Routes to Nations Capital is Blocked by Indian Farmer from Punjab. Amidst protest from opposition and a section of farmer’s organisations, the Monsoon Session of the Lok Sabha passed three Agriculture Sector Bills which will replace the existing ordinances once they are passed by the Rajya Sabha also.
Bill on Agri Market
Farmer’s Produce Trade and Commerce(Promotion and Facilitation) Bill, 2020
To create an ecosystem where farmers and traders enjoy the freedom to sell and purchase farm produce outside registered ‘mandis’ under states’ APMCs.
To promote barrier-free inter-state and intra-state trade of farmers’ produce.
To reduce marketing/transportation costs and help farmers in getting better prices.
To provide a facilitative framework for electronic trading.
States will lose revenue as they won’t be able to collect ‘mandi fees’ if farmers sell their produce outside registered APMC markets.
What happens to ‘commission agents’ in states if entire farm trade moves out of mandis?
It may eventually end the MSP-based procurement system.
Electronic trading like in e-NAM uses physical ‘mandi’ structure. What will happen to e-NAM if ‘mandis’ are destroyed in absence of trading?
Bill on contract farming
The Farmer (Empowerment and Protection) Agreement of Price Assurance and Farm Services Bill, 2020
Farmers can enter into a contract with agribusiness firms, processors, wholesalers, exporters or large retailers for sale of future farming produce at a pre-agreed price.
Marginal and small farmers, with land less than five hectares, to gain via aggregation and contract (Marginal and small farmers account for 86% of total farmers in India).
To transfer the risk of market unpredictability from farmers to sponsors.
To enable farmers to access modern tech and get better inputs.
To reduce cost of marketing and boost farmer’s income.
Farmers can engage in direct marketing by eliminating intermediaries for full price realization.
Effective dispute resolution mechanism with redressal timelines.
Farmers in contract farming arrangements will be the weaker players in terms of their ability to negotiate what they need.
The sponsors may not like to deal with a multitude of small and marginal farmers.
Being big private companies, exporters, wholesalers and processors, the sponsors will have an edge in disputes.
Bill relating to commodities
The Essential Commodities (Amendment) Bill, 2020
To remove commodities like cereals, pulses, oilseeds, onion and potatoes from the list of essential commodities. It will do away with the imposition of stockholding limits on such items except under “extraordinary circumstances” like war.
This provision will attract private sector/FDI into the farm sector as it will remove fears of private investors of excessive regulatory interference in business operations.
To bring investment for farm infrastructure like cold storages, and modernising food supply chain.
To help both farmers and consumers by bringing in price stability.
To create competitive market environment and cut wastage of farm produce.
Price limits for “extraordinary circumstances” are so high that they are likely to be never triggered.
Big companies will have the freedom to stock commodities- it means they will dictate terms to farmers which may lead to less prices for the cultivators.
Recent decision on export ban on onion creates doubt on its implementation.