Two Ordinances To Kick In Agri-Reforms

On 5th June, 2020, the government notified two key ordinances to kick in agriculture reforms and help farmers trade freely and get better prices. The ordinances have been promulgated with the aim of giving a boost to rural India for farmers engaged in agriculture and allied activities.

Farming Produce Trade and Commerce (Promotion and Facilitation) Ordinance, 2020

Aim

• To promote barrier-free inter-state and intra-state trade in agricultural produce.

Need

• Farmers still suffer from various restrictions in mar- keting their produce. There are restrictions for farmers in selling agri-produce outside the notified APMC market yards.
• The farmers are also restricted to sell the produce only to registered licensees of the State Governments.
• Further, barriers exist in free flow of agriculture produce between various States owing to the prevalence of various APMC legislations enacted by the State Governments.

Key

• The maintenance proposes an electronic trading in transaction platform for ensuring a seamless trade electronically.
• The farmers will not be charged any cess or levy for sale of their produce under this Act.
• It proposes to set up a separate dispute resolution mechanism for the farmers.

Impact

• Conducive Agri Ecosystem: It will help to create an ecosystem where the farmers and traders will enjoy freedom of choice of sale and purchase of agri-produce.
• Barrier Free market: It will promote barrier-free inter-state and intra-state trade and commerce out-side the physical premises of markets notified under State Agricultural Produce Marketing legislations. It will help in unlocking the vastly regulated agriculture markets in the country.
• Better Return: 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.
• One India, One Agriculture Market: It will help pave the way for creating One India, One Agriculture Market and will lay the foundation for ensuring golden harvests for our hard-working farmers.

Farmers (Empowerment and Protection) Agreement on Price Assurance and Farm Services Ordinance, 2020

Aim

• To provide a framework for the protection and empowerment of farmers with reference to the sale and purchase of farm products.

Need

• Indian Agriculture is characterized by fragmentation due to small holding sizes and has certain weaknesses such as weather dependence, production uncertainties and market unpredictability.
• This makes agriculture risky and inefficient in respect of both input & output management.

Key Points

• It provides for a farming agreement prior to the production or rearing of any farm produce, aimed at facilitating farmers in selling farm produces to sponsors.
• Farmers will engage in direct marketing thereby eliminating intermediaries resulting in full realization of price.
• Sale, lease or mortgage of farmer’s land is totally prohibited and farmer’s land is also protected against any recovery.
• Effective dispute resolution mechanism has been provided for with clear time lines for redressal.

Impact

• Empowerment of Framers: It will empower farmers for engaging with processors, wholesalers, aggregators, large retailers and exporters, on a level playing field without any fear of exploitation.
• Better Price Realization: It will also reduce cost of marketing as farmers will engage in direct marketing, thereby eliminating intermediaries resulting in full realization of price.
• Risk Transfer: It will transfer the risk of market unpredictability from the farmer to the sponsor and also enable the farmer to access modern technology and better inputs.
• Private Investments: It will act as a catalyst to attract private sector investment for building supply chains for supply of Indian farm produce to global markets. Farmers will get access to technology and advice for high value agriculture and get ready market for such produce.

Criticism

• Anti-farmer Bias: The government’s move has been criticised on being antifarmer and in favour of the corporate companies.
• Pro-business Tilt: The Trade Unions have denounced the Ordinances and have alleged that the government is taking the “Ordinance route” as it benefits “a handful of big-landlords and corporate agri-business”.
• Exploitation of Farmers: It can lead to the exploitation of farmers at the hands of the landlord-corporate-business clique.
• Abrogation of State Power: It is also alleged that this is being done at the cost of the small and marginal farmers, and the agri-workers in particular. Such a move will abrogate the rights of state governments to regulate and intervene in the agrarian economy.
• Proliferation of Intermediaries: The restrictions on stocking food produce are removed through the amendments. Chances are high that middlemen might procure produce at a lower price, store for months and sell for higher price when demand rises.

Way Forward

• These ordinances are expected to build necessary agrarian infrastructure in the country which are expected to resolve a number of issues of the agricultural sector.
• The government must not let the farmers be at the mercy of private companies, big MNCs and corporations during this hour of crisis.
• While keeping the core principles of ‘welfare state’ in focus, the government must actively intervene to ensure survival of farmers.