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Parliament Passes Contentious Agricultural Bills For Inter-State Trade, Contract Farming [Read Bills]

Akshita Saxena
20 Sep 2020 10:58 AM GMT
Parliament Passes Contentious Agricultural Bills For Inter-State Trade, Contract Farming [Read Bills]
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The Parliament today cleared the Farmers' Produce Trade and Commerce (Promotion and Facilitation) Bill, 2020 and the Farmers (Empowerment and Protection) Agreement on Price Assurance and Farm Services Bill, 2020, by voice vote. The Bills have set off widespread farmers' protests who fear that shall not be paid the Minimum Support Price. However, both the Agriculture Minister and the...

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The Parliament today cleared the Farmers' Produce Trade and Commerce (Promotion and Facilitation) Bill, 2020 and the Farmers (Empowerment and Protection) Agreement on Price Assurance and Farm Services Bill, 2020, by voice vote.

The Bills have set off widespread farmers' protests who fear that shall not be paid the Minimum Support Price. However, both the Agriculture Minister and the Prime Minister have assured that the Bills do not affect the mandate of MSP.

The Bills, already in force as Ordinances, were passed in the Rajya Sabha on September 17, 2020 and cleared today by the Lok Sabha, however amid utter chaos and opposition.

They seek to facilitate intra-state and inter-state trade of farmers' produce and execution of agreements between farmers and buyers, prior to the production/ rearing of any farm produce.

Parliamentary Debate

The Bills were widely opposed in the Upper House for their potential of abuse by the private sector, leading to further exploitation of the farmers.

With respect to Bill for 'Contract Farming', the Members apprehend that the Private sector may 'bulldoze' the farmers into entering unfair contracts, for prices below MSP.

They asked the Government why the farmers were not getting 'Remunerative prices' and why the Bill did not guarantee a Minimum Support Price.

Significantly, farmers have been protesting across the country, fearing that they will not be paid Minimum Support Price (MSP). However, Agriculture Minister Narendra Singh Tomar has clarified that these bills would not have any impact on the MSP mechanism, which would continue as it is. The Prime Minister has also addressed the farmers and assured that MSP shall not be abolished.

During the debate, it was highlighted that in case of non-performance of Contract by the private sector, farmers shall be susceptible to prolonged litigation against big corporates, having deep pockets.

Other key issues raised during the debate are listed thus:

  • Parliament is not competent to enact a legislation on the subject of Agriculture since it falls under the State List at Entry No. 14 under Schedule VII of the Indian Constitution.
  • Bills have the effect of privatizing the agricultural sector which will be detrimental to the farmers' interest in the long run; privatization invites black marketing, hoarding and profiteering.
  • Bills will not help to cut down middlemen as they will continue to operate in the form of 'sponsors' for Contract Farming.
  • Bill allows farmers to trade all over the country but there is no provision to bring buyers in the market (amid a dying economy).
  • Farmers have minimal bargaining power and there's a massive potential for exploitation by powerful, profit-oriented private sector companies.
  • By de-regularizing the agricultural sector, the Bill diminishes state control which not only affects the state Government's revenue but also renders them incapable to regulate in case the private sector resorts to unscrupulous practices.
  • The Dispute Resolution mechanism proposed by the Bills is very discriminatory towards the farmers. A member highlighted that whereas the farmers have been given only a 30 days window to file their appeals before the Appellate Authority, the Companies get 60 days.

Responding to the debate, Tomar assured that the legislations will benefit the farmers by increasing competition among traders, thereby enabling them to bargain at a higher price. Further, the farmers shall have an elaborate market as they will be able to trade freely anywhere in the country.

On involvement of private sector in agriculture, the Minister said that it shall enhance farming as farmers will gain access to better infrastructure and modernised services. He said that the bill will ensure that many services will reach small farmers.

So far as the Dispute Resolution mechanism is concerned, he explained that the Sub-Divisional Magistrate will ask both the parties in dispute to appoint two panch each who try to reach a solution. However, in case the dispute is not resolved. The SDM will resolve the issue himself.

He further said that in case the matter goes to the court and an unfavourable order is passed against the farmer, then he shall be liable to pay only the actual disputed amount and that his land/ property shall not be attached.

Tomar also added that the contracts signed under this law will also have a provision that if prices at time of sale are more than what was agreed to at the time of contract, then the farmers will get a certain percentage of the additional profit.

Farmers' Produce Trade and Commerce (Promotion and Facilitation) Bill, 2020

This Bill permits sale and purchase of farmers' produce at remunerative prices through 'competitive alternative trading channels' to promote efficient, transparent and barrier-free inter-State and intra-State trade of farmers' produce outside physical premises of markets notified under various State legislations.

Trade of farmers' produce

It permits trade of farmers' produce outside:

  • physical premises of market yards under the state APMC (Agriculture Produce Marketing Committee) Acts
  • 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

It permits electronic trading of scheduled farmers' produce in the specified trade area.

To give effect to the same, following entities may establish and operate an electronic trading and transaction platform:

  • companies
  • partnership firms
  • registered societies (having PAN)
  • farmer producer organisation
  • agricultural cooperative society

Market fee abolished

It 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'.

Farmers (Empowerment and Protection) Agreement on Price Assurance and Farm Services Bill, 2020

This Bill seeks to provide for a national framework on farming agreements that empowers farmers to engage with agri-business firms, processors, wholesalers, exporters or large retailers for farm services and sale of future farming produce at a mutually agreed 'remunerative price'.

Farming agreement

The Bill provides for a farming agreement between a farmer and a buyer prior to the production or rearing of any farm produce.

Minimum period of agreement: one crop season/ one production cycle of livestock

Maximum period of agreement: five years (unless the production cycle is more than five years))

No farming agreement shall be entered into by a farmer in derogation of any rights of a share cropper.

Pricing of farming produce

The price of farming produce and process of price determination should be mentioned in the agreement.

For prices subjected to variation, a guaranteed price for the produce and a clear reference for any additional amount above the guaranteed price, including bonus or premium, must be specified in the agreement.

Registration Authority

The Bill establishes a Registration Authority to provide for e-registry and for registration of farming agreements. ]

Dispute Settlement

The Bill also provides for conciliation and dispute settlement mechanism for settlement of disputes under the farming agreement.

Resolution Process

The Conciliation Board shall have a fair and balanced representation of parties to the agreement. At first, all disputes shall 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.

Right to Appeal

Parties will have a right to appeal to an Appellate Authority 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.

Penalties

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.

Linkage of farming agreement with insurance or credit

The Bill provides that a farming agreement may be linked with insurance or credit instrument under any scheme of the Central Government or the State Government or any financial service provider to ensure 'risk mitigation' and 'flow of credit' to farmer or Sponsor or both;

These Bills are being read together with the Essential Commodities (Amendment) Bill, 2020 which allows the central government to regulate the supply of certain food items including cereals, pulses, potatoes, onions, edible oilseeds, and oils, under extraordinary circumstances (such as war and famine). The Government may impose stock limits on agricultural produce, only if there is a steep price rise (100% rise).

The Bills will now be tabled before the President for his assent.

Click Here To Download Bill [Free Trade & Commerce]

Click Here To Download Bill [Contract Farming]

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