CRITICAL ANALYSIS OF THE NEW FARM ACTS
Profile of the author: Prerna Chhabra is a 4th year B. A. LL.B. (Hons.) student of Chanderprabhu Jain (College of Higher Studies & School of Law) (affiliated under Guru Gobind Singh Indraprastha University). Her areas of interest include family law, constitutional law, criminal law and socio-legal issues.
A sense of unrest is being felt in different parts of India due to the assent given by our President to the farmers’ bills[i]. However, what exactly are the Farmers Produce Trade and Commerce (Promotion and Facilitation) Act, The Farmers (Empowerment and Protection) Agreement on Price Assurance and Farm Service Act and The Essential Commodities (Amendment) Act of 2020.
For that, we need to dig deep and know the exact function and changes, which each Act holds.
THE FARMERS PRODUCE TRADE AND COMMERCE (PROMOTION AND FACILITATION) ACT, 2020
After India attained its independence, the farmers were directly selling their produce to the consumers, as a result, they were taking huge loans from moneylenders because of the prevalent “zamindari system”. The zamindars set high rates of interest, which made repayment difficult for farmers. In order to provide relief to our farmers the Agricultural Produce Market Committee Act, 1963[ii] (hereinafter referred to as APMC) came into existence. This established a system of State Mandis for the farmers to sell their produce at a subsidized, Minimum Support Price (referred to as MSP). This system established the buying and selling of farmers produce only through State APMC Agents and various other licensed middlemen and stopped the direct buying of farmers produce.
In order to facilitate the movement of produce, every buyer and seller has to have a license for this designated state APMC mandi. And only then they became an eligible buyer/seller in this market space.
The Crops in these markets were being sold through auctions. But this process was corrupted due to the formation of cartels, this directly affected the farmer’s crop price and he was made the lowest amount for his produce.
This existing style of marketing did not favour the farmers as he was earning diminutive of his produce and the consumers were getting that produce at an inflated price.
NEW PROVISIONS and POSITIVES
- The new Act eliminates the licensed middlemen, now farmers can sell their produce to institutional buyers directly
- This Act also allows intra-state and inter-state trade for farmers. Which means that they can now sell their produce at better places which might have better prices.
- It makes provisions for establishing “private mandis” which won’t be taxable.
- It also facilitates Electronic trading which will help farmers to buy and sell their produce through online platforms and also saves them any chargeable market fee.
- The farmers are now fearing these corporate buyers (i.e. institutional buyers) have more negotiating power than the sellers themselves.
- They also have better resources and preference might be given to rich farmers because of their size of land.
- Close to 85% farmers in India who are termed as “marginal farmers” (since they have less than two hectares of land) will be at the mercy of these rich farmers and the institutional buyers.
- They also fear that establishment of “private mandi” will eliminate the APMC mandis.
- The State fears that due to private mandis being non-taxable, they will have lack of funds to run their respective states and the loss of market space will add to unemployment of the various people who are engaged with APMC Mandis.[iii]
THE FARMERS (EMPOWERMENT AND PROTECTION) AGREEMENT ON PRICE ASSURANCE AND FARM SERVICE ACT, 2020
This act is being implemented with the sole concept of “Contract Farming. This means that here the framers and the buyers will now be into a binding agreement before the production is sowed.
The Corporate buyers will initiate a contract with the farmers guaranteeing them a price for the whole future produce. This acts as a great advantage for the farmers since it assures a fixed price which the farmers will earn even if the market is price is lower than the one promised in the contract.
It also becomes advantageous for the farmers because now they will engage with wholesalers, exporters and large size retailers for the sale of their future produce in a transparent manner.
Apart from that it also aims at dispute settlement by conciliation through the formation of a board. All the disputes shall be admitted to the board first, if at the end of thirty days the board is unable to, the matter remains unsolved, the parties will be allowed to file their case before a sub-divisional magistrate. The dispute will be appealable too.[iv]
- Farmers are demanding to link the MSP to contract prices, so that these private investors can not go below a certain limit when buying their produce. They also feared the removal of MSP. Which in turn will affect the minimum selling price of crops for farmers.
- But clearing this misconception, Prime Minister Narender Modi said that MSP wouldn’t be removed.
THE ESSENTIAL COMMODITIES (AMENDMENT) ACT, 2020
The need for this amendment arose due to lack of cold storage and warehouses to the farmers. Back in 1955 when this act saw the light of the day, it prohibited unlimited storage of “essential commodities” like cereals, pulses, edible oils, potatoes, and onions. This was done in order to curb down the malpractices of traders of storing excess produce and then selling it when the prices were the lowest was such produce, this concept is also known as “black-marketing” or “Hoarding”.
This Act replaced the Essential Commodities (Amendment) Ordinance of 2020[v] , and paves way for corporate agents to stock food articles in unlimited quantities.
The central government has delisted certain essential commodities for the purpose of this act and has allowed its storage in huge quantities without the fear of being penalized.
- Farmers are concerned that this will lead to “artificial pricing”, which was practised by the licensed middlemen. It will again affect the price of the produce after harvest.
- According to our farmers, these acts favour the corporate bodies or the institutional buyers, since any of their demands are not being met.
- The concept of MSP only benefits close to 7% of farmers in our country, so provisions should be targeted on getting MSP as a right of farmers, regardless of the size of their land.
- It can be seen that the concept of “middlemen” is not being put aside. They are now emerging as “corporate agents”, who will again chew a huge chunk of farmers earnings and the consumer will buy produce at inflated price.
- Even though these acts were introduced with a bona fide objective of removing the stagnant functioning of agriculture, and the malpractices of APMC markets, yet, agriculture should remain under the control of government because almost 50% of the population is directly linked with this sector.
It is an undeniable fact that our agricultural sector needed reforms, so the largest sector of our economy is not just safeguarded but also improved. Over the years we have heard and read numerous cases where farmers have committed suicide because of the atrocities inflicted on them and the financial paralysis they live through.
These acts have huge advantages but like every coin has two sides, similarly these acts have some major loopholes, which have to be addressed as its earliest. In order to be a true democracy, it is imperative that the government addresses the grievances of the helpless and reinstates their faith in our law-making bodies.
What are APMC Markets?
Agricultural Produce Market Committee (APMC) are “state mandis” set up for the purpose of providing farmers with a platform to sell his goods to licensed middlemen, who further sell this produce to various traders, retailers and local vendors.
These markets were set up because farmers we not allowed to sell their produce directly since they were being abused and harassed by moneylenders and zamindars with inflated interest rates after India attained independence.
What is MSP?
Minimum Support Price is a price which is announced by the government of India before sowing season. It guarantees a minimum price for certain crops to be sold once harvested. It is done in order to save farmers - harvesters from sharp falls in price of crops especially in bumper sale year. This price is determined by Commission for Agricultural Cost and Prices (CACP). In case the price of the crop falls below the MSP, the government purchases the entire quantity of such crop at the decided minimum price.
[i] Bill. No. 121 of 2020
[ii] Act No. 20 of 1964
[iii] Study IQ, ‘Farm Bill 2020 explained’, (YouTube, 23 September 2020), https://www.youtube.com/watch?v=oQlicIzQork, accessed 01 October 2020
[iv] Swati Mathur, ‘Amid intensifying protests, President Kovind gives assent to controversial farm bills, laws come into force immediately’, Times of India, (New Delhi, 28 September 2020), https://timesofindia.indiatimes.com/india/amid-intensifying-protests-president-kovind-gives-assent-to-controversial-farm-bills-laws-come-into-force-immediately/articleshow/78352115.cms, accessed 01 October 2020
[v] Ordinance No. 8 of 2020, dated 5 June 2020, vide: https://drive.google.com/file/d/1WBSndG9ryWmB3RGo1LrTYEYpgu_EeTZL/view