Part 2 : So, what do these Bills actually do?

  

What do these bills actually do?

  • Farming agreement: The Ordinance provides for a farming agreement between a farmer and a buyer prior to the production or rearing of any farm produce.  The minimum period of an agreement will be one crop season, or one production cycle of livestock.  The maximum period is five years, unless the production cycle is more than five years.

  • Pricing of farming produce: The price of farming produce should be mentioned in the agreement.  For prices subject to variation, a guaranteed price for the product and a clear reference for any additional amount above the guaranteed price must be specified in the agreement.  Further, the process of price determination must be mentioned in the agreement.

  • Dispute Settlement: A farming agreement must provide for a conciliation board as well as a conciliation process for settlement of disputes.  The Board should have a fair and balanced representation of parties to the agreement.  At first, all disputes must be referred to the board for resolution.  If the dispute remains unresolved by the Board after thirty days, parties may approach the Sub-divisional Magistrate for resolution.  Parties will have a right to appeal to an Appellate Authority (presided by collector or additional collector) against decisions of the Magistrate.  Both the Magistrate and Appellate Authority will be required to dispose of a dispute within thirty days from the receipt of application.  The Magistrate or the Appellate Authority may impose certain penalties on the party contravening the agreement.  However, no action can be taken against the agricultural land of farmer for recovery of any dues..-- (S.19 bars Civil Courts to be a dispute redressal mechanism, which the centre is ready to amend)


FPTC/ APMC Bypass Act : Key Features 

  • 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.

  • 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’. (The Centre has now proposed amendments which would amenable the states to levy a cess in the private mandis outside the APMC areas as well, to assuage farmers’ concerns)

 

The Essential Commodities (Amendment) Ordinance, 2020/The Freedom of Food Stocking by Agribusinesses Act’ :  Key features.

  • Regulation of food items: 

    • The Essential Commodities Act, 1955 empowers the central government to designate certain commodities (such as food items, fertilizers, and petroleum products) as essential commodities.  

    • The central government may regulate or prohibit the production, supply, distribution, trade, and commerce of such essential commodities. 

    •  The Ordinance provides that the central government may regulate the supply of certain food items including cereals, pulses, potatoes, onions, edible oilseeds, and oils, only under extraordinary circumstances.   These include:

      •  (i) war, 

      • (ii) famine, 

      • (iii) extraordinary price rise and 

      • (iv) natural calamity of grave nature.

 

  • Stock limit: 

    • The Ordinance requires that imposition of any stock limit on agricultural produce must be based on price rise. 

    •  A stock limit may be imposed only if there is: 

      • (i) a 100% increase in retail price of horticultural produce; and 

      • (ii) a 50% increase in the retail price of non-perishable agricultural food items.  

      •  The increase will be calculated over the price prevailing immediately preceding twelve months, or the average retail price of the last five years, whichever is lower.

 


Apprehensions and Perceptions of Farmers :

FPTC Act :  There are basically 2 major apprehensions surrounding this bill

  1. The biggest myth and apprehension surrounding this bill is the potential abolishment of the MSP. The reason for this is quite simple;

    1. Much of government procurement at minimum support prices (MSP) — of paddy, wheat and increasingly pulses, cotton, groundnut and mustard — happens in APMC mandis. In a scenario where more and more trading moves out of the APMCs, these regulated market yards will lose revenues. “They may not formally shut, but it would become like BSNL versus Jio. And if the government stops buying, we will be left with only the big corporates to sell to,” said a Panipat (Haryana)-based farmer

    2. The fact remains that there isn't even a mention of MSP in the concerned bill and is just premised over a probability.

  2. The second myth is all about the dispute redressal mechanism(S.15) where the bill explicitly prohibits Civil courts any jurisdiction over issues relating to these bills, thereby having them to be referred to Conciliation Boards and Appellate Authorities appointed by the local sub-divisional magistrates and district collectors.

  3. Potential Loss of revenue on account of farmers flocking to Pvt Mandis, which according to the text of the acts are cess free, but again this contention is also taken care of by the Proposal of the Govt dated 10.12.2020 where the govt proposed for taxes to be levied on pvt mandis.

 

 

Contract Farming Act : 

Contract farming is looked upon as privatization of farming, two major concerns here are that farmers will never be able to negotiate with the corporate sector. 

  1. The act does not prescribe or specify that the contract price of the crop should be at least equivalent or above the MSP. It means the contractor/companies can pay whatever price they want to the farmer.

  2. Being big private companies, exporters, wholesalers, and processors, they will always have an edge in disputes. A written contract is not mandatory which means farmers will never be able to prove a violation of terms of the contract. Farmers have a valid point because they have seen privatization in markets of seeds and fertilizers where the government believed prices will go down because of competition but the results are opposite, and farmers fear the same in this case also.

 

Essential Commodities Act : 

Purpose of the Amendment : What will be the impact of the amendments?

  • The amendments will remove commodities such as cereals, pulses, oilseeds, edible oils, onion and potatoes from the list of regulated essential commodities.

  • The move is expected to attract private investment in the value chain of these commodities.

  • While the purpose of the Act was originally to protect the interests of consumers by checking illegal trade practices such as hoarding, it has now become detrimental for investment in the agriculture sector in general, and in post-harvesting activities in particular.

  • The private sector has so far hesitated investing in cold chains and storage facilities for perishable items as most of these commodities are under the ambit of the EC Act, and can attract sudden stock limits. But now the situation can change.

 

 

Rationale being the aforementioned Apprehensions and Contentions? 

Amongst the plethora of news articles and opinion pieces about these agri legislations, any upright and/or sane member of society would find a conspicuous leitmotif - which is the asymmetry in the demands.


The journey was such-- the demands went from repealing only the contentious provisions from the bills to scrapping the bills in their entirety.


It is common knowledge that the loss of revenue to the tune of 1200 crore to the State of Punjab owing to the intransigence of the well-intended on the rail tracks.

But at the same time, one can effectively argue about the retrospective indispensability of the protests to validate the achievements that they heralded-- for starters making the government lucubrate and contemplate in order to assuage the ‘initial’ legitimate concerns of farmers.


  1. The Home Minister, Shri Amit Shah expressed his willingness to give a written assurance of MSP.

  2. It showcased the Government's willingness to amend the contentious sections, namely- S.6, S.15 and S.8 of the FPTC Act thereby ensuring samyata between APMC’s and Pvt. Mandis and the institutional impartiality in the Dispute Redressal mechanism by allowing civil courts to adjudicate on potential disputes relating to these laws.

  3. It even was willing to tax Pvt Mandis to ensure that a situation analogous to BSNL v Jio does not occur(the Mandis being BSNL in the competition).

  4. S.4 and S.6 of the FPTC Act are amenable to amendments according to the Centre’s proposal to farmers on 9.12.2020.

  5. Empowering States : Section 4 that expands the scope of a potential buyer to anyone with a PAN card. The Centre’s concession is now to empower states to make rules on registration of buyers. The proposal gives states a foot in the door in determining who is a buyer. In the current mandi system, commission agents have to get a licence to trade in a mandi.

  6. Samyata : The Centre has also proposed a rollback of the provision that did away with a market fee or cess or levy under any State APMC Act or any other State law under Section 6 of the Act. This proposed amendment will empower state governments to impose taxes and fees in private mandis – after deciding on the quantum — to ensure a level-playing field between the APMC mandis and private markets.

 

 

Now, a question needs to be asked, does the asymmetry display itself flagrantly?

The demand still remains, a full repeal and no less.

So, what is the fuss all about, why can't the farmers just make the best out of what's been proposed?

  •  The bills don't make sense to Punjab and Haryana farmers where they enjoy a ready and trusted market in the form of FCI, these laws naturally forment suspicions about their true intent. 

  • Farm protests have been loudest in states such as Punjab and Haryana, states where the procurement system and MSP mechanism is strong.

  • Thus, There is a legitimate reason for farmers of Punjab and Haryana to be apprehensive about these three new laws. 

  • A central government committee report states that only 6% of the country's farmers take advantage of MSP.

  • At the same time, a 2016 NITI Aayog report states that 100% of farmers in Punjab sell their crops at MSP. Data of Haryana remains unbeknownst.

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