Flow of Presentation

History

Introduction

Key features of new legislations

Pros and cons of new legislations

Research studies

Survey report

Conclusion

Evolution of Market Legislations

1886 (Karanja)

1966 (KAPMRD act)

2003 (Model APMC act)

2020 (Three new legislation)

Markets highly fragmented Non-availability of required number of Markets Inadequate Marketing Infrastructure More Market Fee/ Charges High Post—Harvest Wastages Restrictions in Licensing Less Remuneration to the Farmers and High Intermediation

Cost Asymmetry in market information Inadequate Credit Facilities

Acharya (2004)

A study by Global Agri System of Fruit & Vegetable supply chain in four metros (Delhi,

Mumbai, Bangalore and Kolkata)

Gokul Patnaik (2011)

Objectives To understand the major provisions of new farm legislations

To highlight the challenges regarding the introduction of new legislations

To study the pros and cons of new legislations

To review the related studies

To collect opinion by different stakeholders on three new legislations

Introduction

• The parliament passed threeagriculture related legislation inSeptember 2020

• The three legislation that were passedare1. The farmer’s produce trade and

commerce (Promotion andfacilitation) act, 2020

2. Farmers (empowerment andprotection) agreement on priceassurance and farm services act,2020

3. Essential commodities(Amendment) act, 2020

Three Legislation on Agriculture Reforms

Aim :• Transformation of agriculture

sector

• Raising farmers income andlivelihood status

1. To know the major provisions of farm reform legislation

1. The Farmers’ Produce Trade and Commerce (Promotion and Facilitation)

act, 2020

Functions of APMC

To ensure prompt payment to the farmers on the sale of theiragricultural produce.

To ensure the correct weight of the produce of the farmers inthe market yard.

To avoid exploitation of the farmers in the hands ofmiddlemen.

To promote an orderly marketing of agricultural produce byimproving the infrastructure facilities.

Background: Agricultural produce market committee (APMC) Act

Restrictions for farmers in marketing their produce

Selling agri-produce outside the notified APMC market yards

Sell the produce only to registered licensees of the stategovernments

Barriers in free flow of agriculture produce between states

MandiAPMC yard

outside

Punjab RajasthanHaryana U.P

Sell outside APMC & Mandis

Sell withinAPMC & Mandis

Need MSP

Small farmer Big farmer PVT

companies

More choices

Free market

Farmers income will alsodepend upon ups anddowns of the market

Rising costs of cultivation

Low prices due to low demand

Buy at less sell at high

1. The Farmers’ Produce Trade and Commerce (Promotion and Facilitation) act, 2020

Major provisions

(a)Freedom of choice of sale (b)Barrier-free inter-state and intra-state trade

(c)Electronic trading (d)Freedom to do trading at farm gate, cold storage, warehouse,

processing units

(e)Direct marketing

2. The Farmers (Empowerment and Protection) Agreement of Price Assurance

and Farm Services act, 2020

Background :• Indian agriculture is characterized by fragmentation due to

small holding sizes

• This makes agriculture risky and inefficient in respect of bothinput and output management.

• Conditions for the production of farm products

• Delivery requiremets

Dispute settlement mechanism

Contract farming

Farmers ( Empowerment and Protection) agreement on Price Assurance and Farm

services act 2020

Major provisions

(a) Farming Agreement

(c) Price assurance

(b) Empower farmers

(d)Transfer risk from farmer to sponsor

(f)Improve income of farmers

(e)Access better seed and other inputs

(g)Impetus to research and new technology

(h)Effective dispute resolution mechanism

3. The Essential Commodities (Amendment) act, 2020

Need: Farmers have been unable to get better prices due to lack of

investment in cold storage, warehouses, processing andexport

Farmers suffer huge losses when there are bumper harvests,especially of perishable commodities.

Hoarding

Artificial demand

Affect the normal life of the people food, medicines, fuel petroleum products

etc.,

Shortage of onions

Artificial demand

• Onions demand will increase

• Price will increase

Onions are available at right place

Central govt.

Essential commodity

list

Removing certain

commodities as

essential

Govt. will only regulate SUPPLY & PRICES in cases of war, Famine, High Price Rise or natural calamities

Boosting farmers income

The Essential Commodities (Amendment) act, 2020

Major provisions:

(a)Removed few commodities

(b)Remove fears of private investors

Benefits: The freedom to produce, hold, move,

distribute and supply

Help to drive up investment in coldstorages and modernization of food supplychain.

It will create competitive marketenvironment and also prevent wastage

It will help both farmers and consumerswhile bringing in price stability

2. To highlight the challenges regarding the introduction of new

legislations

Why have there been protests then?

Farmer may not possess thebargaining leverage.

Lead to the entry of privatecompanies that further exploit thefarmers.

India is still plagued by hugeconnectivity issues

Easier for farmers to get to mandis.

Why the Punjab and Haryana farmers are more agitated towards legislation?

• From punjab 85% and from haryana75% of wheat and paddy procuredat MSP rates

• The Punjab government chargesmandi tax, giving them an annualrevenue Rs. 3500 crores.

• These revenues returned back tofarmers as graceful subsidies in theform of electricity

Controversies • The major stakeholders are not involved in drafting new

legislations .

• Because of the entry of private companies APMC maycollapse.

• If this happens states will have a lot of revenue loss and uniongovernment has not mentioned any way to compensate them.

• There is a possibility of middleman in private sector alsobecause our farmers are not in a position to bargain withcorporate houses.

• With the end of APMCs, MSP will alsopractically end this is the mostimportant concern.

• Act does not prescribe or specify thatcontract price of the crop should be atleast equivalent or above the MSP.

• Being big private companies, exporters,wholesalers, and processors, they willalways have an edge in disputes.

• In private sector there will beno control and exploitation bymiddlemen may multiply.

• Limits of hoarding have beenremoved, big private playerscan any time cause artificialprice fluctuation.

Demand of the Farmers

• Convene a special Parliament session to repeal the farmlegislation

• Make minimum support price (MSP) and state procurement ofcrops a legal right

• Assurances that conventional procurement system will remain

• Implement Swaminathan Panel Report and peg MSP at least50% more than weighted average cost of production

• Cut diesel prices for agricultural use by 50%

• Repeal of Commission on Air Quality Management in NCR andthe adjoining Ordinance 2020 and removal of punishment andfine for stubble burning

• Release of farmers arrested for burning paddy stubble inPunjab

• Abolishing the Electricity Ordinance 2020

• Centre should not interfere in state subjects. It is againstdecentralization of power

3. To study the pros and cons of new legislations

Pros of the new Farm legislations

• The farmers have a chance towards a freer and more flexiblesystem.

• Selling produces outside the physical territory of the mandiswill be an additional marketing channel for the farmers.

• The direct marketing system help the farmer to get themaximum price without paying any levy or commission

• Essential Commodities Act help the farmers to get betterprice

Cons of the Farm legislations

• Bill does not give any statutory backing to MSP.

• The government declares MSPs for crops, but there has beenno law mandating their implementation.

• Corporate company is contracting based on qualityparameters, if something went wrong farmers cannot goagainst big corporate companies

• The new bills are placing farmers and traders at the mercy ofcivil servants, rather than of the courts.

Farmers Get Less For Their Crops in Bihar

Source: Study on Agricultural Diagnostics for the State of Bihar in India, 2019 report by NCAER

Problems in Cotton Seed Production as perceived by contract farming farmers

MARKETING PROBLEMS Per cent Ranking

1. Irregular payment 75.56 I

2. Low contract price 56.67 II

3. Manipulation of norms by the firm

44.44 III

4. High rejection rate 31.11 IV

(n=90)

Vijay Kumar (2019)

Arun and Premlata (2009)

Challenges Faced by the Farmers in Direct Marketing

Variables Strongly agree

Agree Neither Agree nor Disagree

Disagree Stronglydisagree

1. Do you experience any problem while direct selling

30 25 3 2 1

2. Lack of market information

23 35 3 0 0

3. Competition 29 32 0 0 0

4. Lack of cold storage 29 30 2 0 0

5. Lack in direct marketing techniques

15 27 16 3 0

6. Price volatility 13 18 21 9 0

DHAKSHANA AND RAJANDRAN (2017)

Which view is correct?

• For instance, the new laws are not shutting down APMCmandis, nor are they implying that MSPs will not befunctional.

• If the private deal is not distinctly better, a farmer can carryon as before. If corporate farming does manage to weaken theAPMC mandi system, it would only be because hordes offarmers chose corporate farming or selling outside existingmandis.

• One can understand why farmers are so sceptical aboutmarkets. A good example is ban on onion exports.

• There are innumerable past examples when the governmentsdecision to protect the consumers from higher prices haveresulted in farmers being robbed of the higher prices a freemarket could have provided them.

• Another underlying structural problem is the lack ofinformation with farmers, which inhibits their ability to makethe best decision for themselves

• Similarly, in the absence of adequate infrastructure to storetheir produce, farmers may not have the capacity to bargaineffectively even if they knew the right price.

4. To review the related studies

1. Farm Bill 2020: An overview with the pros and cons on the Agricultural Sector

• Murya (2020) reported that, these bill would raise farmer’sincome and promised to double the income by 2022. It willmake the farmer independent of government-controlledmarkets and fetch them a better price for their produce.These bills aim to develop a new system where farmers areindependent to sell and purchase there produce outside theMandis i.e. APMC (Agricultural Produce Market Committee). Itwill allow farmers an option to sell their produce directly tothese new zones, without going through the middlemen andpaying levies such as mandi fees.

2. Impact of India's new farm act, 2020 on farmers and markets

Sahoo et al., (2020) reported that majority of farmers whomay stand to gain more choices proposed by the new lawsmight not be preferred by the old system. The issues andconcerns raised by the protesters include the end of the MSPregime, the lack of relevance of the ‘mandis’ of the State-controlled APMC, the risk of losing land rights under thecontract farming rule, the reduction of farm produce pricesdue to market dominance by large agribusinesses and theexploitation by large contractors of farmers.

3. Indian agriculture and agricultural bill 2020

• Thomas (2020) stated that instead of a complete structuralchange, a step by step process would be much desirable tobring out its full potential. The rural economy of Indiadepends heavily on agriculture and they still rely upon thetraditional methods. So, changes in the marketing structurealone cannot bring a full-fledged improvement because theproduction techniques remain the same. The actual effects ofthis bill could only be realised after the properimplementation of the same.

5. To collect opinion by different stakeholders on three new legislations

• Sample size 30(10 farmers linked with APMC + 10 farmers not

linked with APMC & 10 commission agents)

• Study area: Sadolalu village, Satanur villageand Mandya APMC

Survey documentation

Survey results

• The new farm bills is based on long-term benefit cannot get aimmediate benefit

• Negotiations with the Private company will be more difficult(example Mandya sugar factory)

• Dispute settlement is a problem to a common man

• Need cold storage facilities and godowns at local level

• Providing a cooperative marketing for horticultural crops likemilk

Farmers viewpoint

• If open market system is preferred by the farmers then APMCmay run in loss and finally APMC may be abolished

• Any PAN card holder can buy the produce from the farmers isnot a good idea, because farmers might be cheated easily

• Establishment of APMCs at local level and to strengthen themto compete with private companies

Commission agents viewpoint

Implications

• If direct marketing is a choice to farmers, then nearly 80% ofthe produce will be sold offline. Hence farmer will faceproblems to fix price for his produce

• Based on market demand farmers should grow the crops,then he can get more price for his produce.

• The state government should opt for public-privatepartnership and use APMC infrastructure under the existinglegal framework

• Crop diversification is there in Karnataka nearly 92 crops were

grown. But UP, Punjab, Haryana hardly grows 10 crops

• Better infrastructure and cold storage facility has to be

provided

• The government should give loans at less interest rate instead

of subsidy for inputs

• For dispute settlement farmer cannot approach district

collector every time, so its better to do it at panchayath level

CONCLUSION