The Govt needs to fix the lacunae in the farm Bills instead of trying to push them through without consulting those it affects most, namely our farmers

A Central legislation, the Essential Commodities Act, 1955 was enacted with the main objective of prohibiting hoarding and black marketing of essential commodities. The other objective was to provide them to the common man  at fair prices. This is because their cost to the consumer is dependent on various uncontrolled factors like  climatic conditions, region of origin, supply chain, marketing and so on. Restrictions were stipulated under the Act and control orders were issued by respective States in relation to stocking, pricing and distribution. Over the years, we have been witnessing fluctuations in prices of essential commodities as well as other agriculture produce. This has often resulted in huge losses to farmers and control orders have often been invoked by the States to minimise the financial damage to them.

Now, there is an uproar among the farmers in the country and in political circles, too, after the Parliament passed three agriculture-related Bills, namely, the Farmers’ Produce Trade and Commerce (Promotion and Facilitation) Bill 2020, Farmers (Empowerment and Protection) Agreement on Price Assurance and Farm Services Bill, 2020 and Essential Commodities (Amendment) Bill.

A reading of the Farmers (Empowerment and Protection) Agreement on Price Assurance and Farm Services Bill, 2020 shows that the same is being enacted to protect and empower the farmers. It is meant for them to engage with agri-business firms, processors, wholesalers, exporters, large retailers for farm services and sale of future farming produce within a mutually agreed remunerative price framework in a fair and transparent manner. A reading of the provisions shows that farming produce includes all the agriculture produce, foodstuffs, cereals, cattle fodder, cotton seeds and so on. And farm services under the Bill include even the provision for supply of seed, feed, fodder inputs for farming and so on by the wholesaler or retailer, who is termed as “sponsor” under an agreement.

This shows that the entire agriculture produce of a farmer would be under the control of the “sponsor”, who could be a businessman or a corporate. The proposed Act specifically overrides the Essential Commodities Act, 1955 and all the State control orders and any other laws related to stock limit and so on under Section 7 of the Bill. The “sponsor”, who would provide inputs for the farmer, would have overall control over the production, stocking and so on. Since the proposed Act overrides the Essential Commodities Act, 1955, there is no limit in relation to the number of agreements that may be entered into by the “sponsor” with various farmers. There is a possibility of a single “sponsor” monopolising the entire control of farming and the produce.

The next stage would be with regard to trade and marketing by the farmer. The Farmers Produce Trade and Commerce (Promotion and Facilitation) Bill, 2020 has been introduced with the main objective of giving farmers and traders the freedom of choice relating to sale and purchase of the produce. The word “farmer” has been defined as an individual engaged in the production of agricultural produce and includes farmer-producer organisations (FPOs). The FPO is defined as an association or a group of growers. However, sections on the inter-State and intra-State trade have included only the word  “trader.” The trader has been defined as a person who buys farm produce and does not include a farmer. Therefore, the sum and substance of the proposed Act is that the inter-State trade or intra-State trade can be conducted by only the one who buys the farm produce.

The Farmers (Empowerment and Protection) Agreement on Price Assurance and Farm Services Bill, 2020 ends with the purchase of the stock by the “sponsor” who enters into a farming agreement with the farmer at the production level. The Farmers Produce Trade and Commerce (Promotion and Facilitation) Bill, 2020 speaks with regard to the trade of the farm produce and spells out that the trader would be involved in the inter and intra-State trade.

Neither the word “trader” in the said Bill includes the “sponsor” under the Farmers (Empowerment and Protection) Agreement on Price Assurance and Farm Services Bill, 2020, nor does the definition “sponsor” include the “trader” under the Farmers Produce Trade and Commerce (Promotion and Facilitation) Bill, 2020. Both the Bills do not specify how the commodity will be dealt with after the produce is taken over by the “sponsor.” Maybe the “sponsor” has to become a trader under the Farmers Produce Trade and Commerce (Promotion and Facilitation) Bill, 2020 but the Bills are silent on this.

Though it appears from the reading of both the proposed legislations that they are being pushed for the benefit of growers in relation to agricultural activity, price, marketing and so on, in reality the businessman, corporates, middlemen may take over the entire control of essential commodities. There cannot be any regulation in relation to hoarding and black marketing. This lacuna has to be addressed by the Central Government and it must make suitable amendments to protect the interests of the farmers and the consumers.  

Section 6 of the Farmers Produce Trade and Commerce (Promotion and Facilitation) Bill stipulates that no marketing fee or cess levy under any State Agriculture Marketing Committee Act or any other State law shall be levied on farmers, traders, electronic trading and transaction platforms for conducting business in a “trade area.”

The “trade area” has been defined as a place where the farmers produce can be collected. Obviously, the “sponsor” under the Farmers (Empowerment and Protection) Agreement on Price Assurance and Farm Services Bill, 2020 would be in control of the farm produce and he may be acting as a “trader” who would utilise the trade area for the purpose of his business. In the process, the State Governments shall lose revenue, which otherwise would be available by way of market fee, levy and so on. Such a provision will adversely affect the revenue of the States.

Section 8 of the said Act of the Farmers Produce Trade and Commerce (Promotion and Facilitation) Bill, 2020 stipulates dispute resolution but speaks with regard to a dispute arising out of the transaction between the farmer and a trader under Section 4. The “farmer” may not have any scope to offer his produce for sale to a trader in cases wherein he enters into an agreement with the “sponsor” under the Farmers (Empowerment and Protection) Agreement on Price Assurance and Farm Services Bill, 2020.

When both the Bills are independently understood, those farmers who would not enter into an agreement with any “sponsor” for the purpose of production, may benefit in the course of time. But in the light of the businessmen/sponsor entering into the domain of the agriculture production, whether the farmer would be benefitted or not is the question.

Certain amendments may be required to the Farmers (Empowerment and Protection) Agreement on Price Assurance and Farm Services Bill, 2020 in respect to pricing of farming produce under Section 5, mechanism for dispute resolution under Section 14 and power of the State Governments to make rules under Section 23 of the Bill, in the interest of protecting the rights of growers.

Certain safeguards can be provided to them in relation to the payment of the Minimum Support Price (MSP), the consequences if the farming produce is refused by the “sponsor” on the ground of quality and payment of money to the grower by the “sponsor.”

Section 5, which contemplates pricing of the produce, does not stipulate any minimum price. It only speaks with regard to the “guaranteed” price to be paid for the produce. The provision is silent with regard to the “authority” which would determine the said guaranteed price. Section 23, which empowers the State Government to make rules, is also silent regarding this aspect. It only enables the State Government to frame rules in relation to the mode and manner of payment but gives it no right to fix the guaranteed price. A reading of the Act shows that the guaranteed price would be determined inter-se between the “farmer” and the “sponsor.”  When the “sponsor” is providing various inputs for the crop, obviously he would be in a position to command a particular price which may be adverse to the interest of the farmer.

The “sponsor”, while determining the price, would also take into account the other factors like the cost of the inputs which in the end would reduce the farmer into a farm labourer.

The Government needs to fix the lacunae in the farm Bills instead of trying to push them through without consulting those it affects the most, 60 per cent of the country’s population.

(The writer is Advocate, Andhra and Telangana High Courts)