Recently, the government has introduced three bills in Parliament targeting to resolve a set of problems faced by the agriculture sector.
These bills have been facing a great deal of opposition from the farmer community especially those of Punjab and Haryana.
This article is an attempt to analyse the positive impact of these three bills in a constructive way while addressing some of the criticisms.
Farmers in India make up the largest chunk of population. More than 70% of the population still depend on agriculture and its allied sectors. 86% of them belong to small and marginal category.
If you don’t know it, small and marginal farmers are those who own less than 2 hectares of the land.
With this landholding size, he barely produced for his survival. When it comes to selling the produce, because we all need money to meet our daily needs, they have to face several challenges. Barter system no more works in present times.
It is obvious that one will need to go to the wholesale market to sell the produce. Government has set up agriculture markets to facilitate the farmers, known as APMC (Agricultural Produce Market Committee). These markets are meant to make the selling of produce easy by providing a platform for buyers and sellers to meet and trade. Think of it like amazon and flipkart. The concept is the same, the sellers and buyers come there to trade.
But here some major problem arises
- The produce can not be sold outside these mandis. It’s like you can purchase only from amazon and not from your local market.
- These mandis are very rare to find with one mandi serving an average area of 496km. Thus farmers had to transport his produce to these mandis, adding an extra cost burden on farmers.
- Even when he manages to reach the mandi, most APMCs have a limited number of traders operating, which leads to cartelization and reduces competition.
Thus it was realised that the availability of a transparent, easily accessible and efficient marketing platform is prerequisite to ensure remunerative prices for farmers.
The Farming Produce Trade and Commerce (Promotion and Facilitation) Bill, 2020 provides for the emergence of small rural markets as a viable alternative for agricultural marketing. Thus it will create an ecosystem for farmers and traders to trade freely outside the boundaries of mandies set up under APMC.
It will promote barrier-free interstate and intrastate trade of farmer’s produce.
Since, farmers are now allowed to sell anywhere or to anyone they wish, this will naturally open up possibility for a different kind of agricultural practices known as contract farming.
For the regulation of such practice, the The Farmers (Empowerment and Protection) Agreement on Price Assurance and Farm Services Bill, 2020 is introduced. Farmers can now enter into contracts with agribusiness firms, processors, wholesalers, exporters or large retailers for sale of future farming produce at agreed price. It will enable farmers to access modern tech and get better inputs, at the same time transfer the risks of market unpredictability from farmers to sponsors while reducing cost of marketing and boost farmer’s income.
When private players are allowed to enter the market, for sure they need a storage facility where they can store before selling it further or processing it. For that the limit imposed by essential commodities Act is to be removed
Removal of such restrictions will attract the private sector/ FDI into the farm sector as it will remove fears of private investors of excessive regulatory interference in business operations. This will bring investment for farm infrastructure like cold storage and modernising the food supply chain. This will help both farmers and consumers by creating a healthy competitive environment. This bill is criticised for price limits for extraordinary circumstances being so high (100% for non perishable items and 50% for perishable items) that they are likely to never be triggered.
I would conclude by saying that agriculture and food are not the same thing. Expenditure on food span the value add, including processing and preparation of it. Thus, the government should also focus on development of the food processing atmosphere in the country. This is the only way farmers’ income can be increased by a considerable rate.
This needs to be done to realise the constitutional promise of economic justice and equality of status and opportunity for all.