the most through a channelized method not, protests. The legislature cannot just take statistics, views of personalities, committee reports, and impose a law inspired by other nations who themselves cannot effectively implement in their country. Yes! Change is the law of nature. Amends are necessary but with the due will of the people and some things need to be regulated.


References

Bills

1. THE ESSENTIAL COMMODITIES (AMENDMENT) BILL, 2020

2. THE FARMERS’ PRODUCE TRADE AND COMMERCE (PROMOTION AND FACILITATION) BILL, 2020

3. THE FARMERS (EMPOWERMENT AND PROTECTION) AGREEMENT ON PRICE ASSURANCE AND FARM SERVICES BILL, 2020.


Online Sources

1. https://www.ibef.org/industry/agriculture-india.aspx

2.http://www.arthapedia.in/index.php%3Ftitle%3DAgricultural_Produce_Market_Committee_(APMC)

3. https://vikaspedia.in/agriculture/market-information/minimum-support-price

4. https://theprint.in/india/only-6-elite-farmers-opposing-the-bills-says-bjp-veteran-who-recommended-farm-reforms/508265/

5. https://www.thehindu.com/news/national/pm-modi-calls-passage-of-farm-bills-a-watershed-moment/article32653331.ece

6. https://indianexpress.com/article/explained/simply-put-redefining-essential-items-6608203/

7. http://www.fao.org/3/y0937e/y0937e02.htm

8. https://timesofindia.indiatimes.com/india/farm-bills-will-make-traders-come-to-farmers-doorstep-to-purchase-produce-agriculture-minister/articleshow/78288664.cms

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