The history of agricultural marketing reform attempts

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Although the current BJP government has passed 3 laws to make changes to agricultural marketing, this is not the first attempt at reform. Multiple attempts have been made before to reform agricultural marketing. Here is a brief history.

A nationwide strike was called today (December 08, 2020) by farmers protesting against agricultural bills that were recently introduced by the central government. Various political parties have supported this call.

Since the three agricultural bills were passed in parliament in September 2020 and subsequently received the President’s assent, opinion among the farming community and experts has been divided. While few consider this to be a landmark bill that would greatly benefit farmers, others believe these bills would do them more harm than good.

The current protest near Delhi, made up mostly of farmers from Punjab and Haryana, is also rallying farmers from other states. Among the various concerns raised by them, the main concerns seem to relate to the minimum support price (MSP) contract farming.

However, many other key provisions are part of these farm laws. In this story, we examine these three farm laws, the historical background, and the position of political parties over the years on farm reforms.

All three bills focus on reducing barriers to agricultural marketing

While the bills recently passed in parliament are colloquially referred to as farm bills, the bills are unique and are three separate bills covering different aspects related to agriculture, in particular “agricultural marketing”.

  1. Farmers Trade and Commerce (Promotion and Facilitation) Act 2020
  2. Essential Products (Amendment) Act 2020
  3. 2020 Agreement on Farmers’ Accord (Empowerment and Protection) on Price Insurance and Agricultural Services.

Here is a brief overview of the provisions of each of these laws.

Farmers Trade and Commerce (Promotion and Facilitation) Act 2020

The stated purpose of this law is to create an ecosystem where farmers and traders have the flexibility of choice with the availability of various alternatives. The law also aims to promote efficient, transparent and barrier-free interstate and intra-state trade beyond APMCs (Agricultural Products Market Committee)

The law restricts the control of APMCs to the market court of the APMC, and other trading parties are free to trade agricultural products beyond the limits of market prices which are now referred to as “trading zone”. As the preamble to the law indicates, it is also possible to create electronic trading platforms.

While creating an environment beyond APMCs aims at seamless trade across the country, this is also seen as limiting state government control since APMCs are under their control.

Essential Products (Amendment) Act 2020

The second act is an amendment to the current Essential Commodities Act-1955. The act aims to eliminate the unpredictability of notification of storage limits by linking to rule-based price triggers.

Restrictions on the storage of essential items would only be deployed in exceptional circumstances.

According to the amendment, storage limits can only be invoked in the event of a 100% increase in the retail price of horticultural products or a 50% increase in the retail price of non-food products. perishable.

While this act has so far escaped scrutiny and criticism compared to other acts, it plays a key role in the larger context. The removal of storage limits is seen by some as an aid to the bigger players who can now store agricultural products in larger quantities, which was not the case before the amendment.

Agreement on Farmers (Empowerment and Protection) in the Agricultural Price Insurance and Services Act 2020

This law provides for written agreements between farmers and other parties (food companies, processors, wholesalers, individual traders, individuals, etc.)

This law provides a framework for contract farming with minimum obligations compared to a model contract farming law previously proposed in 2018. It expands the scope of what are considered agricultural services. Prior to this national-level contract farming legislation, the development of any related law was left to state governments. Only a few states have created dedicated contract farming laws.

The government maintains that these laws are part of the ongoing reform process

Reforms in agriculture, especially with regard to the sale and purchase of agricultural products, have long been sought and there have been multiple attempts over the years to pass legislation in this regard.

The Minimum Support Price (MSP) and the purchase of agricultural products by the Food Corporation of India (FCI) has been one such effort to ensure that farmers are not exploited and that they get a fair price for their products.

However, the limited scope of FCI purchases and the logistical challenges of purchasing and disbursing agricultural products meant that the majority of farmers and their products were excluded from the MSP scheme.

The idea of ​​state-run APMCs also aimed to ensure that farmers are not exploited by traders and that they get a fair price for their produce beyond access to markets in the area. local farmers.

Since the opening of the economy in the early 1990s, there have been attempts to reform existing laws, including APMC laws, as they are seen as compromising the interests of farmers and tend to favor intermediary traders. The entry of private actors into the agricultural processing industry has also increased the demand to authorize them at source.

As part of the national agricultural policy of the year 2000, it is stated that the participation of the private sector will be encouraged through contract farming and land lease agreements would be allowed to ensure a secure market for the products. , the influx of capital, etc.

It was part of the “rainbow revolution” proposed by the NDA government of the day. It is therefore obvious that the authorization of contracting and private investments has been part of the national discourse on agriculture for at least two decades.

However, one of the main challenges in introducing reforms is that agricultural marketing reforms fall under state jurisdiction, and historically it has been difficult to standardize state laws. The first efforts of the central government were to make recommendations and to pursue with the states to make the necessary changes to the laws at the state level.

The Agricultural and Livestock Marketing (Promotion and Facilitation) Act 2017 was one such attempt, in which states were urged to reform CPMAs in accordance with the recommendations provided in that law.

In a 2018 report by the Expert Committee of the Ministry of Economic Affairs, recommendations were made for marketing reforms in agriculture. The Electronic National Agricultural Market (e-NAM) has been one of the attempts to integrate markets across states.

Changing the positions of the different stakeholders

Support and opposition to current farm bills by different political parties has not been in line with their position over the years. As outlined above, the initial vision of introducing agricultural marketing reforms by introducing contract frameworks and authorizing the private sector was proposed by the NDA-1 government as part of the national agricultural policy in 2000. The current NDA government has passed the agriculture bills in parliament. including limiting the role of APMCs, introducing contract farming, etc. are a key element.

The UPA government, which was in power between the two NDA governments, also attempted to push through reforms in the APMCs. In 2012, then Prime Minister Manmohan Singh called on states to review and amend the Agricultural Marketing Law. There are also reports that Sharad Pawar, then Minister of Agriculture in the UPA government, attempted to push through amendments to the APMC law and provisions to include the private sector. However, the NCP has since posted a clarification saying that Pawar had only asked states to explore the earlier model act.

While the current BJP government has questioned the opposition’s stance against the farm bills, arguing that they pushed for such changes when they were in power, there have been opportunities double talk within the BJP. Madhya Pradesh CM Shivraj Singh Chouhan reportedly said a few days ago that the state has decided to buy crops that are harvested only by MPs and that if someone from outside the state tries to sell, he will be stopped. The BJP had previously opposed suggestions on removing APMCs or Arhtiyas when they were in opposition.

While much of the current opposition comes from the state of Punjab (the state government and opposition supporting the protests), the state has a habit of trying to implement a law on the framework of contracts in 2013.

It seems that governments over the years (led by different parties) have attempted to introduce reforms in agricultural marketing. Their stance against previous laws and reforms, as expressed and clarified by political parties, appears to be based on their interpretations and definitions of laws.

In this context, an open dialogue with relevant stakeholders such as farmers and state governments, hearing the voices of those who oppose these changes, seems to be the need of the hour.

The selected image: New agricultural laws

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