Farm Reforms

 

In News:

• Three bills aimed at transforming agriculture in the country and raising farmers’ income were passed by Lok Sabha.
• These are:
• • The Essential Commodities (Amendment) Bill, 2020
  • The Farmers' Produce Trade and Commerce (Promotion and Facilitation) Bill, 2020
  • The Farmers (Empowerment and Protection) Agreement of Price Assurance and Farm Services Bill, 2020

 

Understanding the Essential Commodities (Amendment) Bill, 2020

• Current situation:
• • The Essential Commodities Act, 1955 (ECA) has been a mechanism to protect consumers from price gouging by traders at times of scarcity.
  • ECA was introduced in 1955 when India was not self-sufficient in food production, and there was food scarcity.
  • Stock limits were enforced by the government to check hoarding and price rise of essential commodities.
  • As a result, even as India has become surplus in most agri-commodities, farmers have been unable to get better prices due to lack of investment in cold storage, warehouses, processing and export as entrepreneurs were fearful of the Act.
  • Farmers suffer huge losses when there are bumper harvests, especially of perishable commodities as no one was willing to buy and stock them due to strict stock limits under the Act.
• Essential Commodities (Amendment) Bill, 2020 (ECA)
• • With the country now self-sufficient in food, and having large buffers of food stock, there is no more a need for some of the strict provisions of the ECA.
  • The Bill introduced by the Minister of State for Consumer Affairs, Food & Public Distribution seeks to amend the Essential Commodities Act to remove the existing restrictions on stocking food produce.
  • Sale of six types of agricultural produce, including cereals, edible oils, oilseeds, pulses, onions and potatoes were deregulated, by amending the Essential Commodities Act, 1955.
  • No stock limits are to be imposed on these commodities except in case of national calamity or famine or an extraordinary increase in prices.
  • Even in such exceptions the stock limits would not apply to processors and exporters.
• Benefits:
• • The legislation will help drive up investment in cold storages and modernization of food supply chain.
  • It will help both farmers and consumers while bringing in price stability.
  • It will create competitive market environment and also prevent wastage of agri-produce that happens due to lack of storage facilities.

 

Understanding the Farmers' Produce Trade and Commerce (Promotion and Facilitation) Bill, 2020:

• Current situation:
• • Farmers in India suffered from various restrictions in marketing their produce.
  • There were restrictions for farmers in selling agri-produce outside the notified APMC market yards.
  • The farmers were also restricted to sell the produce only to registered licensees of the State Governments.
  • Further, barriers existed in free flow of agriculture produce between various States owing to the prevalence of various APMC legislations enacted by the State Governments.
• The Farmers' Produce Trade and Commerce (Promotion and Facilitation) Bill, 2020 (FPTC)
• • The Bill introduced by the Agriculture Minister seeks to provide for the creation of an ecosystem where the farmers and traders enjoy the freedom of choice relating to sale and purchase of farmers' produce.
  • It will facilitate remunerative prices through competitive alternative trading channels to promote efficient, transparent and barrier-free inter-State and intra-State trade and commerce of farmers' produce outside physical premises of markets or deemed markets notified under various State agricultural produce market (APMC) laws.
  • In doing so, it aims to end the monopoly of the Agricultural Produce Market Committees (APMC).
  • It also seeks to provide a framework for e-trading of agricultural produce
• Benefits:
• • This legislation is a historic-step in unlocking the highly regulated agriculture markets in the country.
  • It will open more choices for the farmer, reduce marketing costs for the farmers and help them in getting better prices.
  • It will also help farmers of regions with surplus produce to get better prices and consumers of regions with shortages, lower prices.

 

Understanding the Farmers (Empowerment and Protection) Agreement of Price Assurance and Farm Services Bill, 2020:

• Current situation:
• • Indian agriculture is characterized by fragmentation due to small holding sizes and has certainweaknesses such as weather dependence, production uncertainties and market unpredictability.
  • This makes agriculture risky and inefficient in respect of both input & output management.
  • Also, at present, farmers lack an enforceable standard mechanism for predictable prices of crops at the time of sowing.
  • As a result, the private sector investment in the provision of inputs and knowhow in the agriculture sector is also hindered.
• The Farmers (Empowerment and Protection) Agreement of Price Assurance and Farm Services Bill, 2020 (FAPAFS)
• • The Bill introduced by the Agriculture Minister seeks to provide for a national framework on farming agreements that protects and empowers farmers to engage with various businesses for sale of future farming produce at a mutually agreed remunerative price framework.
• Benefits:
• • A legal framework that holds the buyer to an obligation to pay for the produce and the farmers to supply as per contract could facilitate the growth of contract farming.
  • The legislation will transfer the risk of market unpredictability from the farmer to the sponsor (who makes an agreement with farmer to buy even before sowing) and also enable the farmer to access modern technology and better inputs.
  • It will reduce cost of marketing and improve income of farmers.
  • Farmers will engage in direct marketing thereby eliminating intermediaries resulting in full realization of price.
  • Farmers have been provided adequate protection. Effective dispute resolution mechanism has been provided for with clear time lines for redressal.
  • The Bill would help in risk mitigation, assured returns for farmers and quality standardisation.