Agri marketing reforms: Three Bills tabled to allow barrier-free trading of farm goods, contract farming

The Centre on Monday introduced three Bills in the parliament which seek to replace the recent ordinances to allow barrier-free inter-state trading of farm goods and contract farming. The roll-out of the laws heralded a transition of India’s agri-marketing as signs of a weakening of the Agriculture Produce Marketing Committee (APMC) networks are now seen across major farm production centres, which may bolster bargaining strength of farmers.

Introducing two of these bills — The Farmers’ Produce Trade and Commerce (Promotion and Facilitation) Bill, 2020 and The Farmers (Empowerment and Protection) Agreement on Price Assurance and Farm Services Bill, 2020 – in the Lok Sabha, agriculture minister Narendra Singh Tomar said that states had not embraced the reforms in the APMC Act in a uniform manner as suggested by the Centre in the past. The lack of homogeneity in the laws was obstructing a competitive pricing environment for the farmers and was also becoming an impediment to the evolution of a modern trading system.

“To keep pace with the dynamically changing agri-economy, e-commerce and agri-exports and also to meet the rising expectations of farmers and consumers, the country needs an accessible and competitive trading system outside the physical space of the notified market-yards under the State APMC Act. It has become necessary to enact Central legislation to provide a more competitive and hassle-free eco-system where farmers and traders have the choice to sell their products in an efficient, transparent and competitive environment to realise remunerative prices,” Tomar said.

The Farmers’ Produce Trade and Commerce (Promotion and Facilitation) Bill, 2020 provides for freedom of choice to the farmer or trader to conduct trade and commerce while any trader having a permanent account number (PAN) is allowed to buy directly from farmers. The Farmers (Empowerment and Protection) Agreement on Price Assurance and Farm Services Bill, 2020 allows farmers to get a share of post-contract price surge after they sign agreements of contract farming with private players. Also, they will have the cover of the minimum guaranteed price if open market/mandi rates fall drastically.

Separately, Raosaheb Patil Danve, minister of state for consumer affairs and food, also introduced The Essential Commodities (Amendment) Bill, 2020 in the Lok Sabha.

Tomar also said that the Covid-19 pandemic and the nationwide lockdown threw up challenges to the agriculture sector and impacted the livelihood of farmers. “As the sector has immense potential to make a significant contribution to the economic growth, there was a need to find long-term solutions for farmers and for agriculture as a whole,” he said.

On June 5, the Centre promulgated three Ordinances reforming the country’s agriculture marketing. During the June 6-August 31 period, mandi arrivals of crops –- from fruits and vegetables to cereals and pulses – have dropped dramatically. The fall was up to 49% for fruits, 57% for vegetables and 45% for grains.

The Centre through another ordinance also promulgated in June, made changes to the Essential Commodities Act removing cereals, edible oil, oilseeds, pulses, onions and potato from its purview. The reforms are expected to help evacuate the surpluses from production zones to demand zones seamlessly, to the advantage of farmer-producers and players across the agriculture value chain, who have also been promised solid support by way of schemes and outlays to build infrastructure and logistical chains from farm-gate to the retail trade, and even exports.