Agriculture plays an essential role in the process of economic development in India which was the main source of national income and occupation at the time of Independence. Agricultural development is an integral part of overall economic development which contributed nearly 50 percent to India’s national income. Around 72 percent of total Working population was engaged in agriculture and post Independence, the share of agriculture in total national Income declined from 50 percent in 1950 to 18 percent in 2007- 08. But even today more than 60 percent of workforce is engaged in agriculture and continues to be the dominant sector in Indian Economy as the growth of other sectors and overall economy depends on the performance of agriculture to a considerable extent[1].
The Parliament of India on 27 September 2020 passed three agricultural bills in hope of bringing a Paradigm Shift in the agricultural sector from the existing Agricultural Produce Marketing Corporation(APMC)concept of marketing that existed till now.The three laws, which came into effect following the approval of President Ram Nath Kovind[2],are:-
a) Farmers’ Produce Trade and Commerce (Promotion and Facilitation) Act
b) Farmers (Empowerment and Protection) Agreement on Price Assurance and Farm Services Act
c) Essential Commodities (Amendment) Act
Reforms in Indian Agriculture Since Independence [3]
At the time of Independence, India inherited a semi-feudal agrarian structure with onerous tenure arrangements. The ownership and control of land was highly concentrated in a few landlords’ and intermediaries like Zamindars, Talukdars, Jagirs and Inams who had dominated the agricultural sector in India by the time the country attained independence. However, measures for the abolition of the Zamindari system were adopted in different states, soon after independence, with the first Act to abolish intermediaries being passed in Madras in 1948. The programmes of land reform adopted since Independence failed to bring about the required changes in the agrarian structure.’ Landowners resisted the implementation of Tenancy Reforms Security of Tenure Fair Rent Ownership Rights by directly using their political clout and also by using various methods of evasion and coercion.
APMR ACT; ESTABLISHMENT OF APMC
[4] During the 1960s and 1970s, most of the states enacted and enforced APMR Acts All wholesale markets for agricultural produce in states that have adopted the APMR were termed as “Regulated Markets”. The Act was implemented and enforced by APMCs established under it mandating[5]:-
Advantages of APMC
a) That the sale/purchase of agricultural commodities notified under it was to be carried out in specified market areas yards or sub-yards.
b) Prices in them are to be determined by open auction, conducted in a transparent manner in the presence of an official of the market committee.
c) Market charges for various agencies, such as commissions for commission agents (arhtiyas); statutory charges, such as market fees and taxes; and produce-handling charges, such as for cleaning of produce, and loading and unloading, were clearly defined, and no other deduction could be made from the sale proceeds of farmers.
d) Besides improving the way markets functioned, the Acts created an environment that freed producers-sellers from exploitation by traders and mercantile capital.
How the APMC Act Started Benefiting Middleman[6]
Initial Situation: When the APMC Act was enacted by various states in the mid-1960s, It was strongly felt that it would not be possible to attain and sustain food security without incentivising farmers to adopt new technology and make investments in modern inputs. The APMC act however, developed certain inefficiencies; and need was felt to revamp the act as the situation changed with private trading gaining momentum, private investments got thwarted due to agricultural market monopoly and competition reduced as APMC Mandis were the only buyers.
The Entry of Middlemen’s Post 1991. Over time, the marketing system and marketing institutions were plagued by inefficiencies, bureaucratic control, and politicization, forcing farmers to become dependent upon middlemen in the market.The trading class quickly regained its marketing power over farmers by meeting their credit requirements with interlocked transactions, robbing producers of the freedom to decide where they would sell and whom they would sell to leading to the trading class consolidating their power in mandis.
Model APMC Act 2003[7] The government came up with a Model APMC Act in 2003 with the objective of development of agricultural marketing in addition to its regulation under the Act. Accordingly, the Preamble of the Act was redrafted to provide for development of efficient marketing system, promotion of agri-processing and agricultural exports and to lay down procedures and systems for putting in place an effective infrastructure for the marketing of agricultural produce. Legal persons, growers and local authorities are permitted to apply for the establishment of new markets for agricultural produce in any area.
Essential Commodity Act. Almost all agricultural commodities, such as cereals, pulses, edible oilseeds, oilcakes, edible oils, raw cotton, sugar, gur, and jute, are included in the list of essential commodities as suggested by the Twelfth Plan Working Group on Agricultural Marketing (Planning Commission 2011) amongst other pertinent measures.
Agriculture Produce Grading and Marketing Act. The act defined standards of quality and prescribes grade specifications for a number of products. The Act authorised an agricultural marketing adviser in each state to grant a certificate of authorisation to persons or corporate bodies who agree to grade agricultural produces as prescribed by it. There are AGMARK grade specifications for 212 agricultural products, but the use and awareness of it have remained low despite a better understanding of quality attributes among consumers.
What went wrong with the APMC can be briefly summed up that even in the APMC mandis, farmers ended up selling most of their produce below government-mandated prices. This was especially the case for non-MSP crops, such as fruits and vegetables. The farmers earn a pittance even when wholesale prices of tomatoes and onions shoot up. It’s middlemen and commission agents who control the mandis – in collaboration with local netas and dadas get fat, while the farmers and consumers lose.[8]
NATIONAL AGRICULTURE MARKET (eNAM)
In 2015, the year’s Union Budget proposed to create a United National Agriculture Market with the help of state governments and NITI Ayog. An online trading platform for agricultural commodities in India was introduced to facilitate farmers, traders and buyers with online trading in commodities[9] was launched by the Ministry of Agriculture, Government of India. The electronic market pilot across India was launched on 14 April 2016 by Prime Minister of India, Shri Narendra Modi with the objectives as enumerated below:-
a) A national e-market platform for transparent sale transactions and price discovery initially in regulated markets.
b) Liberal licensing of traders/buyers and commission agents by State authorities without any pre-condition of physical presence or possession of shop /premises in the market yard.
c) One license for a trader valid across all markets in the State.
d) Harmonisation of quality standards of agricultural produce and provision for assaying (quality testing) infrastructure in every market to enable informed bidding by buyers.
e) Single point levy of market fees, i.e. on the first wholesale purchase from the farmer.
f) Provision of Soil Testing Laboratories in/ or near the selected mandi to facilitate visiting farmers to access this facility in the mandi itself.
KISAN BILLS 2020 & RESENTMENT IN FARMERS
The three acts include:-
a) Farmers’ Produce Trade and Commerce (Promotion and Facilitation) Act, 2020:
i) Expands the scope of trade areas of farmers’ produce from select areas to “any place of production, collection, aggregation”.
ii) Allows electronic trading and e-commerce of scheduled farmers’ produce.
iii) 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.
b) Farmers (Empowerment and Protection) Agreement on Price Assurance and Farm Services Act, 2020
i) Provides a legal framework for farmers to enter into pre-arranged contracts with buyers including mention of pricing.
ii) Defines a dispute resolution mechanism.
c) Essential Commodities (Amendment) Act, 2020:
i) Removes foodstuff such as cereals, pulses, potato, onions, edible oilseeds and oils, from the list of essential commodities, removing stockholding limits on such items except under “extraordinary circumstances”
ii) Requires that imposition of any stock limit on agricultural produce be based on price rise.
Farmers Angst: Reasons Thereof[10]. The farmers of Uttar Pradesh, Punjab, and Haryana are angry with the provisions of these Bills as they are afraid that these Bills may be the platform that the government (at the Centre) is setting up for the replacement or scrapping of the otherwise robust support system prevalent in their states for the purchase of their crops. They fear that the Minimum Support Price (MSP) guarantee would be snatched away from under the pretext of giving the farmers more playing ground and better platforms. Farmers fear the two recent bills as they feel these agriculture reform processes will kill the government procurement process as well as the MSP.
The Farmers of Punjab & Haryana are biggest beneficiaries of this safety net:-
a) It is reliably known that nearly 89 % of the rice produced by the farmers in Punjab and 85% in Haryana is procured by the government, However FCI is overflowing with these and demand in the market is of pulses.
b) Continuous adoption of rice-wheat cropping system in North-Western plains of Punjab, Haryana and West Uttar Pradesh has resulted in depletion of groundwater and deterioration of soil quality, posing a serious threat to its sustainability,”.
c) Also, these Farm Bills are encouraging farmers to strike deals with large corporate, and farmers do not trust corporate.
Much of the opposition really is just to one of the three laws. Even in that one there are only some contentious provisions, which, although key, can still leave doors open for negotiation[11]. The two laws that ought not to be serious cause for farmer angst:-
a) The Essential Commodities (Amendment) Act: It is about doing away with the Centre’s powers to impose stockholding limits on foodstuffs, except under “extraordinary conditions”.
b) The Farmers (Empowerment and Protection) Agreement on Price Assurance and Farm Services Act: It has to do with providing a regulatory framework for contract cultivation. This specifically concerns agreements entered into by farmers with agri-business firms (processors, large retailers or exporters) ahead of any planting/rearing season for supplying produce of predetermined quality at minimum guaranteed prices.
The contentious Law – the FPTC Act is a bone of contention. How?
a) It permits sale and purchase of farm produce outside the premises of APMC mandis. Such trades (including on electronic platforms) shall attract no market fee, cess or levy “under any State APMC Act or any other State law”.
b) The Centre, in other words, can pass any law that removes all impediments to both inter- and intra-state trade in farm produce, while also overriding the existing state APMC Acts. The FPTC Act does precisely that[12].
The Centre is well within its rights to frame laws that promote barrier-free trade of farm produce (inter as well as intra-state) and not to allow stockholding or export restrictions once the farmer has sold them.
Farmers don’t expect any restrictions on the movement, stocking and export of their produce. When it comes to “marketing”, especially dismantling of the monopoly of APMCs , the farmers, aren’t very convinced about the “freedom of choice to sell to anyone and anywhere” argument. The reason for this is simple: Much of government procurement at minimum support prices (MSP) viz, of paddy, wheat and increasingly pulses, cotton, groundnut and mustard, happens in APMC mandis. The state is bound to lose revenues as the mandis would become the zombies of marketing sector i.e “Alive but still be Dead” as the farmers would be left with no other option but to sell their produce to only the big corporates.
REFERENCES
1. Journal of Emerging Knowledge on Emerging Markets,Vol. 1 [2009],Art.8 https://digitalcommons.kennesaw.edu/jekem/vol1/iss1/8
2. https://en.wikipedia.org/wiki/2020_Indian_agriculture_reform
3. https://www.slideshare.net/srishti290196/reforms-in-agriculture
4. Pic : https://www.civilsdaily.com/marketing-of-agricultural-produce-in-india-definition-role-apmc-act- model-apmc-act-2003/
5. ibid
6. ibid
7. http://agricoop.nic.in/sites/default/files/apmc.pdf
8. https://www.ndtv.com/blog/the-flaws-in-modi-governments-new-farm-bills-2301540
9. https://en.wikipedia.org/wiki/E-NAM
10.ibid
11.https://indianexpress.com/article/explained/farmers-big-concern-and-what-govt-could-negotiate-7073291/
12.https://indianexpress.com/article/explained/farmers-big-concern-and-what-govt-could-negotiate-7073291/
About author –
This article is authored by Adv. Pooja Kohli,BA,LLB,LLM PGDFM, MBA(HR),Punjab & Haryana High court,Chandigarh
