New Delhi: Farm activists have hailed the Union government’s decision to approve three ordinances that will completely overhaul the production, storage and transportation, and sale and purchase of farm produce in the country.
A cabinet meeting presided by Prime Minister Narendra Modi in Delhi on Wednesday approved major changes in the Essential Commodities Act and also cleared two other ordinances that will allow farmers to store, transport and sell their produce across the country and enter into contracts with wholesale buyers and food processors which is aimed at bringing price stability in the farm produce market.
The Union Cabinet cleared three ordinances, first to amend the Essential Commodities Act, and two other ordinances - the Farming Produce Trade and Commerce (Promotion and Facilitation) Ordinance, 2020 and the Farmers (Empowerment and Protection) Agreement on Price Assurance and Farm Services Ordinance, 2020 to implement long-pending reforms in the country's agriculture sector.
In his first term, Prime Minister Narendra Modi tried to push these key reforms in the Essential Services Maintenance Act and Agricultural Produce Marketing Act but due to resistance from some States, he could not implement them.
However, the matter assumed urgency as the outbreak of COVID-19 global pandemic brought economic activity to a grinding halt but it largely left the country’s agricultural sector unaffected.
Some experts suggested that the agriculture sector could emerge as a bright spot at a time when other sectors of the economy are badly hit by a nationwide lockdown.
"COVID has unshackled farmers from the draconian law of APMC, enabled free movement of commodities across the country and liberalized the Essential Commodities Act to enable the storage and transportation of farm produce," said Dr P Chengal Reddy, Chief Advisor of Consortium of Indian Farmers Associations.
"These changes will help farmers in entering into long-term production agreements with buyers and food processors," Dr Reddy told ETV Bharat.
Dr Reddy said that with these three ordinances, the restrictions on sale and purchase of farm produce, storage and transportation will be gone, and they will also enable farmers to engage into large scale contract farming which will provide price stability and protect the farmers' interest.
Restrictions on storage of farm produce removed
With the amendments in the Essential Commodities Act, commodities like cereals, pulses, oilseeds, edible oils, onion and potatoes will be removed from the list of essential commodities.
"This will remove fears of private investors of excessive regulatory interference in their business operations," the government said.
"The freedom to produce, hold, move, distribute and supply will lead to harnessing of economies of scale and attract private sector and foreign direct investment into the agriculture sector."
The new law will remove trade restrictions
The government will enact a new law to ensure barrier-free trade of agricultural commodities across the country. Under the existing legal framework, States regulate the trade of farm produce in their area through the Agricultural Produce Marketing Committee Act (APMC Act).
Under the state-specific APMC laws, farmers are required to sell their produce in the designated market place within a specific area and can’t take their produce outside the state.
States have resisted any changes in the APMC Act as agriculture is in the second list of the seventh schedule of the Constitution, which gives States exclusive power to make laws related to agriculture.
However, agriculture minister Narendra Singh Tomar clarified that the new law enacted by the Centre will regulate the trade and no provision of State APMC laws will be able to interfere with the provisions of the Central law.
New law to enable farmers to engage with wholesalers, food processors
The Union cabinet also approved The Farmers (Empowerment and Protection) Agreement on Price Assurance and Farm Services Ordinance, 2020 that will enable farmers to directly engage with wholesale buyers, exporters and food processors without any intermediaries of the Mandi system under the APMC Act.
"It will result in full realization of price and farmers have been provided adequate protection. Sale, lease or mortgage of farmers' land is totally prohibited and farmers’ land is also protected against any recovery," said the government.
These three laws are aimed at unshackling the farmers from the Mandi system and will also permit them to transport their produce across the nation.
Dr Chengal Reddy said that the outbreak of global pandemic forced the Modi government to urgently implement these reforms to protect the farming community from any adverse economic impact of the pandemic.
However, some experts say that farmer’s situation will not improve without augmenting the marketing infrastructure for farm produce.
"If a farmer comes to a city, where are the places outside the Mandi system where he can sell his produce," asked Dr Yashveer, a farmer's rights activist from Uttar Pradesh.
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