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On 27 September 2020 the presentient Mr RAM Nath Govind gave his consent regarding the three farmer reforms bills and that were approved and notified as legislation. The three farmers bills are The Farmers’ Produce Trade and Commerce, the Farmers Agreement of Price Assurance and Farm Services Act, and The Essential Commodities. The main reason to introduce these new 3 bills is for small and marginal farmers who have no means of either negotiation for the better price as these farms are don’t have productive or investing in the technology. So, by this new reform the government tried to help the small and marginal farmers so that they can sell there produce outside the mandis i.e., in the open market. Now the farmers can sell all the produce anywhere where they want to sell and as well as now the buy can also be anyone the mandi licence is not needed i.e., at the farmers gate everyone can purchase even there the agents of mandi and state will lose the commission and mandi fees respectively by the competition. Cross cutting of transportation the farmer will get more price in the market.
India is and has been an agriculture economy. people of India dependence on agriculture. After independence in 1949 the farmer was selling their crops in the market directly without any middle man the crops are delivered directly to the consumers. But as the time pass the farmers require money for fertiliser, seeds etc for growing the crops for which they were used to take loans from the zamindars and money lenders for which they were charged high interest on the principal amount. By this the farmer were trapped in perpetual debt. This was prevailing system of zamindars and money landers. As the amount to be paid to them is a lot which farmers were not able to pay so the whole crops of the farmer are taken by zamindar or money lenders at very low price and farmers are not able to bargain because of the loan and they also need more loans for growing the crops and this cycle repeats again and again .this process was unfair so the protect the farmers from the cynically used from the zamindars or money lender the government came up with A APMC ACT (Agriculture produce market committee) in 1960’s at the same time when green revolution started in Indian and in green revolution APMC Act played a wide role.
By the APMC Act the farmer sell their produce to the mandis or markets where the produce are sold by auction or price discovery. Now the farmer is not selling the crops to the consumer or government but to the middlemen. Middlemen are the people in the market who buy the crops or produce from the farmer and sell them to retailors for example farmer sell their wheat to middleman in mandi and then middleman sell them to retailor after them the consumer. There the middlemen is big trader and earns high profit. to be a middleman a license is to be obtained from the government and the APMC market is regulated by the state government. The state government also imposes tax on every transaction as the government should also know or have a knowledge at what price the crops are being sold. And the government also set a minimum support price that is the government fixes a price of the crop if the crops of farmer cannot be sold below that price and the middlemen is not purchasing the at that the price the government is there to buy it at minimum fixed price. So that if middlemen are not buying the crops, then they also can sell it to the government. this system was better then before 1960’s one’s. but as time passes middleman got the loopholes in the system of which they had taken advantage as they started exploiting the farmer, they formed cartels or an understanding among themselves and started buying produce from farmer at minimum support price and made minimum support price as maximum support price so they by the produce as lower rates and sold to the traders at higher prices.
As the voice has been raises regarding the defects in the system the government came with 3 new acts in 2020 which are trade in agricultural commodities, price assurance, farm services. These acts are going to bring changes in the key aspect in the farmer economy as removing restriction on the limit of private stock holding of agricultural produce or we can say removing the middleman and farmers can sell the cloths in any markets.
THE NEW FARMERS BILLS
The need of new farmer bill came by seeing the industrialist as they are not restricted to sell their manufactured product at their own price discovered and can sell anywhere not only in limited area that why farmers are restricted? The new 3 farmer bills is based on the principle of one India one agriculture market as it opens the gate for the farmers to corporate world to trade or sell there produce not only in APMC’S but to the open market so that the farmer can get prices more of their produce as the farmer are not forced to sell in the mandis but in the open market.
On the other view the farmers are opposing as the new bills opposes the three pillar of the old bill that is minimum support price, public procurement and public distribution system. The farmer is also in the fear that by the new bill they are going to handed over to the capitalist who will infringe them and exploit them rather than empower them.
The Farmer’s Produce Trade and Commerce (Promotion and Facilitation) Bill, 2020
As we have already discussed that in the new bill a new market place has been introduced i.e., they can sell there products anywhere which is inside the state, outside the state as well as by the online mode. By this new act now farmer is not bound to sell the produce in the mandis but they can sell them anywhere it on there wishes. By the farmer are going to get good price because of competition and the farmer would sell there produce at higher rate who had bitted. Now to buy the produce from the farmer no licence is needed which means everybody can buy from the farmer no another government formalities are needed and the middlemen have no role between them so they are saved from the agent commission and mandi fees which is given to middleman of the mandi and the tax paid to state government.
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- Farmers were used to take some advance from the middleman in the mandi for growing the crops as by this system middleman are removed then the farmer have to take loans from the financial institutes and pay them high or heavy interest.
- By this bill the state government is not going to receive the tax i.e., is the mandi tax which is applied when the produce of the farmer is sold in the mandi (APMC) the state government applies tax on it.
- The commission agents are free as the bills says there are no middleman in between the farmer will sell there produce directly to the registered buyer with no middleman so the middleman is unemployed
- Farmers have given choice to sell their produce at there choice beyond the APMC market yard so by this farmer produce price will increase as the potient buyer in the market is increases . competition in the market.
- One nation one trade market as there is no barrier in the market so famer can sell it in the state as well as inter state and the other option is online option.
- Farmer will get higher prices for the yield because of increase in the competitiveness
- To avoid pending litigation in the court a separate dispute resolution mechanism is passed
The Farmers (Empowerment and Protection) Agreement on Price Assurance and Farm Services Bill 2020 or The Contract Farming Law
By this bill the farmers can have written contract between the farmer and buyer, buyer can be anyone company also and set time for the produce etc in the contract. In other words, now the companies are capable to contract with farms for buying the produce of the farmer and also mention the quality, quantity and time of delivery in the contract. there is going to be written contract between buyer and farmer which will protect farmer if the buyer tries to cheat them and a separate dispute resolving mechanism has been setup to avoid the pending litigation. This all is done for the farmers as they are going to trade between the wholesaler, retail giant and the exporter.
- The companies and merchants are going to be a savvy participant since the farmers have poor negotiating ability to make a successful agreement for themselves.
- The sponsors may be deprived of the small and marginal farmers.
- It provides companies and not farmers independence, as there is no MSP reference in the law and so does the farmer’s objection.
- Enable farmers to get into a direct contract with food manufacturers, wholesale firms, retailers, exporters, etc. This will remove fear of use and ensure worldwide market access.
- Buyer’s investment in infrastructure and technologies to promote food grain production. As the availability to current technology is realised, this will cut costs and increase revenue
- The buyer will supply the means to generate satisfactory harvests when the contract conditions are established.
- The contract only applies to agricultural output and not to land. The farmer is the owner and, if necessary, can use financial institutions’ loan and credit capabilities.
- The contract exempts crops from the restrictions of the Essential Commodities Act and regulations and laws pertaining to the marketing of agricultural commodities.
The Essential Commodities (Amendment) Bill 2020 or Essential Commodities Amendment
In 1955, it was first introduced in decades by the Essential Commodities Act. The Act essentially governs the production, supply and distribution of certain vital goods. If, for instance, a food item and a vital medicine is covered by this Act, firms and shops cannot store these products when they are in deficit, and so on, they cannot increase prices artificially, etc. The basic commodity lists in accordance with the original law should include: drugs (medicines); fertiliser products (inorganic, organic, mixed); foodstuffs (including edible oils, oils and oil seeds) (food crops, fruits and vegetables, cattle fodder and jute seeds). The new amendment removed from the list of essential commodities food such as potatoes, cereals, pulses and oils, meaning that these commodity commodities are not to be taken into consideration under a list of essential commodities unless there are dire circumstances such as a war or famine or an extraordinary price increase. Moreover, the government cannot set stock limits that are not capable of preventing the supermarket chain or a retailing company from hoarding unless the price of peregrinated items is increased 100% (percent) or the prices of non-pregnable goods are increased 50 percent (percent). The following components are removed: rice, wheat, potatoes, onion and oils from the basic act of commodity products.
- The ability to store goods will lead to exploitation, as large enterprises demand excessive rates.
- The price limit for “special situations” is so high that it is unlikely to be triggered.
- Enabling private investment in farming. This helps to give farmers with a source of money to support crop production.
- Help farmers and consumers to achieve price stability
- Elimination from the essential commodity of grains, legumes, olive seeds, onions and potatoes to remove stock limitation. It permits the government to take control if extreme conditions are experienced such as exceptional rising prices, war, hunger, or major natural disasters.
- It will foster private investments in cold storage and open the path for the supply chain to be modernised.
- Removing stock ceilings, guaranteeing that farmers invest in infrastructure and transportation owing to less governmental constraints have a wider market.
All seems wonderful on paper, so where’s the problem? Well, between good law and good execution of the Act, there is a difference, and several criticisms have expressed worries about it. The very first worry is that there has been no discussion about a law that will be implemented throughout the country with countries most impacted by the Act or the specialists in this field accusing the government of undermining cooperative federalism.
One nation one trade market means farmers can sell there produce anywhere which freedom of choice not only in APMC yard market but any where which seems good on the paper but the reality is that the our farmer don’t have medium and money to transport the produce from one place to another as by the government itself told that approximately 86% of the farmers are marginalized.
Contract farming is seen as a privatisation of farming, with farmers never having the opportunity to negotiated with the business sector being two major concerns. The Law does not demand or establish a minimum price equal to or greater than MSP for the crop contract. This means that the contractor/company may pay the farmer whatever it wants.
In disputes, they will always have a benefit, as huge private companies, exporting, dealing and processing entities are. Due of the absence of a formal contract, the farmer can never break the provisions of the deal. There is a fair problem for farmers, because in seed and fertiliser sector privatisation occurred, in which the government expected competitive prices to decline, but the results were the opposite, and the farmers in this case also dread the same.
Hoarding limits are eliminated as ‘extraordinary price growth’ is far too important to achieve, which simply means that big private players can at any time generate false price swings. It will harm not just farmers but also customers, as a private company’s major purpose or focus is to boost profits.
The farmers are the nation’s soul and its growth and upliftment is the government’s primary obligation. The adoption of the legislation is a step towards offering farmers a greater platform for their agricultural goods to receive the appropriate prices. In the farmer’s life it will bring about dramatic changes. The changes would speed up agrarian expansion, provide employment opportunities and boost the economy, through private sector investment in building up agricultural infrastructure and supplies chains for Indian farm production on domestic world markets. Farmers are released from the seizures on specified sites to sell their produce.
Yes, under the decades-old APMC Act numerous failures existed, but opponents think that it was necessary to close loopholes rather than introduce a new system. We can only hope that this does not happen in India that government will not replicate these failings in some European nations, where it has been badly failed.
Author: KUNAL MIDHA, SYBIOSIS LAW SCHOOL NAGPUR
Editor: Kanishka Vaish, Senior Editor, LexLife India.