Updated: Oct 22, 2020
India has always been a state that strives on agriculture. For centuries mainland India has been engaged in agriculture as a profession. In the 21st century, about 70% of the Indian population strives on agriculture alone, which is also a major contributor to the GDP. India is involved in a large number of agricultural exports owing to its Green Revolution in the early 1960s, earning it a name of global agricultural powerhouse. The centre and the states, both have the jurisdiction to frame laws in relation to agriculture as per the Concurrent List. Agricultural Produce Market Committee (APMC) Act was previously formulated to develop state sponsored marketplace and to provide regulation on marketing practices and help farmers get the desired MSP. The Union government recently passed three bills that will directly impact the livelihood of the farmers at large. These are, The Farmer’s Produce Trade and Commerce (Promotion and Facilitation) Bill, The Farmers (Empowerment and Protection) Agreement on Price Assurance and Farm Services Bill and The Essential Commodities (Amendment) Bill. These three bills collectively aim to modernise the field of agriculture and promote agro-business through private investment. To place the truth bluntly, farmers are not ready.
Over the past few weeks the farmers, all over the country have participated in dharnas in spite of repeated COVID-19 warnings. To understand the farmers’ plight, let us understand these bills.
THE FARMERS’ PRODUCE TRADE AND COMMERCE (PROMOTION AND FACILITATION) BILL, 2020
The bill aims to create a system where the farmers and traders will be guaranteed enough liberty to be able to buy and sell farmers’ produce. This system should be able to facilitate lucrative prices through agriculture based specialised trading channels. Through the bill, the state governments will be able to facilitate a barrier-free system for farmers to make a sale. This will give a boost to electronic trading in order to keep pace with the dynamic agri-economy, e-commerce and agri-exports. The old provisions seemed to be a hindrance in providing appropriate platforms to the farmers to sell their produce and develop alternative markets. Ther reason behind promoting competitive markets is to provide farmers a direct benefit to increase their income. The private investors will commercialise the supply chains and bring to the farmers a wide range of alternatives when it comes to selling. The uniform system of purchase and sale will help develop the agricultural sector and bring in ease in selling and converting the farm produce (foodstuffs) into secondary goods.
The bill safeguards farmers by ensuring that due payment shall be accomplished within three working days.[i] Any central governmental organisation can, on the orders of central government may develop a Price Information and Market Intelligence System.[ii] Developing an intelligence system will be able to provide flexible price to the foodstuffs and increase the farmers earning. To get the payment of the produce the centre government can prescribe a mode of payment, as it may deem fit.[iii] For an example, the centre might urge farmers and private investors to utilize BHIM as a mode of monetary transaction to promote digital economy. There will be a code of conduct that will govern all trade practices and guidelines for fair trade practices, any breach of the same calls punishment.[iv] A person shall be liable to pay a penalty which ranges from Rs.25,000 to Rs.5 Lakhs.[v] Special courts will be instituted to entertain suits relating to disputes under this bill.[vi]
THE FARMERS (EMPOWERMENT AND PROTECTION) AGREEMENT ON PRICE ASSURANCE AND FARM SERVICES BILL, 2020
The bill is a national substructure on farming agreements. This bill seeks to protect farmers and their interests by providing them with a legal agreement to assure a price for their produce. It will empower farmers by engaging with wholesalers, agri-business, wholesalers, firms wholesalers, exporters or large retailers and engage themselves in business activities to increase their output. The farming agreement[vii] will include:
1. An agreement for trade and commerce where the farmer retains the ownership of the produce till he gets fully paid.
2. A production agreement where the sponsor provides the farmers with some utilities in the form of investment.
3. It may include clauses of force majeure.
4. Terms and conditions such as quality and price.[viii]
5. Period of contract.[ix]
The parties to contract shall mutually enter into the contract after deciding upon all the categories of the contract.[x] In case of a dispute, the bill provides for a three-level dispute settlement mechanism:
The Conciliation Board
These have exclusive jurisdiction over the disputes that arise with respect to practices under this bill. Civil courts have no jurisdiction. This will reduce the burden of cases on the government and solve the dispute through conciliation.
THE ESSENTIAL COMMODITIES (AMENDMENT) BILL, 2020
The bill aims to replace the Essential Commodities (Amendment) Ordinance, 2020 the supply of such agricultural foodstuff in case of a famine or when Indian is in a state of war. In such situations, there will be a remarkable increase in price and the government will be regulate the same
Although India has an agricultural surplus, we do lack a proper system of storage which leads to the foodstuffs getting waste. The perishable nature of foodstuffs requires large scale private sector investment to address the issue.
Coronavirus has massively impacted the economy. According to the World Bank, India’s economy is likely to contract by at least 9.6% and growth at 5.4% dor 2021-2022 which makes it a primary reason for the government to focus more on the agriculture sector to address the increasing unemployment.
The bill focuses on value chains from the foodstuffs produced in the field to final consumption. It involves processing, packaging, storage, transport and distribution and lays emphasis on the goods at each stage.
How are farmers at a disadvantage?
The farmers might have to bow to the whims and fancies of giant corporations. Their lack of knowledge and insight thereof is a visible disadvantage to the already depressed class of the farming community. The farmer would be responsible for any damage to the implements sponsored. The farmer will have to follow the production methods and standards for cultivation of crops as outlined in the farming agreement. There would be no sense of freedom when it comes to growing a crop of choice. The farmers will have to confine themselves to the terms and conditions of the agreement. Financially stable farmers will yield the most benefit as they already have the desired resources to enter into an agreement.
In case the produce does not match the standard, as enshrined in the contract, the farmers will only be paid for the produce that is in consonance with the agreement. (Although, this does not necessarily imply that farmers can not sell their produce elsewhere yet, it might create a financial problem because of lack of demand for that particular produce and finding a potential buyer.) To play safe, farmers will have to purchase crop insurance or weather insurance in order to save themselves.
The government has provided a lot of scope for private individuals to come into the agricultural sector. This inclusion seems to be imposed on the farmers and creates a sense of fear among the farmers about how much they might be able to earn, if they continue. The sense of confinement has created a panic. The lack of available legal knowledge in contracts and negotiations has let the farmers endanger their lives and come out to protest. The bills seem to be pro-farmers but their practical applicability is questionable. If the government has to bank upon the agricultural sector then it will have to introduce more legal safeguards for the depressed class and address their issue directly which will foster financial stability and enhance growth.
[i] Section 4(3), The Farmer’s Produce Trade and Commerce (Promotion and Facilitation) Bill, 2020
[ii] Section 7(1), The Farmer’s Produce Trade and Commerce (Promotion and Facilitation) Bill, 2020
[iii] Section 4(3), The Farmer’s Produce Trade and Commerce (Promotion and Facilitation) Bill, 2020
[iv] Section 9, The Farmer’s Produce Trade and Commerce (Promotion and Facilitation) Bill, 2020
[v] Section 11(1), The Farmer’s Produce Trade and Commerce (Promotion and Facilitation) Bill, 2020
[vi] Section 15, The Farmer’s Produce Trade and Commerce (Promotion and Facilitation) Bill, 2020
[vii] Section 2(m), The Farmers (Empowerment and Protection) Agreement on Price Assurance and Farm Services Bill, 2020
[viii] Section 3(1), The Farmers (Empowerment and Protection) Agreement on Price Assurance and Farm Services Bill, 2020
[ix] Section 3(3), The Farmers (Empowerment and Protection) Agreement on Price Assurance and Farm Services Bill, 2020
[x] Section 4(4), The Farmers (Empowerment and Protection) Agreement on Price Assurance and Farm Services Bill, 2020
[xi] Section 14, The Farmers (Empowerment and Protection) Agreement on Price Assurance and Farm Services Bill, 2020
2nd Year, LL.B.
Punjab University Regional Centre,