Agricultural Reform Bills
- 21 Sep 2020
- On 20th September, 2020, Rajya Sabha passed two farm reforms Bills- Farmer’s Produce Trade and Commerce (Promotion and Facilitation) Bill, 2020, and the Farmers (Empowerment and Protection) Agreement of Price Assurance and Farm Services Bill, 2020.
About the Bills
Bill on Agriculture Market
Farmer's Produce Trade and Commerce(Promotion and Facilitation) Bill, 2020
Key Provisions
- To create an ecosystem where farmers and traders enjoy the freedom to sell and purchase farm produce outside registered mandis under state’s Agricultural Produce Market Committees (APMCs).
- To promote barrier-free inter-state and intra-state trade of farmers' produce.
- To reduce marketing/transportation costs and help farmers in getting better prices.
- To provide a facilitative framework for electronic trading.
Impact
- Ends the monopoly of traders.
- Creating competition among buyers.
- Yields better returns to farmers and raises incomes.
- Farm produce can move freely from surplus to deficit regions.
- Creates national market; high intimidation cost of mandis will end.
- Consumer gets better and cheaper products.
Reasons for Opposition
- States will lose revenue as they won't be able to collect 'mandi fees' if farmers sell their produce outside registered APMC markets.
- What happens to 'commission agents' in states if entire farm trade moves out of mandis?
- It may eventually end the minimum support price(MSP) based procurement system.
- Electronic trading like in e-National Agriculture Market(e-NAM) uses physical 'mandi' structure. It will hamper the functionality and usefulness ofthe electronic trading portal.
Bill on Contract Farming
The Farmer (Empowerment and Protection) Agreement of Price Assurance and Farm Services Bill, 2020
Key Provisions
- Farmers 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.
- Marginal and small farmers, with land less than five hectares, to gain via aggregation and contract (Marginal and small farmers account for 86% of total farmers in India).
- To transfer the risk of market unpredictability from farmers to sponsors.
- To enable farmers to access modern tech and get better inputs.
- To reduce cost of marketing and boost farmer's income.
- Farmers can engage in direct marketing by eliminating intermediaries for full price realization.
- Effective dispute resolution mechanism with redressal timelines.
Impact
- Farmers will have assured price before sowing.
- Transfers market risk from farmer to sponsor.
- Gives farmers access to high quality seeds, fertilisers, pesticides.
- Will attract private investment in farming and link farms to global markets.
Reasons for Opposition
- Farmers in contract farming arrangements will be the weaker players in terms of their ability to negotiate what they need.
- The sponsors may not like to deal with a multitude of small and marginal farmers.
- Being big private companies, exporters, wholesalers and processors, the sponsors will have an edge in disputes.
Government’s Stand over the Bills
- Accelerating Agricultural Growth:It will accelerate agricultural growth through private sector investment in building agricultural infrastructure and supply chains for Indian farm produce in national and global markets.
- Strengthening Economy:The bills are aimed at creating employment opportunities and strengthening the economy.
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e-NAM
Advantages
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