India is a country where agriculture is the most important sector, as it makes up almost 18% of India’s GDP and employs 50% of the country’s workforce. Despite the statistics and facts, it is one of the most suffering sectors in India with farmers being unable to find a market and get a fair price for their product.
In order to tackle the issue, APMC Acts (Agricultural Produce Market Regulation Acts) was introduced by the governments of different states, which authorized them to set up and regulate marketing prices in wholesale markets. The main objective was to ensure the farmers got a fair price but as the time went by, the APMC turned inefficient as it continuously was plagued by corruption and the ban on private buyers from entering the trade amongst other factors.
Acknowledging the failure of APMC in providing a proper market for the farmers, NAM (National Agriculture Market) was introduced by the Modi Government in 2014.
NAM is a pan-India electronic trading portal which seeks to connect existing APMCs and other market yards to create a unified national market for agricultural products.
Continuing the reform agenda, the Modi government has now introduced three more bills to promote much easier trade for the farm produce and to provide a competitive market for the producers outside the existing APMC system.
The three recent Farm Bills by Modi Government
1. The Farming Produce Trade and Commerce (Promotion and Facilitation) Bill, 2020:
The Farming Produce Trade and Commerce (Promotion and Facilitation) Bill, 2020 aims at creating additional trading opportunities outside the APMC market yards to help farmers get profitable prices due to additional competition. In short, farmers can now sell their agricultural produce in a market of their choice at better prices.
- The newly proposed law will allow intra-state and inter-state trade of farmers’ produce beyond the physical premises of APMC markets thus giving freedom for the farmers and traders to sell or purchase farm products anywhere.
- The proposed law also provides buyers with the freedom to buy farmers’ produce outside the APMC markets without having any license or paying any fees to APMCs.
- The Bill prohibits state governments from imposing any market fee on farmers and traders for the trade conducted on farmers’ produce conducted in an ‘outside trade area’.
- Under the proposed law, transaction over an electronic platform has been proposed for ensuring a seamless trade
- There will also be a separate dispute resolution mechanism for the farmers.
2. The Farmers (Empowerment and Protection) Agreement on Price Assurance and Farm Services Bill, 2020:
The Farmers (Empowerment and Protection) Agreement on Price Assurance and Farm Services Bill, 2020 creates a framework for contract farming through an agreement between a farmer and a buyer prior to the production.
- The minimum period of an agreement will be one crop season or one production cycle of livestock.
- Under this legislation, farmers are empowered to directly engage with processors, wholesalers, aggregators, retailers exporters etc, thus eliminating mediators and resulting in complete knowledge of the price for the farm produce.
- The proposed law also states that the price of farming produce negotiated between the trader and the farmer should be mentioned in the agreement.
- The buyer will be responsible for providing necessary means or inputs for good crop yield. Under the bill, it is the responsibility of the buyer to provide agricultural equipment to the farmer.
- It provides for a three-level dispute settlement mechanism: the conciliation board, Sub-Divisional Magistrate and Appellate Authority.
3. The Essential Commodities (Amendment) Bill, 2020:
- Under the legislation, the central government may regulate or prohibit the production, supply, distribution, trade, and commerce of such essential commodities.
- The proposed bill allows the central government to regulate the supply of certain food items including cereals, pulses, potatoes, onions, edible oilseeds, and oils, only under extraordinary circumstances.
- The legislation requires that imposition of any stock limit on agricultural produce must be based on price rise.
- The bill amends the Essential Commodities Act to provide that stock limits for agricultural products can be imposed only when retail prices increase sharply and exempts value chain participants and exporters from any stock limit.
Why are these bills important?
- These three bills will work towards the freedom of overly regulated agricultural sector in the country.
- The laws will provide more choices and lessen the cost of production for the farmer, thus helping them to get better prices.
- It will be a win-win situation for both, the farmers and the consumers as farmers of regions with surplus produce will be able to get better prices while consumers of regions with shortages will have to pay lower prices. This will result in a price stability.
- The laws will enable the farmer to make use of modern technology and better inputs to enhance their farm produce and its trade.
- These new laws will encourage large companies, food processing firms, exporters, etc, to invest in the farm sector and source good-quality farm produce.
- The proposed changes will also create a competitive market environment and prevent wastage of products that happen due to lack of storage facilities.