This article is written by Tanya Malhotra, from Fairfield Institute of Management and Technology.
Agriculture with its combined sector is the largest source of income in India as 70% of its rural household still depends primarily on agriculture, we all know our farmers are protesting against three Acts passed by the parliament of India and Acts got assent from the president of India Mr. Ram Nath Kovind on 27 September 2020 and these Acts are “The farmers (empowerment and protection) agreement on price assurance and farm services Act, 2020”, The farmers’ produce trade and commerce (promotion and facilitation) Act, 2020” and “The essential commodities Act, 2020”. These Acts are facing some criticism which led to protest against them and agitated farmers wanted them to be repealed as they think it will not double the income of farmers but fill the pockets of corporations instead. Not only these three Acts are facing criticism but there is one more bill which has bought the attention of farmers and that bill is electricity (amendment) bill, 2020, farmers are demanding these bill and Acts to be taken back as it is nothing but a bait set by the government so that big corporation will have more profit.
Farmers (Empowerment and Protection) Agreement on Price and Assurance and Farm Services Act, 2020
It allows farmers to trade inter-state and intra-state beyond the premises of the APMC (agricultural produce market committee) market and the state government cannot put a tax on it which we call mandi tax.
Price of farming produce
Price should be mentioned in the agreement and if the price is subjected to vary then a guaranteed price must be mentioned or a clear reference for any additional amount above it should be mentioned.
Farming agreement and it’s tenure/validity
The farming agreement is defined under section 3 in chapter 2 of the Act. A farmer may enter into a written agreement of any particular farming produce and such agreement must include the following:
- Terms and conditions for the supply of that produce;
- Time of supply;
- Quality, grade, standards, price, and such other matters; and
- Terms related to the supply of farms services.
Responsibility will be on the sponsor or farm service provider for its compliance.
VALIDITY: minimum one crop season to maximum 5 years it may extend on the discretion of farmer and sponsor by mutual decision and should be explicitly mentioned in the agreement.
Dispute Resolution Mechanism
Firstly the matter will be heard at the conciliation board and if the dispute fails to be set aside by the board within 30 days under the conciliation process from the date of filling and giving reasonable opportunity of being heard then such party may approach sub-divisional authority. Every order by the sub-divisional authority will have the same force as a decree of a civil court under the code of civil procedure, 1908 unless an appeal is preferred.
If the conciliation board and the sub-divisional authority are unable to settle the dispute then parties may move to the appellate authority which shall be presided by the collector or additional collector (appointed by the collector) within 30 days from the date of such order. The authority shall dispose of the case within 30 days and they have the same effect and enforceability as that of a decree under code of civil procedure, 1908 with all the powers such as compelling the discovery and production of the document, attendance of witnesses, etc.
PENALTY: magistrate or appellate authority may impose a fine on the party contravening the agreement. No action against the agricultural land of farmers for recovery of any dues.
The act allows intra-state and inter-state trade of farmer’s produce outside physical premises run by market committees under the APMC Act and other markets under the APMC Act.
Trade can be conducted in outside trade areas such as farm gates\factory premises\warehouse\silos and cold storage or any place of production\collection and aggregation of produce.
It also provides electronic trading of scheduled farmer’s produce in the specified trade area, it will be done by online buying and selling of products with electronic devices on the internet.
Who can establish and operate
- Companies, partnership firms, or registered societies having permanent and mandatory account numbers under the Income Tax Act, 1961.
- Agricultural cooperative society or farmer producer organization.
Every trader shall make the payment for traded scheduled farmers’ produce on the same day or maximum of three days; if procedurally required to the subject of condition for the receipt of delivery mentioning payment also should be on the same day.
Who can establish and operate the electronic trading and transaction platform
- Any person, having permanent account number given under the income tax Act, 1961, or other document notified by the central government;
- Farmer producer organization; and
- Agricultural co-operative society.
Duties of establisher or operator
- Shall prepare and implement guidelines for free trade practice
- Guidelines for fees
- Guidelines for technical parameters
- Guidelines for logistic arrangements
- Quality assessment
- Timely payment
- Dissemination guidelines in local language
Market fee under state APMC Act
No market fee or cess or levy shall be levied on any farmer\trader or electronic trading and transaction platform under any state APMC Act.
Dispute Resolution Mechanism
In case of dispute arise then both the parties may seek a mutually acceptable solution through conciliation by applying to the sub-divisional magistrate who will refer the case to the conciliation board and that to be appointed by him by facilitating the binding settlement. The board must have a chairperson and members not less than 2 and not more than 4 as sub-divisional magistrate may deem fit.
If they fail to set the dispute then to sub-divisional authority and he shall decide the dispute within 30 days from the date of filing and after giving reasonable opportunity of being heard.
- Pass an order of recovery of the amount;
- Impose a fine\penalty, he will be liable to pay not more than 25000 but which may extend up to 5 lakhs; or
- Pass an order of restraining.
The party aggrieved by sub-divisional authority’s order may prefer an appeal before appellate authority means collector or additional collector appointed by the collector and within 30 days matter should be disposed of from the date of filing.
Essential Commodities (Amendment) Act, 2020
Regulation of food items
Before this amendment central government had the power to regulate prohibit the production, supply, distribution, trade, and commerce of essential commodities such as oilseeds, onion, potatoes, etc., but now through this amendment, the central government can only regulate them under extraordinary circumstances such as war\famine\extra ordinary price rise\natural calamity of grave nature.
The stock limit must be based on the price rise. To implement a stock limit there are two conditions:
- 100% increase in the retail price of horticulture produce.
- 50% increase in the retail price of non-perishable agricultural food items.
The increased calculation will be prevailing immediately preceding 12 months or average retail price from the last 5 years, whichever is lower.
The essential commodities Act, 1955 was brought in India when we were not self-sufficient in food production but now we have a surplus in most commodities and the amendment plays an important step to:
- Double the farmer’s income, and
- Ease of doing business.
So far we have talked about the analysis of these Acts now, we will discuss their criticism and what are the loopholes that have been left behind in these 3 Acts.
The Central government passed these three Acts through ordinance while having voice votes they did not pass them through its normal way so these Acts are facing many dissents. Here is some main criticism about these Acts that have been disclosed by many experts and farmers themselves so far which led to major protests. Also, many critics have said that it is not a union subject but a state subject and it is up to those to decide what will be best suited for their farmers’ income. Both state and union have the power to control the production, distribution, and products of the industry including agriculture under concurrent list entry 33 of the constitution. But agriculture is under state list entry-level 14.
These are some main criticisms:
No mentioning on MSP
Minimum support price, the assurance of MSP in these Acts are almost blurred as in the Act there is no mention for MSP but the government keeps on saying that no one is going to deprive farmers of MSP. This lack of mentioning MSP is leading a big criticism as without this price assurance farmers can be exploited by the private companies because the price would not be set or we can say the minimum price will not be their due to which private company will bargain with farmers and farmers will end up selling produce at the lowest price even that low which they will get from the government under MSP.
Abolished mandi tax
These Acts abolish the tax or levy and prevail free market, whereas APMC used to charge 4.5% to 8% as mandi tax but now due to this change government will face loss in revenue as now there would not have any mandi tax in these new reforms as there will be no mandi outside the premises of APMC, and it is a major drawback as due to covid-19 we are already facing a huge loss.
“NO MANDI = NO TAX = NO REVENUE”
Indirectly destroying APMC market
By adding private companies under the agrarian sector APMC will end up becoming a second option for farmers, what is required is the strengthening of the existing APMC market. Political leader Sharad Pawar has also stated that we need reforms in the APMC market and for that, we have discussed it many times with the government about it and even wrote the letter but destroying the APMC market was never their choice. Scrapping the APMC market will attract incapability under the agrarian market as small farmers will not be able to attract corporations and mandi will end becoming their last resort and if mandi will also not be there then they would be left with nothing.
No civil jurisdiction
These Acts provide that no civil court has the jurisdiction to hear the matter related to these Acts as for that conciliation board, sub-divisional magistrate and appellate authority (sub-divisional authority) have empowered for that. So, in this regard the government has to think twice as our country still faces corruption (under the table) and big corporations will easily bribe sub-divisional magistrates and farmers will not get justice.
What positive outcome will these Acts bring
Prime Minister Narendra Modi while addressing the nation said that these three Acts will prevail competition under the agrarian market and these are the revolutionary reforms which will bring a major change in the agricultural market by changing its reform and changing its old behavior, now every farmer will have a right to move outside the APMC premises to sell their produce, they are not just stuck to the only market they can move freely and decide on their own that whom they want to sell and where they are getting the best price and they do not even have to pay tax i.e., mandi tax.
Under APMC there was limited trader’s operation which led to cartelization and reduction in competition and due to this we were not able to grow the agricultural market the way we should have. These three Acts will help with two factors:
- Due to private investment economy will grow rapidly and attract foreign investment which will lead to building the trust of investors under the agrarian market;
- And most importantly helps to double the farmers’ income.
Traders, commission agents, and other functionaries used to organize into the association by themselves, lead to restricting the entry of a new person into the market so that it also has been curbed under these Acts by lowering the state intervention and moving it to broader view by going outside the premises of market transaction.
These Acts need some reformation which I have already explained under the criticism part (see here) but otherwise it Act can bring a revolution under the agricultural market. And, on top of it if we regulate the Swaminathan report with this act it will come as a great move by the government.
The national commission on farmers which was chaired by Professor M.S Swaminathan gave five reports through the period of 2004-2006 in which there were some recommendations which can lead to a better agricultural environment and these can help the Acts to become more solid. So these recommendations are:
- Distribute ceiling-surplus and wastelands.
- Prevent digression of prime agricultural land and forest to corporate for non-agricultural purposes.
- Ensure grazing rights and seasonal access to forests to tribal and pastoralists, and access to common property resources.
- Establish a National Land Use consulting service, which might have the capacity to link land-use decisions with ecological meteorological and marketing factors on a location and season-specific basis.
- Set up a mechanism to manage the sale of agricultural land, supported quantum of land, nature of proposed use, and category of buyer.
For further reading of this committee (see here).
So we can conclude by saying that agriculture plays an important role in our country to become “atma nirbhar” and for that to happen it is important to strengthen the agrarian sector and for which three acts passed by the parliament of India but they are facing some criticism due to their loopholes as those loopholes can bring nothing but corporate nirbhar India but if we can reform them in a way that those loopholes will repeal then these Acts can bring a good change in the society.
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