Farm Bills revivify the Indian Agriculture sector
This article provides a summary of three farm bills, which bring in much needed agricultural sector reforms in India: thereby freeing the Indian farmers from restrictions on sale of their produce and ending the monopoly of traders.
These bills have opened the window for private capital by allowing farmers to enter into deals with large buyers such as exporters and retailers; and the private sector investment/ participation is definitely going to increase in future either as standalone investments or via Public-Private Partnerships (PPPs) in cold storage, warehousing etc.
Such investment will give a boost to the rural incomes and drive sustainable growth for the country going forward.
The Farmers’ Produce Trade and Commerce (Promotion and Facilitation) Bill, 2020
· Farmers are free to sell produce to anybody, anywhere outside the
1) the physical premises of market yards run by market committees formed under the state Agricultural Produce Market Committee (APMC) Acts; and
2) other markets notified under the state APMC acts such as private market yards and market sub-yards, direct marketing collection centres, and private farmer-consumer market yards.
· Such trade can be conducted in any place of production, collection, and aggregation of farmers’ produce including: (i) farm gates, (ii) factory premises, (iii) warehouses, (iv) silos, and (v) cold storages.
· It removes all barriers for intra and inter-state trade in agricultural produce. It allows farmers, farm producer organisations as well as anyone who buys farmers’ produce for: (i) wholesale trade, (ii) retail, (iii) end-use, (iv) value addition, (v) processing, (vi) manufacturing, (vii) export, or (viii) consumption, to engage in such intra-state or inter-state trade.
· It supports seamless electronic trade. An electronic trading and transaction platform may be set up to facilitate the direct and online buying and selling of farmers’ produce through electronic devices and internet for physical delivery of the farmers’ produce. The following entities may establish and operate such platforms:
1. companies, partnership firms, or registered societies, having permanent account number under the Income Tax Act or any other document notified by the central government, and
2. farmer producer organisation or agricultural cooperative society.
· Ends the monopoly of traders
· Encourages competition among buyers
· Yields better returns to farmers and raises incomes
· Farm produce can move freely from surplus to deficit regions
· Creates national market; high intimidation cost mandis will go
· Consumer gets better and cheaper products
Farmers (Empowerment & Protection) Agreement of Price Assurance & Farm Services Bill, 2020
· Provides a framework for the protection and empowerment of farmers with reference to the sale and purchase of farm products.
· Relates to contract farming; and provides for a farming agreement prior to the production or rearing of any farm produce, aimed at facilitating farmers in selling farm produces to sponsors.
· A sponsor includes individuals, partnership firms, companies, limited liability groups and societies; and thus, it allows farmers to tie up with large buyers, exporters and retailers.
· The agreement may provide for mutually agreed terms and conditions for supply, quality, standards and price of farming produce as well as terms related to supply of farm services.
· Prohibits sponsors from acquiring ownership rights or making permanent modifications on a farmer’s land or premises under a farming agreement.
· Farmer will have assured price before sowing
· Transfers market risk from farmer to sponsor
· Gives farmers access to high quality seeds, fertilisers, pesticides
· Will attract private investment in farming and link farms to global markets
The Essential Commodities (Amendment) Bill, 2020
This is an amendment to the Essential Commodities Act, 1955 which empowers the central government to designate certain commodities (such as food items, fertilizers, and petroleum products) as essential commodities. The central government may regulate or prohibit the production, supply, distribution, trade, and commerce of such essential commodities.
· The amendment provides that the central government may regulate the supply of certain food items including cereals, pulses, potatoes, onions, edible oilseeds, and oils, only under extraordinary circumstances. These include: (i) war, (ii) famine, (iii) extraordinary price rise and (iv) natural calamity of grave nature.
· Does away with imposition of stock limit except under exceptional conditions.
· Further, it requires that imposition of any stock limit on agricultural produce must be based on price rise. A stock limit may be imposed only if there is:
1) a 100% increase in retail price of horticultural produce; and
2) a 50% increase in the retail price of non-perishable agricultural food items.
· Likely to attract private investment in cold storage, warehouses, processing
· Helps reduce wastage as storage facilities improve
· Brings price stability and raise farm incomes for farmers
YOG INFRA has experience in promoting private sector investments in agriculture sector, and we believe the private sector has a larger role to play in implementing these reforms in future.
For more information on how we can help you evaluate investments in Indian agriculture sector to make a developmental impact, please reach out to us at firstname.lastname@example.org