Farm Bill 2020: A Brief Scrutiny
Even though 2020 was a year that was taken by the novel coronavirus, there was something else that shook our nation alongside the crisis. It was The Farm Bills of 2020. The reactions and after-effects of the bill were no different from that of a pandemic. Before we jump to the very polarising reactions to and implications of the Farm Bill, we need to know what the bill is all about, what the new amendments are, and How it is going to affect the whole agricultural landscape of our country.
On 23rd September 2020, the Parliament decided to pass three agriculture bills: Farmers’ Produce Trade and Commerce (Promotion and Facilitation) Bill, Farmers (Empowerment and Protection) Agreement of Price Assurance, and the Essential Commodities (Amendment) Bill.
The Government decided to introduce the three bills in an attempt to combat some serious flaws that were prevalent in the system in place. To begin with, the APMC here was made with one goal in mind – the protection of farmers from the oddity of the market, but it has turned its way into helping traders and harming farmers. Their lack of capability led to unnecessary layers in the supply chain and giving certain control to the middlemen.Though the union government did introduce model law to straighten the curve, it was in vain.
Another flaw is how MSP manipulates the trade. Over the last few years, MSP has given the government an added pressure – to purchase the excess grains produced by the farmers. And before you know it, it is wasted through various FCI warehouses and the ration system of our country. This becomes really absurd considering how India gained security in terms of grain stock long back.
The three bills, right after its inception, were faced with an uproar by opposition party leaders and farmer groups alike. And to date, the protests have been taking very big turns and are gaining a lot of media attention. Even amidst vehement opposition, there have been voices that have come out in support of the bills with some of them establishing that they are willing to “unshackle” the workforce involved in the agriculture sector of our country.
To dive through the noise, here is a detailed feature that explains each bill and the positives and concerns they bring to the existing agriculture laws in the country.
1. The Farmer’s Produce Trade and Commerce (Promotion and Facilitation) Bill
This bill will allow farmers to trade their agricultural produce outside the physical markets which are notified under various state Agricultural Produce Marketing Committee laws (APMC acts). Also called the ‘APMC Bypass Bill’. It will overrule all the existing state-level APMC acts.
A highlight of the bill is it creates a barrier-free intra-state and inter-state trade of farmer’s produce. This means an exchange of products between different states and inside the state is going to be much more simple for the farmers/merchants.
The bill introduces the use of an electronic trading platform for direct and online trading of produce. Organizations that can establish such platforms include companies, partnership firms, or societies. The bill also allows farmers the freedom to trade anywhere and everywhere outside the state-notified APMC markets. This includes allowing trade at farm gates, warehouses, cold storage, etc. Another highlight feature of this bill is, it denies state governments or APMCs from levying fees, cess, or any other form of charge on farmers’ produce.
The Farmers’ Produce Trade and Commerce (Promotion and Facilitation) Bill does not give contractual support to the MSP(Minimum support price). Even though the farmers have nothing to do with the legalities, they have everything to do with the MSP. To this very day, there has been no mention of either “MSP” or “Procurement” in the said bill.
The three bills may finally be able to save farmers from the clutches of middlemen. There are lakhs of commission agents in the mandis of Punjab and Haryana, the leading farm producer states. They will lose their control and power over farmers and in turn, their huge revenue. Due to denying the State government from levying taxes, they will lose a fair share of mandi tax, which will lead them to lose a huge source of revenue – one of the major reasons why they are opposing these bills.
2. Farmers (Empowerment and Protection) Agreement of Price Assurance and Farm Services Bill
The second bill provides farmers with a framework for engaging in contract farming, where farmers will be able to have a direct agreement with a buyer (before sowing season) for selling the product to them at previously agreed prices. This process works through the state govt who acts as an intermediary.
The Organisations that may strike agreements with farmers to buy agricultural produce are defined as “sponsors’’. These Sponsors include individuals, companies, partnership firms, limited liability groups, and societies. The provision clearly states that any third parties that are involved in the transaction will have to be clearly mentioned in the agreement. The state governments can then establish registration authorities to provide for an electronic registry of farming agreements.
Agreements will cover mutually agreed terms between farmers and sponsors such as supply, quality, standards, price, as well as farm services. These include the supply of seeds, feed, fodder, agrochemicals, machinery and technology, and other farming inputs. The duration for the agreement is said to be one cropping season or one production cycle of the livestock. The maximum duration allowed is restricted to 5 years. For production cycles that exceed five years, the period of agreement can be decided by the farmer and sponsor with a common agreement.
Purchase price of the farming produce which includes the methods of determining the price can be added to the agreement. In case the price varies after a certain time, it becomes mandatory that the agreement must add a guaranteed price to be paid as well as clear reference points for all additional payments the farmer might receive, like bonus and other incentives. Just like the first bill, there is no mention of the minimum support price (MSP) that buyers need to offer to farmers.
It also specifies that, in this system, delivery of farmers’ produce can be undertaken by either party, provided it lies within the agreed time frame. Sponsors have the right to inspect the quality of products as per the agreement. Except for seed production in all other cases, the entire amount must be paid at the time of delivery and a receipt slip must be made that includes all the details of the sale.
Since the produce is out of state govt’s hands, such agreements are also exempted from the sponsor for any stock-limit obligations applicable that come under the Essential Commodities Act of 1955. Stock-limits are a method for preventing hoarding of agricultural produce.
This bill also comes with a three-level dispute settlement mechanism:
- The conciliation board- A board that is constituted by the government for providing settlement regarding an industrial dispute, when such an occasion arises.
- The sub-divisional magistrate- The head official of a district subdivision or an administrative officer, depending on the govt’s structure.
- The appellate authority- Prescribed by the Central Act, certain officers are appointed ( who are senior in rank) to the Public Information Officer to deal with appeals from requesters who are unhappy with how their request is being treated. These officers belong to the Appellate authority.
Under this policy, it says that a company doesn’t need to make a written contract with the farmer for any contract farming produce. Therefore, even if the company violates the terms of the contract, the farmer will not be able to prove it. Sponsors also have the upper hand during the situation of a dispute. These are some of the reasons that are raising eyebrows about this bill.
3. The Essential Commodities (Amendment) Bill, 2020
A major amendment to the Essential Commodities Act of 1955, this bill is meant to restrict the powers of the government concerning the production, supply, and distribution of certain key commodities. The bill removes major products such as cereals, pulses, oilseeds, edible oils, onion, and potatoes from the list of essential commodities.
According to this bill, the government can put forward stock holding limits and regulate the prices for the above-mentioned commodities. But these are only applicable under exceptional circumstances. These circumstances include war, famine, unexpected price rise, and natural calamity of a very large scale.
This provision says that stock limits on farming produce have to be made based on price rise in the market. They can be imposed only under certain conditions such as:
(i) a 100 % increase in the retail price of horticultural produce.
(ii) a 50% increase in the retail price of agricultural food items that are non-perishable.
This increase is to be calculated over the price surge during the preceding 12 months, or the average retail price over the last 5 years. Lower among the two.
The bill is aimed at removing the fears of private investors that hold regulatory influence in their respective business operations. The bill also gives the freedom to produce, hold, move, distribute, and supply the product, leading to exploitation of the private sector/foreign direct investment in the agricultural infrastructure of the country.
The government’s decision not to regulate the supply of the listed food items leads to the fact that the chances of hoarding are high especially for big companies. Also, it does predict the fact that a ban on onion exports is inevitable.
Over the last few months, a wild turn of events has occurred in the country in the form of protests, riots, etc concerning these three bills. Almost all the farmers of Punjab and Haryana have stormed the roads, protesting against the central govt’s decision on implementing the farm bills and other states have been seeing similar uprisings in one way or another concerning the same issue. At the moment they are not willing to stop at nothing unless and until the bills are revoked. But when you look closely at the issue, one can easily come to the conclusion that such complex, tedious bills cannot be understood by the common man/woman of our country very easily and will need time and some detailed explanations for them to get the whole picture.
Due to the lack of awareness on the extent of success of the bill, the new reforms might not hit the positive note that one expects them to. The future ahead heavily depends on how each stakeholder weighs their options and decides to be a part of this renewed system. Let us conclude this discussion with the hope that all the involved parties will soon arrive at a mutually acceptable win-win take on these bills.