Farm Bill 2020 - Another blow for democratic India.
In this blog, we will examine whether the protest against the passing of Farm Bill 2020 is legitimate or not. We will analyze the details of "Farm Bill 2020" to find out its advantages and disadvantages.
This article will be very much useful for students preparing for UPSC and other competitive examinations.
Read the entire post "Farm Bill 2020" before passing any sort of judgment
The Bill has attracted several criticisms from all opposition parties as well as farmers and social workers.
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Background of Farm Bill 2020 - What is the current farm bill?
The Farmers’ Produce Trade and Commerce (Promotion and Facilitation) Ordinance, 2020 replaces the old Farmers (Empowerment and Protection) Agreement of Price Assurance and Farm Services Ordinance, 2020 Bill.
The Farm Bill 2020 was introduced in the Lok Sabha on 14th September 2020.
Agricultural markets in India were mainly regulated by the state Agriculture Produce Marketing Committee (APMC) laws and legislations. APMCs were set up to ensure fair trade between buyers and sellers for effective price discovery of farmers’ produce.
Power of APMCs:
APMC has the following powers
(i) To regulate the trade of farmers’ produce by issuing licenses to buyers, commission agents, and private markets
(ii) Levy market fees and other charges on trade of agricultural commodities (iii) Provide necessary infrastructure within markets to facilitate proper trading between farmers and buyers.
Farm Bill 2020 Recommendations of Standing Committee on Agriculture
The Standing Committee on Agriculture set up by the Ministry of Agriculture in (2018-19) observed that the APMC laws are not implemented by the local state governments in their true sense and need to be reformed urgently.
The committee identified several Issues which include
(i) Most state APMCs doesn't have a sufficient number of traders, which leads to the creation of monopoly power and reduces competition leading to unfair prices for farmers and consumers
(ii) Traders, commission agents, and other stakeholders organize themselves into cartels, which does not allow free entry of new traders into agricultural markets, thereby damaging the perfect competition.
The Act also prevents the promotion of multiple channels of marketing (such as more buyers, private markets, direct sale to businesses and retail consumers, and online transactions)
Objectives of the "New Farm Bill 2020"
The central government passed three Ordinances on June 5, 2020:
(i) Farmers’ Produce Trade and Commerce (Promotion and Facilitation) Ordinance, 2020
(ii) Farmers (Empowerment and Protection) Agreement on Price Assurance and Farm Services Ordinance, 2020, and (iii) Essential Commodities (Amendment) Ordinance, 2020.
The objectives are
(i) To facilitate barrier-free trade of farmers’ produce outside the markets which doesn't come under the regulations of various state APMC laws
(ii) Defining a framework for contract farming
(iii) Imposing stock limits on agricultural produce only if there is a sharp increase in retail prices.
The three amendments together aim to increase opportunities for farmers to enter long term sale contracts, increase the availability of buyers, and permit buyers to purchase farm produce in bulk.
Next, we shall discuss the main features of each of the three bills
Features of Farmers’ Produce Trade and Commerce (Promotion and Facilitation) Ordinance, 2020
Allowing free trade of farmers’ produce:
It allows for the intra-state and inter-state trade of farmers’ produce outside:
(i) the physical premises of the market run by committees formed under the state APMC Acts (ii) Outside markets regulated under the state APMC Acts.
Such trade can be conducted in ( i) farm gates, (ii) factory premises, (iii) warehouses, (iv) silos, and (v) cold storages.
Electronic trading:
New Farm Bill 2020 permits for electronic trading of scheduled farmers’ produce.
Electronic trading and transaction platform will facilitate the direct and online buying and selling of agricultural produce through electronic devices and the internet.
Market fee abolished:
The new bill prohibits state governments from levying any market fee, cess or taxes on farmers, traders, and electronic trading platforms for the trade of farmers’ produce in any "outside trade area’.
Essential Commodities (Amendment) Ordinance, 2020
Regulation of food items:
The Essential Commodities Act, 1955 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 ban the production, supply, distribution, trade, and commerce of such essential commodities. This bill provides additional powers to the central government that 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.
Stock limit:
The New Farm Bill 2020 rules that the stock limit on agricultural produce must be solely based on price rise. A stock limit may be imposed only if there is: (i) a 100% increase in the retail price of horticultural produce; and (ii) a 50% increase in the retail price of non-perishable agricultural food items.
This is terrible legislation that will give undue bargaining powers to the central government and traders. This legislation may lead to price manipulation and black marketing of necessary food items
Key Criticisms of New Farm Bill 2020
The bill will allow farmers to sell their produce outside APMC ‘mandis’ to whoever they want. Anyone can buy their produce even at their farm gates. Though ‘commission agents’ of the ‘mandis’ and states could lose 'commissions' and 'mandi fees' respectively (the main reasons for the current protests), farmers will get better prices through competition and cost-cutting on transportation.
Political parties and farm organizations such as the Bhartiya Kisan Union (BKU) and All India Kisan Sangharsh Coordination Committee (AIKSCC) are protesting against the bills which they believe are designed to help big corporate houses at the cost of farmers
The state governments of Punjab and Haryana will be affected most because of the loss ‘Mandi Tax’, a good source of state revenue.
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