Farmer’s Protest

The Farmers’ Produce Trade And Commerce (Promotion And Facilitation) Bill, The Farmers (Empowerment and Protection) Agreement on Price Assurance and Farm Services Bill, and The Essential Commodities (Amendment) Bill — passed by the Parliament in the recently concluded Monsoon session. Farmer’s objections are mostly against the provisions of the first. And while there is no uniform demand among the protesters or a unified leadership, it emerges that their concerns are mainly about sections relating to “trade area”, “trader”, “dispute resolution” and “market fee” in the first bill. As many as 31 farmers’ organisations, which have different ideologies and leanings, are to fight collectively against these Bills, and the first agenda on their common programme is the ‘Punjab Bandh Call’.

The three farm bills seek to:

Break the monopoly of government-regulated mandis and allow farmers to sell directly to private buyers.
Provide a legal framework for farmers to enter into written contracts with companies and produce for them.
Allow agri – bussinesses to stock food articles and remove the government’s ability to impose restrictions arbitrarily.
Agricultural Produce Market Committees (APMCs).
To create a framework for contract farming.
‘One Nation, One Market’ for agricultural produce.

Why the fear? :

Mandis bring in revenue for state governments and this will diminish their relevance.
Middlemen will be affected.
Farmers fear this will end minimum support prices regime.
The lack of bargaining power with big companies is a concern.
While retail prices have remained high, data from the Wholesale Price Index (WPI) suggest a deceleration in farm gate prices for most agricultural produce.

Are the fears valid? :

A farmers will have the freedom to choose where he wants to sell but may not have the knowledge to negotiate the best terms with a private company.
There is hardly any regulations outside the mandis and no grievences redressal mechanism yet.

The Farmers’ Produce Trade and Commerce (Promotion and Facilitation) Bill, 2020

Main provisions:

The new legislation will create an ecosystem where the farmers and traders will enjoy freedom of choice of sale and purchase of agri-produce.
It will also promote barrier-free inter-state and intra-state trade and commerce outside the physical premises of markets notified under State Agricultural Produce Marketing legislations.
The farmers will not be charged any cess or levy for the sale of their products and will not have to bear transport costs.
The Bill also proposes electronic trading in transaction platform for ensuring a seamless trade electronically.
In addition to mandis, freedom to do trading at farmgate, cold storage, warehouse, processing units etc.
Farmers will be able to engage in direct marketing thereby eliminating intermediaries resulting in full realization of price.

Doubts:

Procurement at Minimum Support Price will stop
If farm produce is sold outside APMC mandis, these will stop functioning
What will be the future of government electronic trading portal like e-NAM

Clarification :

Procurement at Minimum Support Price will continue, farmers can sell their produce at MSP rates, the MSP for Rabi season will be announced next week
Mandis will not stop functioning, trading will continue here as before. Under the new system, farmers will have the option to sell their produce at other places in addition to the mandis
The e-NAM trading system will also continue in the mandis
Trading in farm produce will increase on electronic platforms. It will result in greater transparency and time saving

Read Also Minimum Support Price (MSP)

The Farmers (Empowerment and Protection) Agreement of Price Assurance and Farm Services Bill, 2020

Main provisions :

The new legislation will empower farmers for engaging with processors, wholesalers, aggregators, wholesalers, large retailers, exporters etc., on a level playing field. Price assurance to farmers even before sowing of crops. In case of higher market price, farmers will be entitled to this price over and above the minimum price.
It will transfer the risk of market unpredictability from the farmer to the sponsor. Due to prior price determination, farmers will be shielded from the rise and fall of market prices.
It will also enable the farmer to access modern technology, better seed and other inputs.
It will reduce cost of marketing and improve income of farmers.
Effective dispute resolution mechanism has been provided for with clear time lines for redressal.
Impetus to research and new technology in agriculture sector.

Doubts :

Under contract farming, farmers will be under pressure and they will not be able to determine prices
How will small farmers be able to practice contract farming, sponsors will shy away from them
The new system will be a problem for farmers
In case of dispute, big companies will be at an advantage

Clarification:

The farmer will have full power in the contract to fix a sale price of his choice for the produce. They will receive payment within maximum 3 days.
10000 Farmer Producer organizations are being formed throughout the country. These FPOs will bring together small farmers and work to ensure remunerative pricing for farm produce
After signing contract, farmer will not have seek out traders. The purchasing consumer will pick up the produce directly from the farm
In case of dispute, there will be no need to go to court repeatedly. There will be local dispute redressal mechanism.

The Essential Commodities (Amendment) Ordinance, 2020:

Regulation of food items: 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.

Stock limit: The Ordinance requires that imposition of any stock limit on agricultural produce must be based on price rise.
A stock limit may be imposed only if there is: (i) a 100% increase in retail price of horticultural produce; and (ii) a 50% increase in the retail price of non-perishable agricultural food items.
The increase will be calculated over the price prevailing immediately preceding twelve months, or the average retail price of the last five years, whichever is lower.

Way forward

The government must resolve to address the structural issues and there is a need to give farmers not just a better, but also more stable, return on their crops.
NITI Aayog has suggested that all subsidies for agriculture, including fertilizer, electricity, crop insurance, irrigation and interest subvention be replaced by income transfer which will give them the freedom to choose the best crop.
The expansion of the APMC market system
Empowering State Farmers Commissions