{"id":60274,"date":"2020-09-27T17:19:46","date_gmt":"2020-09-27T11:49:46","guid":{"rendered":"https:\/\/www.legalindia.com\/news\/?p=60274"},"modified":"2020-09-27T17:19:46","modified_gmt":"2020-09-27T11:49:46","slug":"benefits-and-drawbacks-of-agriculture-bills-2020","status":"publish","type":"post","link":"https:\/\/www.legalindia.com\/news\/benefits-and-drawbacks-of-agriculture-bills-2020","title":{"rendered":"Benefits and Drawbacks of AGRICULTURE BILLS 2020"},"content":{"rendered":"

\"\"<\/a><\/p>\n

By: Mr Rakesh Singh, Advocate, Bombay High Court & Senior Partner of Law Firm, RKS Associates<\/p>\n

 <\/p>\n

Introduction:<\/p>\n

The Lok Sabha (Lower House of Indian Parliament) on Thursday (September 17, 2020) passed three legislations pertaining to the agriculture sector, ostensibly, to push agriculture marketing and commodities trade reforms in the country. The three bills that were passed are<\/p>\n

1.\u00a0\u00a0\u00a0the Farmers’ Produce Trade and Commerce (Promotion and Facilitation) Bill, 2020,<\/p>\n

2.\u00a0\u00a0\u00a0Farmers (Empowerment and Protection) Agreement on Price Assurance and Farm Services Bill, 2020<\/p>\n

3.\u00a0\u00a0\u00a0Essential Commodities (Amendment) Bill, 2020.<\/p>\n

These bills were introduced in the Lok Sabha on day one of the Monsoon session (September 14, Monday). The bills will replace the Farmers’ Produce Trade and Commerce (Promotion and Facilitation) Ordinance, 2020 promulgated by the President on June 5 this year once they are passed by the Rajya Sabha as well.<\/p>\n

 <\/p>\n

Bill on Agri market –\u00a0 \u00a0The Farmer\u2019s Produce Trade and Commerce (Promotion and Facilitation) Bill, 2020<\/strong><\/p>\n

 <\/p>\n

Benefits:<\/strong><\/p>\n

1.\u00a0\u00a0\u00a0Create an ecosystem where farmers and traders enjoy the freedom to sell and purchase farm produce outside registered ‘mandis’ under states’ APMCs (Agricultural Produce Market Committees).<\/p>\n

2.\u00a0\u00a0\u00a0Help farmers in getting better prices through competition, abolishment of market fees and cost-cutting on transportation.<\/p>\n

Section 6\u00a0states\u00a0that no market fee or cess or levy, by whatever name called, under any State APMC Act or any other State law, shall be levied on any farmer or trader or electronic trading and transaction platform for trade and commerce in scheduled farmers\u2019 produce in a trade area.<\/p>\n

3.\u00a0\u00a0\u00a0Promote barrier-free inter-state and intra-state trade of farmers’ produce.<\/p>\n

Section 3:\u00a0Subject to the provisions of this Act, any farmer or trader or electronic trading and transaction platform shall have the freedom to carry on the inter-State or intra-State trade and commerce in farmers\u2019 produce in a trade area.<\/p>\n

4.\u00a0\u00a0\u00a0Provide a facilitative framework for electronic trading.<\/p>\n

 <\/p>\n

Section 5\u00a0provides framework for electronic trading and transaction platform. The Central Government shall by rules<\/p>\n

(a) specify the procedure, norms, manner of registration; and<\/p>\n

(b) specify the code of conduct, technical parameters including inter-operability with other platform and modalities of trade transaction including logistics arrangements and quality assessment of scheduled farmers\u2019 produce and mode of payment, for facilitating fair inter-State and intra-State trade and commerce of scheduled farmers\u2019 produce in a trade area.<\/p>\n

Drawbacks:<\/strong><\/p>\n

1.\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0States will lose revenue as they won’t be able to collect ‘mandi fees’ if farmers sell their produce outside registered APMC markets.<\/p>\n

2.\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0If entire farm trade moves out of mandis the commission agents in states will lose their businesses.<\/p>\n

3.\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0Farmers are not trained electronic trading and thus, they shall be highly prone to frauds<\/p>\n

 <\/p>\n

Bill on contract farming- The Farmer (Empowerment and Protection) Agreement of Price Assurance and Farm Services Bill, 2020<\/strong><\/p>\n

 <\/p>\n

Benefits:<\/strong><\/p>\n

1.\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0Farmers can enter into a contract with agribusiness firms, processors, wholesalers, exporters or large retailers for sale of future farming produce at a pre-agreed price. It is the responsibility of sponsors or the farm service provider for compliance of any legal requirement for providing such farm services.<\/p>\n

Section 3\u00a0of the bill explains about farming agreement and its period. It also states that the responsibility for compliance of any legal requirement for providing such farm services shall be with the Sponsor or the farm service provider, as the case may be. The minimum period of the farming agreement shall be for one crop season or one production cycle of livestock, as the case may be, and the maximum period shall be five years.<\/p>\n

Section 4\u00a0of the bill states that the parties entering into a farming agreement may identify and require as a condition for the performance of such agreement compliance with mutually acceptable quality, grade and standards of a farming produce.<\/p>\n

2.\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0Risk of market unpredictability is shifted from farmers to sponsors as the price of farming produce is predetermined at the time entering into agreement. Farming agreement may<\/p>\n

Section 5\u00a0of\u00a0the bill explains that the price to \u00a0be paid for the purchase of a farming produce may be determined and mentioned in the farming agreement itself and \u00a0a guaranteed price to be paid for such produce.<\/p>\n

3.\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0Ensure risk mitigation and flow of credit to farmer or Sponsor or both by linking farming agreement\u00a0 with insurance and credit instrument.<\/p>\n

Section 9:\u00a0A farming agreement may be linked with insurance or credit instrument under any scheme of the Central Government or the State Government or any financial service provider to ensure risk mitigation and flow of credit to farmer or Sponsor or both.<\/p>\n

4.\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0Effective dispute resolution mechanism with redressal timelines.<\/p>\n

Section\u00a013\u00a0states that every farming agreement shall explicitly provide for a conciliation process and formation of a conciliation board consisting of representatives of parties to the agreement.<\/p>\n

Section 14\u00a0states that\u00a0where, the farming agreement does not provide for conciliation process as required under sub-section (1) of section 13, or the parties to the farming agreement fail to settle their dispute under that section within a period of thirty days, then, any such party may approach the concerned Sub-Divisional Magistrate who shall be the Sub-Divisional Authority for deciding the disputes under farming agreements.<\/p>\n

 <\/p>\n

Drawbacks:<\/strong><\/p>\n

1.\u00a0\u00a0\u00a0Farmers in contract farming arrangements will be the weaker players in terms of their ability to negotiate what they need.<\/p>\n

2.\u00a0\u00a0\u00a0It will affect the small farmers as many sponsors may not like to deal with a multitude of small and marginal farmers.<\/p>\n

3.\u00a0\u00a0\u00a0Being big private companies, exporters, wholesalers and processors, the sponsors will have an edge in entire dealing including in disputes.<\/p>\n

4.\u00a0\u00a0\u00a0Farmers who don\u2019t know to read and write, chances are there they might get exploited by the sponsors.<\/p>\n

5.\u00a0\u00a0\u00a0If the dispute doesn\u2019t get resolved within the timelines provided in this bill then it will be the farmers who will be most affected.<\/p>\n

6.\u00a0\u00a0\u00a0It may give rise to cash crop and corporates will call the shots. Ultimately subsistence crops will take a beating.<\/p>\n

 <\/p>\n

Bill relating to commodities : The Essential Commodities (Amendment) Bill, 2020<\/p>\n

A new sub-section 1A in Section 3 of the act stipulated control orders \u2014 with respect to the supply of certain foodstuffs was added.<\/p>\n

It would be issued only under extraordinary circumstances that may include war, famine, extraordinary price rise and natural calamity of grave nature<\/p>\n

Benefits:<\/strong><\/p>\n

1.\u00a0\u00a0\u00a0The amendment bill will remove commodities like cereals, pulses, oilseeds, onion and potatoes from the list of essential commodities.<\/p>\n

2.\u00a0\u00a0\u00a0Allows the central government to regulate the supply of certain food items only under extraordinary circumstances (such as war and famine). Stock limits may be imposed on agricultural produce only if there is a steep price rise.<\/p>\n

3.\u00a0\u00a0\u00a0It will remove fears of private investors of excessive regulatory\u00a0interference in their business operations.<\/p>\n

4.\u00a0\u00a0\u00a0It will help to bring investment for farm infrastructure like cold storages, and modernising food supply chain.<\/p>\n

5.\u00a0\u00a0\u00a0Will help both farmers and consumers by bringing in price stability.<\/p>\n

6.\u00a0\u00a0\u00a0Will create competitive market environment and cut wastage of farm produce.<\/p>\n

 <\/p>\n

Drawbacks:<\/p>\n

1.\u00a0\u00a0\u00a0Price limits for “extraordinary circumstances” are so high that they are likely to be never triggered.<\/p>\n

2.\u00a0\u00a0\u00a0Big companies will have the freedom to stock commodities- it means they will dictate terms to farmers which may lead to less prices for the cultivators.<\/p>\n

 <\/p>\n

Conclusion:<\/p>\n

No doubt, the Bills help farmers by giving them freedom to sell the goods as per their own choice. However, the biggest chunk of Indian farmers are small farmers having no great education or source of income. The Bills, if become Acts, may increase the income of farmers on short term basis, but on long term, the small famers may end up becoming labourers of big corporates. Certainly the bills contemplate corporatisation of farm sector and it has its own advantages as well as disadvantages.<\/p>\n

 <\/p>\n","protected":false},"excerpt":{"rendered":"

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