The Farmer Bill, 2020 has brought confusion over a significant portion of the farming community. While certain aspects of the bill showcase commendable features, it is not without its considerable drawbacks. A focal point of concern within the legislation revolves around provisions addressing traders, trade areas, market fees, and the mechanism for resolving disputes. To gain a comprehensive understanding, this blog shall discuss the specifics of the Farmer Bill, 2020.
Highlights of the Farmer Bill, 2020
The proposed Farmer Bill, 2020 aims to empower farmers by enabling them to engage in commercial or direct contracts with various entities such as organisations, retailers, wholesalers, and exporters. This strategic move is designed to facilitate farmers’ access to the global market, while concurrently alleviating concerns related to manipulation.
One of the key advantages of the bill is the encouragement for buyers to invest in technology and infrastructure. This investment is intended to stimulate and promote the production of food grains. By leveraging the latest technology, the cost of production is expected to decrease, subsequently leading to an increase in the income of farmers.
Once the terms of the contract are activated, the buyer assumes the role of a crucial factor in ensuring a successful crop yield. This arrangement establishes a symbiotic relationship where the buyer’s involvement is pivotal to the cultivation process.
A noteworthy provision in the bill is the confinement of contracts to agricultural produce rather than agricultural land. This restriction offers farmers the flexibility to obtain credit and loans as needed, without jeopardising their land ownership.
Exemption from Sale Provisions and Essential Commodities Act
Under the proposed Farmer Bill, 2020, crops covered by contracts will be exempted from the regulations concerning the sale of agricultural produce and the rules outlined in the Essential Commodities Act. This exemption provides farmers with a more simplified and favourable environment for their agricultural pursuits.
Challenges and Concerns Regarding the Farmer Bill, 2020
The proposed bill, while offering certain advantages, raises notable concerns and potential downsides that need attention and evaluation.
1. Exploitation of Farmer Vulnerability
A significant drawback of the Farmer Bill, 2020 is the potential for exploitation of farmers, particularly those with limited literacy and weak negotiation skills. Traders and corporate entities may disproportionately benefit from the bill, taking advantage of the farmers’ vulnerabilities in contractual negotiations.
2. Impact on Small and Marginal Farmers
The Farmers Bill, 2020 poses a risk of reducing access to sponsors for small and marginal farmers. These farmers, lacking the resources and bargaining power of larger counterparts, may find it challenging to secure sponsorship, potentially limiting their ability to thrive in the changing agricultural landscape.
3. Farmer Vulnerability in Conflicts
In the event of conflicts arising from contractual agreements, the bill appears to place a disproportionate burden on farmers. While conflicts could have adverse consequences for all parties involved, the ill-equipped and less powerful position of farmers may lead to their bearing the brunt of the repercussions. Meanwhile, corporate entities, exporters, and sponsors may be better positioned to navigate and benefit from such conflicts.
4. Corporate Favouritism and MSP Exclusion
A notable disparity in the bill is the perceived favouritism towards corporate entities, particularly evident in the exclusion of Minimum Support Price (MSP) provisions. This exclusion may result in a more lenient regulatory environment for corporations compared to the safeguards provided to farmers. The potential consequences of this discrepancy raise concerns about the bill’s overall impact on the balance of power between farmers and corporate entities.
The Farmer’s Produce Trade And Commerce (Promotion And Facilitation) Bill, 2020: Benefits and Downsides
Let us now look at the benefits and disadvantages of the Bill:
Benefits of the Farmer Bill, 2020
The major benefits of the Bill include:
1. Market Diversification for Farmers:
Farmers gain the flexibility to sell their products beyond APMC markets, accessing a broader market with a larger pool of potential buyers.
2. Interstate Trading and ‘One Nation, One Market’ Concept:
The bill supports interstate trading, enabling farmers to sell their produce across state borders without legal impediments. It aligns with the ‘One Nation, One Market’ principle, fostering a more expansive and unified marketplace.
3. Competition Throttling for Better Bargains:
The bill is anticipated to reduce competition in the market, enabling farmers to secure more favourable deals for their produce.
4. Cost-Cutting through Electronic Trading Platforms:
The incorporation of electronic trading platforms is expected to streamline the trading process, promoting cost-cutting in transportation and marketing.
5. Autonomous Conflict Resolution Mechanism:
The bill introduces an autonomous conflict resolution mechanism, providing farmers with a means to address disputes without resorting to prolonged court litigation.
Downsides of the Bill
The major demerits of the Bill include:
1. Loss of State Revenue:
State governments may experience a decline in revenue as farmers opt to sell their products outside APMC markets. The Mandi system, a significant income source for state governments, could be disrupted.
2. Impact on Commission Agents:
The exclusion of middlemen from the bill may adversely affect commission agents, as farmers gain the ability to sell directly to registered traders. This change could render commission agents ineffective in the trading process.
3. Disruption of MSP-Based System:
The bill is projected to challenge the existing Minimum Support Price (MSP) system, potentially leading to its disruption. This shift could have implications for the overall stability of the mandi system.
While the bill offers several benefits such as market diversification and cost-cutting, it also raises concerns related to state revenue, the role of commission agents, and the potential impact on the MSP-based system. A nuanced approach is required to balance these advantages and downsides for the overall welfare of the agricultural sector.
Final Thoughts
The Farmer Bill, 2020 presents a transformative shift in the agricultural sector of India. By granting farmers the freedom to explore a wider market, engage in interstate trading, and benefit from electronic platforms, the bill aims to enhance their economic prospects. However, challenges such as potential loss of state revenue, the impact on commission agents, and disruptions to the MSP-based system underscore the need for careful implementation and continuous monitoring. Striking a balance between market liberalisation and safeguarding the interests of farmers is imperative for the long-term success of the agricultural sector in India.
