In a move to ensure barrier-free trade by farmers and help raise their income, the Union Cabinet on Wednesday approved an amendment to the six-and-a-half-decade-old Essential Commodities Act 1955 to deregulate food items, including cereals, pulses, onion and potatoes. It also nodded the promulgation of an Ordinance to allow farmers to engage with processors, aggregators, large retailers, exporters, to pave the way for creating “One India, One Agriculture Market”.
The EC Act, which empowers Government to impose curbs on stocking of farm produce, will be amended to make it in tune with the times and to attract investments into the farm sector. Besides, the “Farmers (Empowerment and Protection) Agreement on Price Assurance and Farm Services Ordinance, 2020” will empower farmers for engaging with processors, aggregators, large retailers, exporters on a level playing field without any fear of exploitation.
However, the Act will be invoked during inflation, war, or any other unforeseen circumstances.
Addressing a media briefing later, Union Agriculture Minister Narendra Singh Tomar said the Cabinet had approved the Ordinance to ensure barrier-free trade in agriculture produce. It will not bind farmers to sell their crop only to licensed traders in the APMC (Agricultural Produce Market Committee) mandis of their respective talukas or districts.
“The proposed amendment will allay fears of private investors of excessive regulatory interference,” he said adding it will also allow clamping of stock limits on agricultural commodities only under “very exceptional circumstances” like natural calamities and famines.
Besides enabling better price realisation for the country’s farmers, the amendment ensures no such stock limit shall apply to processors or value chain participant, subject to their installed capacity or to any exporter subject to the export demand. The amendment announced will help both farmers and consumers while bringing in price stability. It will also prevent wastage of agri-produce that happens due to lack of storage facilities.
The Ordinance, for its part, basically aims at creating additional trading opportunities outside the APMC market yards to help farmers get remunerative prices due to additional competition.
On May 17, the Ministry of Consumer Affairs, Food and Public Distribution had circulated a draft of the Ordinance to amend the EC Act. The ECA draws from the days of the Bengal famine and the Defence of India Rules of 1943. Describing the EC Act as “anachronistic”, the Economic Survey 2019-20, too, recommended the “jettisoning” of this law.
The Ordinance will empower farmers for engaging with processors, aggregators, large retailers, exporters etc., on a level playing field without any fear of exploitation. It will transfer the risk of market unpredictability from the farmer to the sponsor and also enable the farmer to access modern technology and better inputs. It will reduce cost of marketing and improve income of farmers, the Government said.
This Ordinance will act as a catalyst to attract private sector investment for building supply chains for supply of Indian farm produce to global markets. Farmers will get access to technology and advice for high value agriculture and get ready market for such produce.