Agri reforms will increase income opportunities for farmers: CII
Bhubaneswar: The Confederation of Indian Industry (CII) has welcomed the proactive action of the Centre in pushing the agri marketing reforms agenda aimed towards ‘Moving to One Nation, One Market’. The reforms were announced under the economic package for building ‘Atmanirbhar Bharat’ and the quick action in terms of approval by the Union Cabinet is commendable. The reforms are now the Farm Acts 2020.
“The Farming Produce Trade and Commerce (Promotion and Facilitation) Act, 2020” towards freeing up agricultural markets is progressive and alters the agriculture marketing landscape in the country in several positive ways. There are several key provisions.
There will be dual benefits to farmers with provision for more avenues to sell their produce at better prices and also reducing their transportation costs significantly. There will be transparent and barrier-free inter-State and intra-State trade which in turn will help in better price discovery for farmers. The Act also contemplates establishing a pan-India electronic trading and transaction platform which will enable the farmers to access markets in other States also which was not available earlier to farmers.
To facilitate timely payment, the Act specifies that payment to farmers should be made on the same day or within maximum three working days if procedurally so required. While competition will bring in transparent price discovery, the Act also provides for developing a Price Information and Market Intelligence System for farmers’ produce and a framework for dissemination of information. An efficient and detailed mechanism for dispute resolution is also outlined to prevent any kind of exploitation of farmers.
The provisions also address key areas of farmers’ concerns. Farmer concerns are primarily around the future of Minimum Support Price as MSP can be enforced only through Government intervention. What needs to be understood is MSP is not a function of the APMC Act or the APLM Act. Mandis only provide the physical infrastructure for facilitating the procurement operations and they will continue to do so for farmers that come to the APMC market. While the farmers in Punjab and Haryana are largely dependent on the MSP regime, it needs to be understood the reform does not intend to demolish the MSP system but helps towards getting the markets at a large right. Additionally, the Government has offered a written assurance that the existing system of MSP will not be tampered with.
The law will gradually end the mandi system and with businesses moving to deregulated markets, farmers will be exploited. What needs to be understood is that the reform does not intend to demolish existing APMC system. It only provides additional market option to the farmers which was not available earlier and the farmer has a choice to make. Further, the Government has offered to put deregulated markets and notified markets on a level-playing field in terms of taxes and fees so that there is no disadvantage to anyone. It is proposed to give States the freedom to impose taxes and fees in private mandis (wholesale markets), a move aimed at maintaining a level playing field between private and State regulated markets.
Dispute resolution mechanism: Under the Act, it was proposed that dispute resolution will be within the powers of the district authorities such as the Sub-Divisional Magistrate. However, the Government has now proposed that that farmers can approach civil courts in case of any trade related dispute.
Farmers (Empowerment and Protection) Agreement on Price Assurance and Farm Services Act, 2020 provides a national framework on farming agreements that protects and empowers farmers to engage with agri-business firms, processors, wholesalers, exporters or large retailers for farm services and sale of future farming produce at a mutually agreed remunerative price framework in a fair and transparent manner.
The Act is a right step towards scaling up contract farming partnerships and will help industry in terms of reducing uncertainty in the availability of the farm produces while farmers will be benefited with assured prices as well as inputs and agronomic support.
On Contract farming, farmers’ concern is around loss of land ownership. However, the Act does not allow transfer, lease or sale of land and the Government has assured that sale or auction of farmland will remain outside the purview of the Act.
The Essential Commodities (Amendment) Ordinance, 2020 is a welcome step. With the amendment in place, commodities like cereals, pulses, oilseeds, edible oils, onion and potatoes are removed from the list of essential commodities. The freedom to produce, hold, move, distribute and supply is expected to harness economies of scale and attract private sector/foreign direct investment into agriculture sector. It will also prop up investment in cold storages and modernisation of food supply chain.
The private sector has been partnering with farmers over decades for enhancing production and productivity leveraging technology, enhancing farmer capabilities through introduction of improved varieties and good agricultural practices, providing market linkages as well as farmer friendly post-harvest management solutions thus creating avenues for enhanced farmers’ incomes. These reforms, coupled with other policy interventions around Farmer Producer Organisation, Agro clusters and Agri Infrastructure Fund will set the stage for deeper long term engagement between the farmers and the value chain participants (compared to the one transaction-at-time type APMC system) to make Indian agriculture more competitive.
In this hour, it is critical that all stakeholders come together on a common forum and resolve issues, if any, through fruitful deliberations.