Things we need to know about Farmer’s Reforms

THE THREE FARMER REFORMS ACTS:

1. The Farmers’ Produce Trade and Commerce (Promotion and Facilitation) Act, 2020:

• The farmers’ produce Trade and Commerce (Promotion and Facilitation) Act, 2020 allows intra-state and inter-state trade of farmers’ produce beyond the physical premises of APMC markets.  State governments are prohibited from levying any market fee, cess or levy outside APMC areas.
• This Act allows the farmers to sell their produce outside the Agricultural Produce Market Committee (APMC) regulated markets, so, the farmers clearly have more choice on who they want to sell.
• The prices in APMC’s although above MSP, are controlled by the middlemen cartels. Whereas, with the introduction of this new act, role of middleman will get completely extinct.

What is APMC and MSP?

• The Agricultural Produce Market Committee (APMCs) are government-controlled marketing yards or mandis  set up with the objective of ensuring fair trade between buyers and sellers for effective price discovery of farmers’ produce.
• MSP (Minimum Support Price) is the minimum price that farmers can sell their produce. The MSP’s are set by the government and such price flooring ensures that farmers do not receive rates that are too low

2. The Farmers (Empowerment and Protection) Agreement on Price Assurance and Farm Services Act, 2020:

This Act makes provisions for the setting up of a framework for contract farming. The farmer and an ordained buyer can strike a deal before the production happens. Farming shall be carried out on the basis of the agreement between the buyers and the producers. One of the greatest advantages that farmers receive through this bill is the price assurance even before sowing his crops. 

The scope of contract farming is huge as MNC’s regularly get into contracts with farmers in order to ensure they receive specified types of produce. 

It provides for a three-level dispute settlement mechanism: the conciliation board, Sub-Divisional Magistrate and Appellate Authority.

3. Essential Commodities (Amendment) Act, 2020

• The Essential Commodities Act, 1955 empowers the central government to designate certain commodities (such as food items, fertilizers, and petroleum products) as essential commodities.  The central government may regulate or prohibit the production, supply, distribution, trade, and commerce of such essential commodities.  The Ordinance provides that the central government may regulate the supply of certain food items including cereals, pulses, potatoes, onions, edible oilseeds, and oils, only under extraordinary circumstances.   These include: (i) war, (ii) famine, (iii) extraordinary price rise and (iv) natural calamity of grave nature.

Reason behind enactment of these Acts?

• The government has said these reforms will accelerate growth in the sector and provide buyers the freedom to buy farmers’ produce outside the APMC markets without having any license or paying any fees to APMCs.  The Contract Farming provides a framework for buyers and farmers to enter into a contract (before a crop season starts) which guarantees farmers a minimum price and buyers an assured supply. The third Act amends the Essential Commodities Act to provide that stock limits for agricultural produce can be imposed only when retail prices increase sharply and exempts value chain participants and exporters from any stock limit.  
• The three farm Acts aim to increase the availability of buyers for farmers’ produce, by allowing them to trade freely without any license or stock limit, so that an increase in competition among them results in better prices for farmers. through private sector investment in building infrastructure and supply chains for farm produce in national and global markets. They are intended to help small farmers who don’t have means to either bargain for their produce to get a better price or invest in technology to improve the productivity of farms.

Why farmers are upset?

The Farmers are protesting mainly against the first 2 Farm Acts i.e. (1) the Farmers’ Produce Trade and Commerce (Promotion and Facilitation) Act, 2020, and (2) the Farmers (Empowerment and Protection) Agreement on Price Assurance and Farm Services Act, 2020.

The farmers are afraid that these Bills may be the platform that the government is setting up for the replacement or scrapping of the APMC. Farmers believe the price assurance legislation may offer protection to farmers against price exploitation, but will not prescribe the mechanism for price fixation. They fear that the Minimum Support Price (MSP) guarantee that was their safety net since the Green Revolution of the 1960s shall be snatched away from them under the pretext of giving the farmers more playing ground and better platforms by given free hand to private corporate houses which will lead to their exploitation. Farmers are demanding the government guarantee MSP in writing.

For any clarifications/suggestions or any queries please write drop a comment or write to us at info@sigmalegal.in

TEAM SIGMA LEGAL

(LEGAL DEPARTMENT)