Critical Analysis of Three New Ordinances Bill for Farmers

Critical Analysis of Three New Ordinances Bill for Farmers

This post is written by Parul khurana, Amity Law School, Delhi.

Recently Central government introduced three ordinances to bring in far-reaching agricultural ‘reforms’ in the country. Taken together, these ordinances intend to liberalize the regulatory system in the agriculture sector, provide freedom to farmers and traders to trade in farm produce at a site of their choice such as farm gates, warehouses, etc., and to usher in legal contract farming in a uniform manner throughout the country. While the stated objectives of these ordinances provide the appearance that these will ‘free up’ curbs on trade that had shackled farmers and their ability to get a remunerative price for their crop, the text of the three ordinances raises some questions. Farmers from Punjab and Haryana are staging protests against bills on food and agriculture reform introduced by the centre in Lok Sabha. Here is all we need to know about the three bills:

  • Bills on agri market farmers produce trade and commerce (promotion and facilitation) bill, 2020 

(a)To create an ecosystem where farmers and traders enjoy the freedom of sale and purchase farm produce outside registered ‘mandis’ under states APMCS.

(b)To promote barrier free inter-state and intra-state trade of farmers produce. 

(c)To reduce the marketing and transportation costs and help farmers in getting better prices.

(d)To regulate the framework for electronic trading.

  • Analysis of the ordinance 

Although the APMC(Agricultural Produce Market Committee)  markets have been surrounded by several issues such as lack of enough market yards, lack of facilities in the existing market, monopoly by traders, unwarranted deductions in the payments of farmers, etc. but what if we end the APMC structure in the farming.

APMC markets were never inherently problematic, it was considered as an important medium for price discovery at the local level for farmers. APMC were even considered as the last resort for various small farmers. Although only 6 percent of farmers uses MSP ( minimum support price ) but it was considered fruitful for various farmers who were  unable to sell their products through the middle men ’  In my opinion there is the need to reform and regulate the APMC markets and sub markets in the rural areas instead of ending the APMC structure.

  • Bill on contract framing the farmer (empowerment and protection ) agreement of price assurance and farm services bill, 2020 
  1. Farmers can enter into a contract with forms, processors, wholesalers, exporters or large retailers for sale of future farming produce at pre- agreed price.
  2. Small farmers, with less than 5 hectares to gain via aggregation and contract.
  3. To transfer the risk of market from farmers to sponsors.
  4. To enable the farmers to access modern tech and get better inputs.
  5. To promote direct marketing by eliminating intermediaries. 
  6. Effective ADR mechanisms. 
  • Analysis of this ordinance 

This ordinance is considered to be the least argumentative, the timely payment to the farmers, and a conciliation process for dispute settlement where SDMs have been given the power to resolve the disputes is the main crux of this ordinance.

If we go in the critical analysis of this ordinance there are two broader concerns, the first principle talks about the contract farming and the negation between the farmers and big cooperators. It would be difficult that the small farmers might not be able to negotiate with corporate and big sponsor to ensure a fair price for their produce. If we talk about approaching the SDMS (sub divisional magistrate) for conciliation it can be a hurdle for the various small and marginal farmers. Second, the ordinance says that the quality parameters can be mutually decided by the two parties in the agreement. But the quality aspect will become crucial when a few corporate will try to usher in uniformity which might end up adversely impacting the already skewed agro-ecological diversity in the country.

  • Bill relating to commodities The Essential Commodities ( Amendment )Bill, 2020
  1. To remove commodities like cereals, pulses, oilseeds onions and potatoes from the list of essential commodities. It will do away with the imposition of stockholding limits on such items except under extraordinary circumstances.
  2. This provision will attract private sector/FDI into farm sector as it will remove fears of private investors of excessive regulatory interferences in business operations.
  3. To bring investment for farm infrastructure like cold storages and modernizing food supply chain.
  4. To help both farmers and consumers by bringing in price stability.
  5. To create competitive market environment and cut wastage of farm produce.
  • Analysis of ordinance 

 This stock limit regulation will not be applicable for value chain participants of any agricultural produce if their stock limit remains within their installed capacity. It will also not apply to exporters if they can show demand for export.

The question therefore is, how will the states ensure that exporters and value chain participants are stocking only the permitted amount according to the rules? For instance, in Haryana, at the level of agricultural bureaucracy – whose officials are primarily tasked with enforcement of rules and regulations within the department of agriculture – there is a severe lack of class II officers of the agriculture department, called agriculture development officers (ADOs). Almost 60% of the sanctioned posts for ADOs in Haryana are vacant. Senior-most ADOs have been given the charge of block agriculture officers at several places.

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