The Farmers Empowerment and Protection Bill 2020, Agreement on Price Assurance and Farm Services
The Farmers Empowerment and Protection Bill 2020 replaces the Farmers (Empowerment and Protection) Agreement of Price Assurance and Farm Services Ordinance, 2020. Therefore please refer to our legislative brief on the Agriculture Ordinances, 2020.
Main provisions of Farmers Empowerment and Protection Bill 2020–
- The new legislation will empower farmers for engaging with processors, wholesalers, aggregators, wholesalers, large retailers, exporters etc., on a level playing field. Price assurance to farmers even before sowing of crops. In case of higher market price, farmers will be entitled to this price over and above the minimum price.
- It will transfer the risk of market unpredictability from the farmer to the sponsor. Due to prior price determination, farmers will be shielded from the rise and fall of market prices.
- It will also enable the farmer to access modern technology, better seed, and other inputs.
- It will reduce the cost of marketing and improve the income of farmers.
- An effective dispute resolution mechanism has been provided with clear timelines for redressal.
- The impetus to research and new technology in the agriculture sector.
Doubts of Farmers Empowerment and Protection Bill 2020–
- Under contract farming, farmers will be under pressure and they will not be able to determine prices
- How will small farmers be able to practice contract farming, sponsors will shy away from them
- The new system will be a problem for farmers
- In case of dispute, big companies will be at an advantage
Clarification of Farmers Empowerment and Protection Bill 2020–
- The farmer will have full power in the contract to fix the sale price of his choice for the produce. They will receive a payment within a maximum of 3 days.
- 10000 Farmer Producer organizations are being formed throughout the country. These FPOs will bring together small farmers and work to ensure remunerative pricing for farm produce
- After signing the contract, the farmer will not have to seek out traders. The purchasing consumer will pick up the product directly from the farm
- In case of dispute, there will be no need to go to court repeatedly. There will be a local dispute redressal mechanism.
Highlights of the Ordinance
- The Farmers’ Produce Trade and Commerce (Promotion and Facilitation) Ordinance, 2020 allows intra-state and inter-state trade of farmers’ produce beyond the physical premises of APMC markets. State governments are prohibited from levying any market fee, cess, or levy outside APMC areas.
- The Farmers Agreement Ordinance creates a framework for contract farming through an agreement between a farmer and a buyer prior to the production or rearing of any farm produce. It provides for a three-level dispute settlement mechanism: the conciliation board, Sub-Divisional Magistrate and Appellate Authority.
- The Essential Commodities (Amendment) Ordinance, 2020 allows 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.
Key Issues and Analysis
- The three Ordinances aim to increase the availability of buyers for farmers’ produce, by allowing them to trade freely without any license or stock limit, so that an increase in competition among them results in better prices for farmers. While the Ordinances aim to liberalize trade and increase the number of buyers, de-regulation alone may not be sufficient to attract more buyers.
- The Standing Committee on Agriculture (2018-19) noted that the availability of a transparent, easily accessible, and efficient marketing platform is a pre-requisite to ensure remunerative prices for farmers. Most farmers lack access to government procurement facilities and APMC markets. It noted that small rural markets can emerge as a viable alternative for agricultural marketing if they are provided with adequate infrastructure facilities.
- The Standing Committee also recommended that the Gramin Agricultural Markets scheme (which aims to improve infrastructure and civic facilities in 22,000 Gramin Haats across the country) should be made a fully funded central scheme and scaled to ensure the presence of a Haat in each panchayat of the country.
Key Features of The Farmers Empowerment and Protection Bill 2020, Agreement on Price Assurance and Farm Services Ordinance
- Trade of farmers’ produce: The Ordinance allows intra-state and inter-state trade of farmers’ produce outside: (i) the physical premises of market yards run by market committees formed under the state APMC Acts and (ii) other markets notified under the state APMC Acts. Such trade can be conducted in an ‘outside trade area’, i.e., any place of production, collection, and aggregation of farmers’ produce including: (i) farm gates, (ii) factory premises, (iii) warehouses, (iv) silos, and (v) cold storages.
- Electronic trading: The Ordinance permits the electronic trading of scheduled farmers’ produce (agricultural produce regulated under any state APMC Act) in the specified trade area. An electronic trading and transaction platform may be set up to facilitate the direct and online buying and selling of such produce through electronic devices and internet. The following entities may establish and operate such platforms: (i) companies, partnership firms, or registered societies, having permanent account number under the Income Tax Act, 1961 or any other document notified by the central government, and (ii) a farmer producer organisation or agricultural cooperative society.
- Market fee abolished: The Ordinance prohibits state governments from levying any market fee, cess or levy on farmers, traders, and electronic trading platforms for trade of farmers’ produce conducted in an ‘outside trade area’.