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Analysis Of Farmers Bill 2020

The Farmers Bill 2020, which is the combination of 3 bills, Farmers' Produce Trade and Commerce (Promotion and Facilitation) Bill, Farmers (Empowerment and Protection) Agreement on Price Assurance and Farm Services Bill, and Essential Commodities (Amendment) Bill, aims to provide the farmers of our country a better ecosystem for selling their agricultural produces, defines a legal framework for the contract farming, and give directions for the stocking and hoarding of specific agricultural produces, in natural circumstances or otherwise.
There is rampant exploitation of farmers for so many years, so the government's primary motive behind introducing these bills is to stop farmers' exploitation and encourage corporate investments in the agricultural ecosystem to make it lucrative for farmers.

The bill has overriding effects on all the State Laws regarding this. The bill is introduced as Farmers Bill in parliament in June 2020, where both Houses passed the bill in September amid all oppositions and protests by farmers and states.

The Reforms under Farmers Bill

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

    Through the Farmers' Produce Trade and Commerce (Promotion and Facilitation) Bill, the government aims to provide farmers a new way of selling their products, i.e., barrier-free trade, online transactions for buying and selling and setting up the Conciliation Board for disputes
    1. Trade outside the market premises:
      Essentially, by this bill, the government allows the farmer to trade inter-state or intra-state without entering into the premises of APMC (Agricultural Produce Marketing Committees). APMC�s are the State-regulated market or mandis where a farmer takes his agricultural produce and sell it to different traders. Hence, it provides that a buyer can purchase farm produce directly from the farmer outside the physical premises of the market committees formed under the state Agricultural Produce Market Committees.
    2. Abolishing the market fee:
      Every state has its own regulated APMC from which the state gets some revenue by levying some expenses on the farmers' trade's trade. The following bill aims to abolish the market fees by not imposing fees on the exchange, which will happen outside the physical market premises.
    3. Electronic Trading and Transaction Platform:
      Employing this bill, the government aims to set up online platforms to facilitate the buying and selling of the farmers' agricultural produce in the trade area through the network of devices and internet applications which will results in the physical delivery of the farm produce.
    4. Dispute Conciliation Boards:
      The Bill provides for the setting up of Conciliation Boards by the Sub-Divisional Magistrate to arrive at mutually acceptable solutions in cases of disputes arising out of transactions between farmers traders.
  2. Farmers (Empowerment and Protection) Agreement on Price Assurance and Farm Services Bill

    The previous bill seeks to lift all the trade barriers and allow farmers to trade inter-state or intra-state; this bill introduces Contractual Farming. This bill nearly steps towards the farming agreement between the farmers and the other purchasing party for future agricultural produce at the �mutually agreed remunerative price framework� fairly and transparently. The minimum period stipulated for an agreement is one crop season or one production cycle of livestock. The maximum period for the same is five years unless there is a longer production cycle of any farming produce.

    The agreement must be mutually agreed on the price by both the parties and the standards and quality of the farm produce should be specified in the agreement. If the farm price is subjected to any variation, then the agreement must contain a guaranteed price and the additional amount.

    If there is any dispute regarding the farming agreement, then both the parties to the contract must reach the conciliation board, where the representatives of the board must look into the matter. The other authority for deciding disputes relating to farming agreements is the Sub-Divisional Magistrate.
  3. Essential Commodities (Amendment) Bill, 2020

    Through this bill the government added a subclause 1A in the Section 3 providing that the supply of such foodstuffs, including cereals, pulses, potato, onions, edible oilseeds and oils, as the Central Government may, by notification in the Official Gazette, specify, may be regulated only under extraordinary circumstances which may include war, famine, tremendous price rise and natural calamity of grave nature.

This bill aims to attract private investments, by removing the heavy stock limits on foodstuffs. The Bill prescribes that the basis for imposition of stock limits shall be price rise and applicable only in cases of a 100% increase in the retail price of horticulture produce or 50% increase in the retail price of non-perishable agricultural foodstuffs. Price rise shall be evaluated in relation to the price prevailing immediately preceding 12 months or average retail price of the last five years, whichever is lower.

The exclusion is being made for the processors or value chain participants of agricultural produce if their stock limit does not exceed the overall ceiling of installed processing capacity or demand for export (in case of exporters).

Key Concerns
Toward the beginning, the Farmer Bills are being seen by state governments as rapid encroachment on the state's powers and components as agribusiness and markets are State subjects under Entries 14 and 28 independently in List II Constitution of India. They are seen as clashing with the spirit of supportive federalism and the public authority country loved in the Constitution.

In any case, the Central government has battled that trade and business in food things fall under Entry 33 in the Concurrent List, from now on attributing sacrosanct fittingness to the Farmer Bills. Though Entry 33 between state trade food things would be reliant upon Central authorization, any laws impacting intra-state trade are a quick impedance with state powers and abbreviate state institutions' reasonability on issue recorded under the State List.

It has been raised in the Sarkaria Commission Report on Center State Relations[4] that Entry 33 has been used by the Center to disproportionately empower itself in issues relating to agriculture. Since the Farmer Bills have a supplanting sway over State acts, inquiries regarding encroachment of the Constitution's public authority plan have arisen. Without a doubt, the Central government will respect states' self-administration in regulatory development and any necessity on their powers and assets is silly.

The second vital concern is the consent of all traders, farmers, states, and commission agents. Why they were not consulted prior to the introduction of Farm Bill 2020 in the Parliament. Those who stand to lose most from these Farmer Bills were not permitted to participate in discussions on the subject. The government has hastily passed the Farmer Bills in the Parliament despite strong opposition.

Opportunity And Obstacles
The Government of India aims to provide a better ecosystem to our country's farmers through the bill called Farm Bill 2020, which is being passed in parliament and then in both the houses. Though the bill seeks to provide different opportunities to the farmers, it also created chaos throughout the country. The farmers are finding the bill as an outrageous loss for themselves in the future; that�s why they are protesting in different states of the country. The state also finds it challenging to implement, as the bill overrides the state governed APMC laws.

We have to see the perspective of GOI and farmers. Let us discuss the opportunity being created for the farmers through this bill.

  1. The buying and selling of the agricultural products can be done in a more free manner, they can sell their produces outside the mandis without any barrier
  2. While trading can be done outside the physical premises of mandis, the government seeks to provide another platform for trading, i.e., online transactions.
  3. These bills remove the fear for holding the stock more than the GOI's prescribed limit by a licensed trader. Prior to these bills, traders would be punished for holding the stocks that are deemed excess and inflicting losses for farmers.
  4. The bill ensures that farmers will get the stipulated price for crops so that farming services.

There are different concerns individually connected to all three bills. The issues that the farmers fear in relation to these bills are:
  1. End of Minimum Support Price:

    The farmers' most significant concerns are regarding the MSP (Minimum Support Price). The private organizations will be in the power position and the farmers will be subjected to exploitation. The organizations will be able to exploit the farmers and they will be able to take the agriculture produce at even less than the MSP. The farmers are demanding the MSP as the legal rights for themselves. The government had verbally given the farmers an empathy, that the MSP will be there.
  2. Dismantling the existing APMC system:

    The government seeks to end the current APMC system throughout the country, even though they stated that these bills aim to provide an alternate ecosystem to the farmers for their trade. The new ecosystem allows farmers to sell their products outside the mandis; however, even under the current system, farmers are already free to sell to anyone, as most APMC acts contain exclusion clauses. Therefore, the freedom to sell outside the physical premises of the mandis were never curtailed by these acts; also, the APMC laws only regulate the very first transaction between the farmers and the buyer- not the trader that followed. Prior to these bills, many states already amended their APMC laws with the 2017 Model APMC Act and provided for setting up of special and private market yards for purchase directly from the farmers.

    The State intervention in the current mandi system issues will be over, whereas the GOI would take over the subject of the APMC�s. The new ecosystem will eventually result in the shutdown of the APMC�s, which will result in the loss of farmers as they will no longer be able to bargain to trade their agricultural products.

    The state earns from the APMC�s as the market or fees, whereas the bill's provision. i.e., Section 6 provides for the waiver of market fee or levy for all transactions made outside the APMC premises. It will be detrimental for the states, as they will not be able to develop the rural areas and linkage of rural roads with mandis for the farmers to carry their agricultural products.

    APMCs have their shortcomings, but it provides a farmer to bargain and sell their products at much significant rates, farmers will get MSP and bargain in terms of grading, moisture measurements, weighing, etc.

    Hence, creating two distinct parallel markets will not be a solution for a farmer; instead, GOI needs to improve the situation of APMCs so that the farmers will not be subjected to exploitation.
  3. Loss of revenue and livelihoods:

    The dismantling of APMCs will eventually result in the state's revenue loss and small and marginal farmers. The state generates revenue from the APMC, and they pay off the laborer who do their jobs such as packaging, storing, transporting, etc. After implementing these bills, the state will eventually lose their revenue that it earns from the APMCs and the small laborers will suffer. The livelihoods of different traders and small labour will be at stake with the mandi system's disintegration.

    The GOI introduced these bills to eliminate all the middlemen between the farmers and the buyers. The price is being added and added by them as the products pass through them to the final buyers. But, the GOI introducing the private market will gradually add the middlemen even without a license. So, the new bill will indirectly result in the emergence of intermediaries and contractors.

    Let's talk about the online platform for trading and transactions, keeping in mind the small landholding farmers' small output. It does not seem to be attainable to sell their products anywhere outside the mandi's physical premises when MSP is not a legal right.
  4. The exploitation of farmers by parties involved in the farming agreement:

    The big private organization will easily negotiate with the small or marginal farmer. The small or marginal farmers will not be able to negotiate much with the bigger parties as they have small output. Although the bill aims to protect farmers against exploitation and increase choice in the sale, it does not consider that individual farmer might not be equipped to negotiate with private corporations to ensure themselves a fair price.
  5. Black Marketing:

    The stock limit has been changed and will be in the hands of GOI, i.e., how to regulate and when to regulate. The GOI will limit the stocking and hoarding of some essential commodities in extraordinary circumstances, such as war, famine, price rising, etc. This will give rise to black marketing; the traders, retailers, organizations will be able to keep heavy stocks of the products and subject them to selling while the prices are low in the market, which will eventually result in the loss of farmer, as their harvested crop will go waste, or the big traders or organization will buy them on low rates.

Some beneficial reforms need to be done by the Government of India:
  1. Make MSP a lawful appropriate for the farmers all through the country
  2. Do not merely destroy the APMC structure; all things being equal need to improve the current APMC design's conditions. There is a need to change the current APMC markets and sub-advertises instead of destroying them in a roundabout way and make new business sectors to decrease the weight on existing ones.
  3. Legislations protecting farmers from crop damage and loss caused by drought, floods, and cyclones and ensuring income in such calamities through state support are imperative in India.
  4. GOI needs to improve the street network, transport offices, environment controlled storage spaces, and power supply, which are essential for exceptional enhancements in agribusiness.

The farmers all over the country are distressed about their indebtedness, their small landholdings, fewer facilities for producing farm products, climate change, transportation. A mere bill that is providing a new ecosystem to the farmers is also not an amicable solution to tackle the farmer's problem. The bills are directly or indirectly creating new issues for the farmers, and subsequently, the farmers will never be able to decide the price of their own farm products.

There is an urgent need to listen to the farmers' voices protesting in different states of the country. The play between India's government and the government of different states is creating new problems for the farmers. Although the states have their own APMC laws, GOI is still interfering in between and doing privatization of the most crucial sector, i.e., Agriculture.

The agriculture sector requires stability, whereas the new model will only introduce more price volatility by introducing market forces. The reassessing of the bill has to be done and all the decisions should be first discussed with farmers, traders, and states to meet the needs and requirements of farmers.

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