*This article was last updated on September 25th at 01:28 PM IST.
The Indian Parliament passed three agriculture bills—Farmers’ Produce Trade and Commerce (Promotion and Facilitation) Bill, 2020, Farmers (Empowerment and Protection) Agreement of Price Assurance, Farm Services Bill, 2020, and the Essential Commodities (Amendment) Bill, 2020—during its monsoon session culminating on 23 September.
The contentious bills which await the President’s sign off were passed amid an uproar by opposition party leaders and farmer groups alike.
Amid the stiff opposition, there have also been voices that have come out in support of the bills with some stating that they would “unshackle” the workforce engaged in the agriculture sector.
To cut through the noise, here are a few key points from each bill that explain the changes proposed by them to the existing agriculture laws in the country.
The three farm bills: Key highlights
1. Farmer’s Produce Trade and Commerce (Promotion and Facilitation) Bill, 2020
This bill allows farmers to engage in trade of their agricultural produce outside the physical markets notified under various state Agricultural Produce Marketing Committee laws (APMC acts). Also known as the ‘APMC Bypass Bill’, it will override all the state-level APMC acts.
- Promotes barrier-free intra-state and inter-state trade of farmer’s produce.
- Proposes an electronic trading platform for direct and online trading of produce. Entities that can establish such platforms include companies, partnership firms, or societies.
- Allows farmers the freedom to trade anywhere outside state-notified APMC markets, and this includes allowing trade at farm gates, warehouses, cold storages, and so on.
- Prohibits state governments or APMCs from levying fees, cess, or any other charge on farmers produce.
2. Farmers (Empowerment and Protection) Agreement of Price Assurance and Farm Services Bill, 2020
The bill seeks to provide farmers with a framework to engage in contract farming, where farmers can enter into a direct agreement with a buyer (before sowing season) to sell the produce to them at pre-determined prices.
- Entities that may strike agreements with farmers to buy agricultural produce are defined as “sponsors’’ and can include individuals, companies, partnership firms, limited liability groups, and societies.
- The bill provides for setting up farming agreements between farmers and sponsors. Any third parties involved in the transaction (like aggregators) will have to be explicitly mentioned in the agreement. Registration authorities can be established by state governments to provide for electronic registry of farming agreements.
- Agreements can cover mutually agreed terms between farmers and sponsors, and the terms can cover supply, quality, standards, price, as well as farm services. These include supply of seeds, feed, fodder, agro-chemicals, machinery and technology, non-chemical agro-inputs, and other farming inputs.
- Agreements must have a minimum duration of one cropping season, or one production cycle of livestock. The maximum duration can be five years. For production cycles beyond five years, the period of agreement can be mutually decided by the farmer and sponsor.
- Purchase price of the farming produce—including the methods of determining price—may be added in the agreement. In case the price is subject to variations, the agreement must include a guaranteed price to be paid as well as clear references for any additional amounts the farmer may receive, like bonus or premium.
- There is no mention of minimum support price (MSP) that buyers need to offer to farmers.
- Delivery of farmers’ produce may be undertaken by either parties within the agreed time frame. Sponsors are liable to inspect the quality of products as per the agreement, otherwise they will be deemed to have inspected the produce and have to accept the delivery within the agreed time frame.
- In case of seed production, sponsors are required to pay at least two-thirds of the agreed amount at the time of delivery, and the remaining amount to be paid after due certification within 30 days of date of delivery. Regarding all other cases, the entire amount must be paid at the time of delivery and a receipt slip must be issued with the details of the sale.
- Produce generated under farming agreements are exempt from any state acts aimed at regulating the sale and purchase of farming produce, therefore leaving no room for states to impose MSPs on such produce. Such agreements also exempt the sponsor from any stock-limit obligations applicable under the Essential Commodities Act, 1955. Stock-limits are a method of preventing hoarding of agricultural produce.
- Provides for a three-level dispute settlement mechanism: the conciliation board—comprising representatives of parties to the agreement, the sub-divisional magistrate, and appellate authority.
3. Essential Commodities (Amendment) Bill, 2020
An amendment to the Essential Commodities Act, 1955, this bill seeks to restrict the powers of the government with respect to production, supply, and distribution of certain key commodities.
- The bill removes cereals, pulses, oilseeds, edible oils, onion, and potatoes from the list of essential commodities.
- Government can impose stock holding limits and regulate the prices for the above commodities—under the Essential Commodities, 1955—only under exceptional circumstances. These include war, famine, extraordinary price rise, and natural calamity of grave nature.
- Stock limits on farming produce to be based on price rise in the market. They may be imposed only if there is: (i) a 100 percent increase in retail price of horticultural produce, and (ii) a 50 percent increase in the retail price of non-perishable agricultural food items. The increase is to be calculated over the price prevailing during the preceding twelve months, or the average retail price over the last five years, whichever is lower.
- The bill aims at removing fears of private investors of regulatory influence in their business operations.
- Gives freedom to produce, hold, move, distribute, and supply produce, leading to harnessing private sector/foreign direct investment in agricultural infrastructure.
Curated articles and video interviews
Keeping in mind the sharply polarised points of view and ensuing confusion on the implications of the bills, here is a curated list of articles and video interviews that explain the nuances of these bills and their potential impact.
1. What are the farm bills and how will they affect farmers?
In this NL Cheatsheet video Meghnad S, Associate Editor, Newslaundry explains what the reforms are all about, and how they will affect farmers.2. What will the new agriculture system under the three reform bills look like?
In the new set-up, it will not only be fragmented markets with different sets of rules but also fragmented regulatory structures that will create a more uneven playing field for farmers. Kavitha Kuruganti, convenor of the Alliance for Sustainable & Holistic Agriculture explains this in detail in this article.
3. Why are farmers protesting?
In this interview with journalist Faye D’Souza, P Sainath, Founder Editor of People’s Archive of Rural India explains the impact of the bills on the country’s farmers while warning that it will lead to a “corporate-led” agriculture sector.
4. The farm bills make agriculture as free as other sectors
The laws allow farmers to perform inter-state and intra-state transactions freely, and increases competition between buyers providing better prices to the farmers. Ila Patnaik and Shubho Roy explain this in detail in this article.
5. Voices of farmers
This article was first published in IDR Online
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