This article is written by Nikhil Gayner, pursuing a Diploma in Labour, Employment and Industrial Laws (including POSH) for HR Managers from LawSikho.
Table of Contents
Even though India has shifted its focus from agrarian Industry to more industrial industry and now in service Industry yet the Indian agriculture is one of the largest private sectors in the country. Even though it has a scale and large reach the agriculture sector still remains one of the most regulated, restricted, and prohibited sectors in India’s economy.
Despite many hurdles and boundaries India has performed well in the agriculture sector post Green Revolution and has fought efficiently overcame few of the greatest threats such as food scarcity and poor quality food products. In 2019, according to the World Trade Organization, today India ranks as 8th in terms of major exporter of agriculture produce.
Even though India’s achievement is second to none then also today India grapples with shrinking share of agriculture in gross domestic product. With this push of Farm reforms government says that, it will give an opportunity and freedom to Indian farmers to sell their produce directly in open market without involvement of any third party and without restrictions of government Mandis.
However, Indian farmers have been benefiting from such freedom since the 1990s. The government declaration that the focus on contract farming will bring direct investment, knowledge, infrastructure of large private players and this in return will improve local farmers’ incomes.
Although it has been continuously communicated from the government that the very intent of these acts is to serve the interests of farmers. Also, on the ground few believe that these Acts will not only focus on farmer welfare but also on improving the business aspects for various supply chain companies and especially non-traditional private players in the space of agri-tech business and core agri-based companies.
With the center’s broad directions few of the states have taken steps in implementing these reforms. However, few states in India had already allowed private agribusinesses to take a part in contract farming and buy farmer produce directly from farmers. These Private sectors work within the boundaries of the state level APMC, working within the regulatory authorities of APMC markets since these APMC markets work as an intermediary channel by bringing buyers and sellers together to work on a single platform.
On 5 June 2020, the Farmers (Empowerment and Protection) Agreement on Price Assurance and Farm Services Ordinance, 2020 was promulgated by the Union Cabinet and In September 2020, the same has been assented by President
3 Farm Acts are as follows:
Farmers’ Produce Trade and Commerce (Promotion and Facilitation) Act, 2020
This act provides for setting up a mechanism allowing the farmers to sell their farm produce outside the Agriculture Produce Market Committees (APMCs).
This act will help any trader bearing licence in buying the farmers at mutually pre-agreed prices. Also, the mandi tax imposed by the state government will not impact the said trade of farm produce.
Farmers (Empowerment and Protection) Agreement on Price Assurance and Farm Services Act, 2020
This act focuses more on open market trade and thus allows farmers to do contract farming by finalising the produce quantity and rates well in advance.
Essential Commodities (Amendment) Act, 2020
All the free essential commodities such as grains, edible oils, pulses and others for trade.
The Indian government has presented these laws as reforms which are analogous to the 1991 opening of the Indian economy directly with the globalised markets. It has also been claimed that all these laws will open up new opportunities for the farmers and will impact in a positive way to farmers income from various farm products.
Also, the crucial factor which has been observed in the recent past is that in India the food markets are growing exponentially and governments have always found various financial constraints in investing more in farm and rural infrastructure. The viewpoint that implementation of such laws will help in strengthening the basic infrastructure requirement through private players and would make the agriculture products more profitable for the farmers.
Positive aspects of the Acts
- One Country- One Market: This can put an end to hegemony of the APMC on farm products, and this will eliminate the critical issue of “middleMen” and farmers can sell their products to the best price in an open market.
- In certain states within the country, few commodity items are in excess production while other states levies higher taxes on these commodity items because of the demand and supply issue. This one country one market will call in the private sectors to take up their infrastructural and supply chain power in a more conducive way and thus they can lead by proposing a win-win situation for both the farmers and the consumers.
- It will pull the interest of private organisations into farming, by such investments the private investors can change the framework of the rural part and can lead it to more modernization in farming.
- Agreement cultivating is more beneficial for farmers since they will get the price confirmation in early stage and will know the exact production requirements.
- This may also lead to cooperative farming, since the farmers are well aware in advance the requirement of corporates, the requirement can be fulfilled by calling in other similar produce cultivating farmers and thus it will give more negotiation strength to the farmers.
Negative aspects of the Acts
- The passing of these acts were done in a very authoritative manner. The respective states must deal with their concerned Farming and allied issues. However, state inputs were not considered in first place and also the most impacted party “the farmers” were not allowed to voice out their issues and concerns. Even in the parliament the bill was not thoroughly discussed and it got passed by simply voicing out the ballot.
- APMC are somewhat useful for the smaller farmers who do not wish to go extra bounds for the sale of their produce. This act may tinker with the very basic structure of APMC’s and may lead the APMC’s just to behave as an institution without much of the power in hand.
- There is no assurance that it will increase the income of the farmers. In recent events, in Bihar during 2006 the APMC’s were cancelled and it was observed that the farmers received the least price of their produce and in a few cases it was even less than the MSP.
- Farmers might be interested more in selling their produce rather than shipping them out by selling it to the large private partner.
The acts have potential to transform the agriculture sector and has shown larger intent in increasing the farmers income by 2022 and will the local farmers independent from the governments regulated mandis and provides them an opportunity for better negotiations of their produce. Also, these acts aim to enable farmers to engage more with agri based organisations, exporters, retailers and service providers for sales and service of their produce and opens the gates of modern technology for the farmers. This gives an option for farmers to choose whichever market best suits them to sell their produce.
However, lack of proper communication channels is making it difficult for farmers to understand the same and farmers are relying more on others to understand the same. Also, the government should have given more focus on grievance or conflict redressal in the act, since the farmers are dealing with deep pocketed private sectors having money muscles and all the legal system at their disposal.
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