Farm Bill 2020
The necessity for adjustments in the farmer's present farm market machinery cannot be questioned. The latest three Farm acts introduced by the government and passed by the Parliament faced a lot of rebuke, there was a lot of condemnation about the intention of the government, which questioned why the latest three farm acts proposed by the government and passes by the parliament in a hurry, amid a pandemic. The government and the farmers are at odds.. However, the result of the act will only be observed after few years of implementation.
The agriculture sector is believed to be the spine of our economy. Despite being the key element, it is the most neglected and disturbed sector; Agriculture occupies 43 per cent of the country's land, It is a primary lead source of livelihood, 58%of population is dependent on agriculture, but with the growth of industrial and service sector agriculture sector's share in country's GDP has dropped to only 18%. Reform in the existing market mechanism was the need of the hour; the agrarian population was facing political, social, environmental, and economic challenges.
The Indian government, in June 2020 passed three ordinances as reforms for agriculture sectors which the government is purporting to pave new paths for farmers, link farmers with the open market and offer an opportunity to taste price discovery, enable specific crops to be hoard. In this article, we will comprehend the provisions, pros and cons of the act, farmers’ allegations, the government’s in paper solution, controversies and the conclusion.
Minister of Agriculture and Farmer Welfare, Narendra Singh Tomar During the Monsoon Session, introduced three farm ordinances in Lok Sabha on September 14th, 2020; Lok Sabha passed the bill on September 17th, 2020; The bill was also passed by the Rajya Sabha on September 20, 2020, and it was transformed into an act on September 24, 2020, with President Ram Nath Kovid's signature. The three farm acts were viz;
1) Farmers (Empowerment and Protection) Agreement on Price Assurance and Farm Services Act, 2020
Farmers will be introduced to the new provisions through this act, like to contract to farm and likely to creates an environment in which companies/ organisations contact farmers directly for production, ;in this act, business is defined as “sponsors”. It will benefit both parties as no middlemen will be involved.
Meaning of contract farming
It’s an agreement between sponsor and farmer, both the parties will enter into a contract with mutual consent; in the contract, the sponsor can specifically mention the quality and grade of crop they require, time, place, price and delivery, they can hold the agreement for the period of one farming season up to 5 years. This measure would ensure that farmers would know that someone would buy their products. Certainly, it will mainly reduce the insecurities of farmers. The act also come up with a dispute settlement mechanism , remedies are already listed in the bill, for example the procedure of dispute settlement , where can farmer go in case of dispute with the sponsor. Yet, there are pros and cons and dissension.
1) It will unbolt choices for farmers
2) Reduce marketing cost
3) Facilitate getting the best price of their produce
4) Quick dispute resolution
No superior legal interference is allowed
Commission agent will lose their income source if entire agrarian farmers will move out of APMC mandis
Exploitation by private companies
Concerns of farmers regarding this act and the solutions mentioned in the act -
a) It might be stressed by farmers that private enterprises exploit them since farmers are unlearned and ignorant of the law, so that businesses can fool them with reference to complicated terms in the contract.
-> The solution to this problem, as mentioned in the act is in chapter II (farming agreement) section 3(4). Government will issue a model farming agreement, they will make farmers understand everything about the deal, so that farmers should be aware of what are their roles and responsibility and remedies available in case of dispute or breach of contract and clauses mentioned in the agreement. Sponsors can mention clauses in pursuance with rules. Any addition beyond the regulations will be held void.
b) Farmers have to deal with environmental fluctuations after harvesting; what if companies will quarrel with them relating to the quality and grade of the produce
-> The act has mentioned solutions for this also (quality grade and standard of farming).Section 4 of the act states that during the process of cultivation and rearing, a farm service provider which had to be called by the sponsor, will impartially monitor the quality of the crops to protect parties from future disagreement.
c) Farmers may be concerned about the price-fixing mechanism. They allege that sponsors will pay them less money by provoking an unneeded quarrel
-> In section 5 ( pricing of farming produce) it is clearly mentioned that the price of the produce had to be fixed beforehand in case there is subject of variation in price its compulsory to mention a guaranteed price, for the produce and additional onus and premium will be decided with referring APMC mandis prices or e-Nam existing prices.
d) Most of the farmers do not own vehicles for transportation/delivery of produces; hiring vehicles for delivery will cost farmers considerably, this is what farmers presume; adding to this they fear that private companies will delay their payment.
-> But, farmers need not worry about the delivery of crops or about the payment because in section 6 (sale and purchase of farming produce),sub-clause 1 says that the sponsor had to bear the cost of delivery and is), wholly responsible for the delivery mechanism either sponsor will come to take the product or will arrange for the vehicle in which farmers can deliver their order. In sub-clause (3) it is clearly mentioned that sponsor had to pay 2/3rd of the price at the time of delivery and remaining within thirty days of delivery.
e) Farmers' major dread is private companies will annex their land if they will fail to complete the contract.
-> Annexation of a farm property according to section 8 is prohibited. It is clearly mentioned that farmers and sponsors cannot enter into the agreement at stake farmer’s land or his private property, and during the period of the contract if the sponsor would build any structure within premises of farmer they have to demolish it after the expiry of the agreement or else and it will be added to farmer’s property.
The law would enable farmers to explore the open market, provide farmers with an opportunity to innovate, compete healthily competition and boost organic farming since organically farmed crops are helping to generate the best quality harvests exactly that any firm wants.
2) Farmers' Produce Trade and Commerce (Promotion and Facilitation) Act, 2020
This legislation will encourage and facilitate farmer-to-farmer trade and commerce, as well as allow farmers to trade outside the APMC mandis. They can also sell their produce in other state or other state’s APMC, where ever farmer will get the best price of his product he is free to trade there, will implementation of this act. Outside of the notified APMC mandis, this bill will remove all barriers to trade in agricultural products. The state will not impose taxes on the sale and purchase of farm produce outside of the mandis as a result of this bill. it will create a free market for farmers, the government is likely to create one nation one market system, as it’s a universal fact that there are two sides of the coin, let us discuss both the sides.
1) Its goal is to shift the risk of market volatility from farmers to investors
2) Access to inter and intrastate trade
3) Access to modern technology
4) Also, farmers can sell their products online
5) It seeks to boost farmer’s income
Gradual demolition of APMC, Farmers believe that once this bill is implemented, no one will be able to sell their produce in APMC Mandis, resulting in their closure
No MSP With the closure of APMC farmer’s worries that government will stop the MSP system, the government will not procure produce after enactment of the law.
New oligopoly:- When a market model or a business dominate rest of the business or market, there s a formation of oligopoly, reduces the competition. Introduction of contract farming market will influence the stake of APMC functioning.
What are APMC and MSP?
The Royal Commission of Agriculture advised in 1928 that regulated marketplaces should be established to enhance trading practices and build up market yards across the country In 2003, the Indian government drafted a model Agricultural Produce Market Committee (APMC) Act. It’s a market where the farmer sell their produces to wholesalers or traders via commission agents, it was established to save farmers from exploitation, also to supervise and regulate the MSP system.
MSP means Minimum Support Price, now through this system center fix a guaranteed price for some crops; every farmer will get at least that fixed price for their produce impartial of market condition.
3) Essential Commodities (Amendment) Act, 2020
It's an amendment to the Essential Commodity Act of 1955, which was enacted to give the government more control over the production, supply, and distribution of certain goods. With the amendment of this act, certain commodities that were prohibited from being kept in large stock have been removed from the list of essential commodities. Cereals, pulses, potato, onion, edible oil, and seed oils are among the products. Under three scenarios, the government will regulate the supply and price of these commodities: war, famine, and natural disaster if prices of non-perishable items (cereals, pulses, edible oil and seed oil) increase by 50% in their retail price and 100% increase in the price of perishable (potatoes and onions) items, the government will take those commodities under their control.
But the farmers censure this act saying it will escalate Artificial Demand and shoot up prices of goods, affecting the lives of common people.
Just after releasing three bills, farmers began denouncing the bill and requested the statutes to be withdrawn. The public demonstration started from August 2020 by the infinitesimal amount of farmers from Punjab, gradually more farmers partake in the riot.
Parties against the bill
The bill was opposed by two major farmer's organisations: Samyukt Kisan Morcha and All India Kisan Sangharsh Coordination Committee.
They controlled the rest of the farmer's unions, which included:
• Bharatiya Kisan Union (Ugrahan, Sidhupur, Rajewal, Chaduni, Dakaunda)
• Kisan Swaraj SangathanIn Indore
• Jai Kisan Andolan
• All India Kisan Sabha
• Karnataka Rajya Raitha Sangha
• National Alliance For People's Movements
• Lok Sangharsh Morcha
• All India Kisan Khet Majdoor Sangathan
• Kissan Mazdoor Sangharsh Committee
• Rashtriya Kisan Majdoor Sangathan
• All India Kisan Mazdoor Sabha
• Krantikari Kisan Union
• Asha-Kisan Swaraj
• Lok Sangharsh Morcha
• All India Kisan Mahasabha
• Punjab Kisan Union