Farms Laws

Benefits and
Challenges
Imp Concept
The Farmers' Produce Trade and Commerce
(Promotion and Facilitation) Act, 2020

Features

▪ Freedom to the Farmers: The Act provides the

farmers the freedom of choice related to sale and
purchase of produce

▪ Liberation from the Cess: The farmers will not be

charged any cess or levy for sale of their produce
under this Act.

▪ Further there will be a separate dispute resolution

mechanism for the farmers.
Benefits

Promotes trade: It promotes barrier-free inter-state and intra-state

trade and commerce outside the physical premises of markets
notified under State APMCs.

Better price: It will open more choices for the farmer, reduce
marketing costs for the farmers and help them in getting better
prices
One nation, one market: The Act will help create One India, One
Agriculture Market and will lay the foundation for ensuring golden
harvests for our hard working farmers.
Electronic Trading: Additionally, it allows the electronic trading
of scheduled farmers’ produce (agricultural produce regulated
under any state APMC Act) in the specified trade area. It will
also facilitate direct and online buying and selling of the
agricultural produce via electronic devices and the internet.
Impact of the these Acts
The stakeholders in these bills are:
Farmers: The farmer is now the producer and the
seller of his own produce and will be free to enter
into agreement with private trade directly.

Consumers: The consumers would now get the

produce as much lower costs.

.
2- Farmers (Empowerment and Protection)
Agreement on Price Assurance and Farm Services
Act, 2020

Key Features:

It seeks to provide for a national framework on

farming agreements that protects and empowers
farmers to engage with agri-business firms,
processors, wholesalers, exporters or large
retailers for farm services and sale of future
farming produce at a mutually agreed remunerative
price framework in a fair and transparent manner
and for matters connected therewith or incidental
thereto.
Benefits

Level playing field: The new legislation will empower farmers for
engaging with processors, wholesalers, aggregators, wholesalers,
large retailers, exporters etc., on a level playing field without any
fear of exploitation.

Transfer the risk: 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.

Attract private sector: This legislation will act as a catalyst to

attract private sector investment for building supply chains for
supply of Indian farm produce to national and global markets, and
in agricultural infrastructure.

Eliminate intermediaries: Farmers will engage in direct marketing

thereby eliminating intermediaries resulting in full realization of
price.
Sale, lease or mortgage of farmers’ land is totally prohibited and
farmers’ land is also protected against any recovery.
State Government: Different State Governments
revenues will be adversely affected.
The mandi tax, arthiya commission and other taxes
imposed by the state govt in Punjab gives about 7,000
crore rupees as transaction cost annually.
There is 8.5% and 7% of total transaction cost collected
from Punjab and Haryana respectively whereas for most
other states it’s about 2.5-3.5% only. Therefore, the state
revenue of these two states will be drastically hit.

Arthias

Arthias are those who act as the immediate intermediary

and aggregator in the process of procurement for which
they charge their commission as notified in the
Agricultural Produce Markets Act (APMC) of the
respective States.
Amendments to Essential Commodities Act (1955)

Background

❖ India has become surplus in most agri-commodities but

farmers have been unable to get better prices due to
lack of investment in cold storage, processing and
export.
❖ The imposition of the curbs on stocking of farm
produce and regulation of the prices of commodities,
etc. under Essential Commodities Act (ECA) are some
of factors responsible for less entrepreneurial spirit and
thus less investment in the farm sector.
Benefits of Amendments

The amendment would deregulate the commodities such as cereals,

edible oils, oilseeds, pulses, onions and potatoes. It will help to
lessen the fears of private investors of excessive regulatory
interference in their business operations.
Any limits under ECA over these commodities will be imposed only in
exceptional circumstances such as war, famine, extraordinary price
rise and natural calamity.
The freedom to produce, hold, move, distribute and supply will lead
to harnessing economies of scale and attract private sector/foreign
direct investment into the agriculture sector.
 Significance of these Acts

The reforms are expected to accelerate growth in

the sector through private sector investment in
building infrastructure and supply chains for farm
produce in national and global markets.

They are intended to help small farmers who don’t

have means to either bargain for their produce to
get a better price or invest in technology to
improve the productivity of farms.

The legislation on contract farming will allow

farmers to enter into a contract with agri-business
firms or large retailers on pre-agreed prices of
their produce.
It will also help farmers of regions with surplus produce
to get better prices and consumers of regions with
shortages, lower prices.

It will promote the creation of Farmer Producer

Organisations (FPO) on a large scale and will help in
creating a farmer-friendly environment for contract
farming where small players can benefit.

Competition is the best protector of stakeholders

whether it is consumer or the farmers. Having a variety
of buyers will protect farmers from exploitation and by
having more sellers (farmers), consumers can buy
better products at better deals.
Farmers Protest and Issues Involved

Lack of Consultation: First the ordinance route and now the hastily attempt
to pass the Acts without proper consultation adds to the mistrust among
various stakeholders including farmers.

Also, by allowing ‘trade zones’ to come up outside the APMC area,

farmers have become apprehensive that the new system would lead to
eventual exit from the minimum support price.

Absence of any regulation in non-APMC mandis: Another issue that is

raised by the farmers is that it gives the preference for corporate interests at
the cost of farmers’ interests.

In absence of any regulation in non-APMC mandis, the farmers may find it

difficult to deal with Corporates, as they solely operate on the motive of profit
seeking.
Way Forward
Improve Agricultural Infrastructure to Strengthen
Competition: Government should massively fund the
expansion of the APMC market system, make efforts to
remove trade cartels, and provide farmers good roads, logistics
of scale and real time information.

Empowering State Farmers Commissions: Rather than

opting for heavy centralisation, the emphasis should be on
empowering farmers through State Farmers Commissions
recommended by the National Commission for Farmers, to
bring about a speedy government response to issues.
State Government: Different State Governments revenues
will be adversely affected.
The mandi tax, arthiya commission and other taxes imposed
by the state govt in Punjab gives about 7,000 crore rupees
as transaction cost annually.
There is 8.5% and 7% of total transaction cost collected from
Punjab and Haryana respectively whereas for most other
states it’s about 2.5-3.5% only. Therefore, the state revenue
of these two states will be drastically hit.

Arthias

Arthias are those who act as the immediate intermediary and

aggregator in the process of procurement for which they
charge their commission as notified in the Agricultural
Produce Markets Act (APMC) of the respective States.
Contract Farming
Contract farming is crucial to promote food
processing and to provide technical and financial
support and quality input to smallholders.

The Model APMC Act circulated to States/UTs

during 2003 provides for contract farming
agreement and its model specifications. 20 states
amended their APMC Act to make provision for
Contract farming but only 12 notified the rules.

These rules should be notified by states which have

amended APMC acts and those states which have
not yet amended the act need to act swiftly.
Direct Benefit Transfer has the unique benefit of
helping farmers in distress promptly. However for a
long term and holistic solution of the agrarian
crisis, marketing and trading policies need to be
reformed to bring a structural change in
agricultural produce marketing.
Explain various types of revolutions, took place in Agriculture after Independence in
Q. have helped in poverty alleviation and food security in
India. How these revolutions
India?

India is primarily an agricultural economy and majority of people are still dependent on
agriculture for their livelihood. After independence, development of agriculture has been
assured by various revolutions supported by government.

Green Revolution – This revolution led to tremendous rise in production of food grains,
especially wheat, by use of high-yielding varieties of seeds, fertilizers and pesticide.

White Revolution – Operation Flood (1970), an initiative of National Dairy Development

Board has led to revolution in milk production in India. The world’s largest dairy
development programme transformed India from a milk deficient nation to world’s
largest milk producer.

Blue Revolution – This revolution focussed on management of fisheries sector and has
led to phenomenal increase in both fish production and productivity from aquaculture
and fisheries resources of the inland and marine fisheries.
Other revolutions which are no less significant includes yellow
revolution(oil seed production), golden fibre revolution (jute),
golden revolution (horticulture), silver fibre revolution (Cotton)
and red revolution (meat production).
Significance of these revolutions

These innovations in agriculture have lifted millions of people

out of poverty by generating rural income opportunities for
farmers, farm labourers, and also reduced prices for consumers.
India has become self sufficient in food grain production with
the help of green revolution.
The exponential rise in milk production has led to nutritional
security among the masses. Per capita availability of milk has
reached all time high of 337gms/day.
These steps have provided avenues for income diversification
for farmers.
 Discuss the role of land reforms in agricultural development identify the
factors that were responsible for the success of land reforms in India.

India at independence inherited a semi feudal agrarian system. The

ownership and control of land was highly concentrated in the hands of a
small group of landlords and intermediaries, whose main intention was to
extract maximum rent, either in cash or in kind, from tenants. This was one
of major hindrance in the development of agriculture. Land reform involves
the changing of laws, regulators or customs regarding land ownership, plays
a great role. Its main objectives included:

Weakening the domination of landlords and providing security of tenure to

share croppers and land to landless and poor peasants.
Simulating the growth of productivity and output in agriculture by
eliminating feudal and semi-feudal land relations.
Expanding rural markets by means of a significant redistribution of
productive assets, especially land, and by adequate public investment in the
agrarian economy.
In the success of land reforms in India, following factor were
responsible.

Political will: Land reforms were more successful in some states

such as West Bengal, Kerala because of strong political will of the
government. Provisions of land reforms were implemented
actively. The pro-poor impact of land reforms was enhanced by
the emergence of the system of decentralized local government
put in place by the Left Front in 1978 (West Bengal) soon after
coming to office. The role of individuals associated with Indian
Independence movement such as Shri Vinoba Bhave. Absolution
of Zamidari was initiated just after the independence of India by
the Union government which streamlined the process of land
reforms.
Though the process of land reforms were not as successful as it
was intended to because to inactive participation of landlords
except some states like West Bengal and Kerala. According to
some scholars land reforms also increased the gap between rich
and poor.
Given the vulnerability of Indian agriculture to vagaries of nature, discuss the need for crop
insurance and bring out the salient features of the Pradhan Mantri Fasal Bima Yojana (PMFBY).

Every year, in one part of India or the other food crops are affected by natural calamities (like
flood, drought and plant diseases). The farmers have to be assured that they will be
compensated for such loss in crops. Otherwise, they cannot be drawn into the campaign to
increase productivity of land under their plough.

The need for crop insurance arises for the following reasons

In our country nature has always been moody. Crop insurance provides protection to farmers
against losses caused by crop failure and thereby ensures stability in farm income.
It also reduces, to some extent, government expenditure incurred on relief measures extended
to meet the havoc caused by natural calamities such as droughts and floods, locusts, plant
diseases.
It also strengthens the position of co-operatives and other institutions that finance, agriculture
to the extent it enables the farmer members to repay their loans in years of crop failure.
By protecting the economic interest of the farmers against possible risk or loss, it accelerates
adoption of new agricultural practices.
It may act as anti-inflationary measure, by locking up part of the resources in rural areas.
The government launched a new crop insurance scheme,
PM’s Fasal Bima Yojana (PMFBY) with a view to de-risk
agriculture from the vagaries of nature. Salient features of
PMFBY are following.

PMFBY targets to cover 50% India’s cropped area in the next

three years. There will be a uniform premium of only 2% to be
paid by farmers for all Kharif crops and 1.5% for all Rabi
crops.
In case of annual commercial and horticultural crops, the
premium to be paid by farmers will be only 5%.
There is no upper limit on Government subsidy. Even if
balance premium is 90%, it will be borne by the Government.
The new scheme will also seek to address a long-standing
demand of farmers and provide farm-level assessment for
localized calamities, including hailstorms, unseasonal rains,
landslides and inundation.
Assess the role of National Horticulture Mission (NHM) in boosting the
production, productivity and income of horticulture farms. How far has it
succeeded in increasing the income of farmers?

National Horticulture Mission (NHM) is an Indian Government scheme promoted

with the objective to develop horticulture to the maximum potential available in
the states and to augment production of all horticultural products. This scheme
was launched under 10th five year plan in 2005-06. Under this scheme centre
government contributes 85%, and 15% is contributed by the state government.

The role of NHM in boosting the production, productivity and income of

horticultural farms can be assessed as:

It provides holistic growth of the horticulture sector through an area based

regionally differentiated strategies due to which more than 9 crore metric tons of
fruits on 63 lakh hectare land were produced during 2015-16.
Horticulture farms are much smaller and horticulture crops have high return on
investment which allows marginal farmers to increase their income using small
lands.
Farmers can plant multiple crops on their land which
provide multiple earning resources.
Regions experiencing low rainfall and prone to drought are
getting benefit from the option of horticulture which
requires less water and is less susceptible to crop failure.
For example, Bagepalli, a drought prone area in Karnataka-
Andhra Pradesh border is now emerging as a horticulture
hot spot.
Horticulture crops have short turnaround time than food
crops which helps in efficient land utilization, increased
production and productivity, and also increases income of
farmers.