Introduction:
In the present article an attempt has been made to make our famers aware of the new farm acts which have been passed by the Government. The article presents the background, need for reforms, its benefits and impacts to the farming community. Moreover, a detail comparison is has been provided about the acts so that myth and reality can be presented to understand the acts and its usefulness to the farming community in Nagaland .It is believed that the new acts will provide a good opportunity for the progressive farmers of the state to sell their produce in any market anywhere as per their convenience with a good price tag.
BACKGROUND OF REFORMS
Disparity between Agriculture and Other Sectors
Despite economic liberalization in the beginning of the nineties, agriculture as a sector was left out. The difference in annual income of farmer and non-farmer worker, which stood at Rs 25,398 in 1993-94 further widened to Rs 54,377 in 1999-2000 and in the next decade it further increased to more than Rs 1.42 lakh. The dairy and fisheries sectors are growing at an annual rate of 4% to 10%, while the growth in food grain sector, where regulations were seen as excessive, has been at an average of 1.1% annually after 2011-12.
Hence, it was always known that agriculture sector too needed pro-farmer reforms, just like the reforms in other sectors, to double the income of farmers.
NEED FOR PRO-FARMER REFORMS
Fragmented Markets
Each market functioned as a separate entity, hampering intra and interstate trade.
Insufficient Markets
At the same time, there were not enough markets to deal with growing produce.
Market Fees & Charges
Taxes, various commissions raised the cost of final product, while reducing returns to farmers.
Inadequate Infrastructure
Despite market taxes, infrastructure in markets remained underdeveloped and not in tune with modern supply chains.
Post-Harvest Losses
This inadequate infrastructure led to high postharvest losses, estimated at Rs 90,000 crore in 2014.
Restriction in Licensing
Entry as a licensed agent was restricted, discouraging competition and encouraging cartelization.
High Intermediation Costs
The fragmented system led to high intermediation costs, raising costs for consumers, while depressing prices received by farmers.
Information Asymmetry
Farmers often lacked market information, which traders & commission agents withheld from farmers.
Inadequate Credit Facilities
Informal credit channels still dominated formal channels.
BENEFITS OF THE NEW FARM LAWS IN NUTSHELL
|
SL.No. |
Before Reforms |
After Reforms |
|
1 |
Can sell notified farm produce only in APMC Mandi Monopoly of few Cartels of traders could keep prices artificially low |
Freedom of choice to sell in APMC mandi or choose any other seller. Multiple options to sell.Better price realization through competition |
|
2 |
Once produce brought to mandi, farmer has to accept whatever price is offered |
Can bargain for price even at door-step
|
|
3 |
Mandi fee, commission, and other charges borne by producers and consumers |
No fee, no commission. Large savings to benefit producers and consumers. |
|
4. |
Large price spread Long chain of intermediaries |
Higher share of farmer in consumer’s payment Minimum or no intermediary |
|
5. |
No opportunity for farm youth to trade agri commodities |
Rural farm youth will get opportunity to trade and run supply chain. |
|
6. |
Cannot directly sell to consumers |
Can sell directly to anyone and earn higher price |
|
7. |
Freedom to sell fruits and vegetables outside of APMC mandi existed in some states |
This freedom is now extended to all agri produce and all over the country |
|
8. |
Small land holders did not have scale and bargaining power in input and output markets |
Empowered to access modern input, services and protection against price risk. Farmer Producer Organizations help small farmers’ organize for better bargaining power |
|
9. |
Contract farming restricted only to some pockets |
Contract farming now nationally enabled and on terms favorable to farmers |
|
10. |
Farmers not part of value chains |
Farmers will now be partners in value chain |
|
11. |
Exports getting uncompetitive due to long chain of intermediaries and poor logistics |
Export competitiveness will increase and benefit farmers |
IMPACT OF THE LAW
1. If farmers want to sell within the APMC markets, that will continue. MSPs also continue. So, the MSP acts as a safety net for farmers.
2. APMC market yards will be open for farmers to sell. This apart, they can also sell outside the mandis. There will be competition to buy from farmers which means farmers have greater bargaining power to decide their price.
3. For every product and for every producer, all of India is a single unified market. Only farmers were denied this benefit of a massive market.
4. With these reforms, Indian farmers will now finally have the freedom to sell their produce to who they want and where they want and at price of their choice, an option denied to them until now.
5. If farmers find buyers willing to buy from their own doorstep, they can sell to them. They also have a legal framework protecting their rights when they do so. This saves farmers time, money and effort.
6. Development of infrastructure close to their own farms will reduce post-harvest losses and improve income through greater linkages to markets in food processing, retail, and exports.
7. This will also lead to the development of better price discovery mechanisms for farmers, leading to better price for their produce.
8. eNAM can finally fulfill its potential of serving as the national platform for electronic trading in agriculture produce.
IMPACT OF CONTRACT FARMING LAW
Contract farming acts as a form of price assurance.
1. Typically, in contract farming, the agreement is made between the farmer and buyer even before the crop is sown. Farmer already knows what MSP he can get for his crop. So, the farmer will negotiate a price above the MSP.
2. The MSP will actually begin to act as a starting price of negotiation for the farmers, empowering them.
3. The price in the agreement is only the minimum price the farmer can get. If the contractor makes a better profit than expected, farmers will be entitled to get a bonus over and above the minimum price they had bargained for.
4. This means, even if there is a loss for the contractor while reselling/value addition, the farmer still gets an assured price. But if there’s a profit above expectations, the farmer will also get a share of it.
5. Arhtiyas are also empowered to make use of the contract farming law by becoming contractors themselves since they already have links with farmers and knowledge of what they grow.
6. Bringing farmers together through Farmer Producer Organizations will enable bargaining capacity and economies of scale for even small farmers.
7. These reforms will boost investment in the agriculture sector, through better assured prices, and contracts for farm services.
8. The impact of these reforms will see India’s agriculture and food processing industries transformed. Private sector investments will pour in across the entire cold chain, reducing losses and ensuring better prices for farmers.
9. Better backward linkages will ensure better quality of produce, leading India to capture a bigger share of global export markets. So, even the global markets will open up for Indian farmers.
10. Employment in the food processing sector will rise among rural youth, and this will put India on the path towards becoming the leading food exporter in the world, while maintaining our food security.
11. Due to all of this, farming can become profitable even for small and marginal farmers.
The Farmers’ Produce Trade and Commerce (Promotion and Facilitation), Bill, 2020 – Freedom to Sell Farm Produce Across India
|
Sl.no |
Myth |
Reality |
|
|
a. “Farmers will not get the MSP” b. “It may eventually end MSP based procurement system” c. “MSP operations will discontinue |
MSP system stays. In fact, the Modi government has increased MSPs multiple times and also procured more from farmers at MSP than any past government! The new law will not affect MSPs adversely. MSP purchase on agricultural produce is done through State Agencies and there is no change in this due to this law MSP procurement from farmers is the top priority of the present Government and it will continue to be so. |
|
|
“Trade & Commerce Act will replace the State APMC Act and affect the functioning of the APMCs” |
This Bill is not intended to replace the State APMC Act and does not affect the functioning of the APMCs APMCs will continue to regulate the marketing of agricultural produce within the physical boundaries of market yards. They can levy market fee within physical mandi as per their regulations The Act only provides farmers with additional marketing opportunities outside existing APMCs Both the laws will co-exist for the common interest of farmers |
|
|
a. “Infringement into the States powers of making Legislation” b. “Encroachment in State Powers |
Inter-State trade falls within Entry 42 of Union List of the Constitution of India Though intra-State trade falls within Entry 26 of State List, the same is subject to Entry 33 of Concurrent List of Constitution of India Central government is fully competent and empowered to legislate here Hence, no encroachment in State powers |
|
|
a. “Sufficient safeguard is not provided to protect the interest of farmers” b. “Exploitation of farmers by traders” |
Act provides sufficient elaborate mechanism to protect the interest of farmers Simple, accessible, quick and cost-effective dispute resolution mechanism is prescribed for the farmers against traders to prevent and curb any unscrupulous acts |
|
|
“The Act doesn’t safeguard farmer payments. The commission agents under APMC are verified and payment is secured.” |
Payment has to be made to the farmers on the same day or within three working days Deterring penal provisions have been put in place for traders to curb any malpractices The penalty provision against trader will act as determent against any fraudulent motives |
|
|
a. “Revenue loss of APMC mandis” b. “The Act will block the ways for the state to generate revenue from agriculture trade and will lead to the closure of APMCs.” |
States/APMC continue to have regulatory powers to impose mandi fees and other charges within markets APMC markets will continue to operate and are not affected in any way by this reform In fact, APMC markets will become even more efficient to compete with other buyers and attract farmers to generate revenue APMC markets have understanding of farming patterns and their agents already have a connect with farmers. They will make APMCs more efficient and competitive |
The Farmers (Empowerment and Protection) Agreement on Price Assurance and Farm Services Act 2020 – Contract Farming Law
|
Sl.no |
Myth |
Reality |
|
|
Contractors will take over farmers’ land and farmers will end up becoming laborers |
Agreement is for crops and not for land The law clearly disallows any transfer, including sale, lease and mortgage of the land or premises of the farmer The law ensures that buyers/sponsors are prohibited from acquiring ownership rights or making permanent modifications on farmers’ land |
|
|
No legal safety net for farmers against contractors Contractors can take over farmer land for recovery |
Clear pro-farmer dispute resolution mechanism outlined. Some farmers have already got due compensation by taking legal action against traders No recovery of dues against farmers’ land. Farmers’ land is safe, no matter what the situation |
|
|
The Act does not provide any price guarantee for farmers |
The law clearly says that the price of farming produce will be mentioned in the farming agreement itself, which assures the price It also says that, in case, such price is subject to variation, then, the agreement shall explicitly provide for a guaranteed price to be paid for such produce If the contractor fails to honour the agreement and does not make payment to the farmer, penalty may extend to one and half times the amount due! Some farmers have already benefited from this 4 Big companies will exploit farmers in the name of contract The con |
|
|
Big companies will exploit farmers in the name of contract |
The contract agreement will guarantee the farmers to get the fixed price Farmer can withdraw from the contract at any point without any penalty |
|
|
Such agreement based farming has never been tried in India |
Punjab, Tamil Nadu and Odisha already have contract farming laws. |
Reference: Putting farmers first. (2020) Published by Ministry of Information and Broadcasting, Government of India.
Compiled By: Dr. Rakesh Kumar Chaurasia
Sr. Scientist and Head
KVK, Zunheboto,
Nagaland University
