MGT-35

MBA THIRD SEM 2ND YEAR

ACTIVITY 4
India’s Agriculture Policy, 2020
SUBMITTED BY:
Simran (2K20/DMBA/126)
Introduction
● The Farmer’s Bill: The Indian Agricultural Act of 2020
● Approval: Three acts were presented for approval in September, 2020.
● Lok Sabha Approval: 17th September, 2020
● Rajya Sabha Approval: 20th September, 2020
● Presidential Assent: 27th September, 2020
● The criticism of these acts have been a media highlight for many months by
farmers.
The three bills are namely:

1. Farmers' Produce Trade and Commerce (Promotion and

Facilitation) Bill, 2020
2. Farmers (Empowerment and Protection) Agreement on Price
Assurance and Farm Services Bill, 2020
3. Essential Commodities (Amendment) Bill, 2020
The Farmers' Produce Trade and Commerce
(Promotion and Facilitation) Bill, 2020
KEY FEATURES

○ Trade of farmers’ produce

○ Electronic trading
○ Market fee abolished
Criticism? The Farmers view
● The state's income from the respective mandis would be lost. While the bill proposes to abolish
the middleman, farmers across various states believe that the scheme would lead to the end of
Minimum Support Price (MSP) regime.
● Rice is a water-intensive crop and farmers from areas with water shortage too grow it as there is
an MSP assured in the end.
● Pulses
● Bypassing the Agriculture produce market committee (APMC) altogether.
● Complete dependency on traders; where farmers do not agree.
● Political instability in the Punjab state: Akali Dal and Harsimran Kaur Badal
The Farmers (Empowerment and
Protection) Agreement of Price Assurance
and Farm Services Bill, 2020
Objective

The new bill seeks to provide a national agricultural agreement system that protects and
empowers farmers to interact equally and transparently with agribusiness companies,
processors, wholesalers, exporters or major retailers in the field of agricultural services
and sell future agricultural produce at mutually agreed remunerative price structures.

This law would shift the risk of market unpredictability from the farmer to the sponsor
and allow the farmer to access new technologies and better inputs. It will reduce the
marketing costs and increase farmers' earnings. Farmers can participate in direct
marketing so that the intermediaries are eliminated, resulting in maximum price
realisation. Through this bill, farmers have been given adequate protection, and with
clear timelines for redress, an efficient dispute resolution process has been established.
How does it help?

●Farmer will have assured price before sowing

●Transfers market risk from farmer to sponsor

●Gives farmers access to high quality seeds, fertilisers, pesticides

●Will attract private investment in farming and link farms to global markets
Key Questions Answered

What are the Act’s provisions on payments to farmers?

The price of farmers’ produce may be mentioned in the farming agreement. In the event
that such price is subject to variation, the agreement should expressly state a guaranteed
price to be paid to the farmer for their produce, and a clear price reference for any
additional amount to be paid – including a bonus or premium.
Key Questions Answered

What does the Act say about other state government laws on agricultural trade?

The farm produce mentioned in agreements under this Act shall be exempt from the
application of any state law that aims to regulate the sale or purchase of agricultural
produce. Notwithstanding the provisions of the Essential Commodities Act, 1955, or any
orders in force at the time, such produce shall be exempt from ‘any obligation related to
stock limit’.
The Essential Commodities
(Amendment) Bill, 2020
Introduction
● The Parliament passed the Essential
Commodities (Amendment) Bill, 2020. The Bill
replaces an Ordinance promulgated in June
2020 and amends the Essential Commodities
Act (ECA), 1955.
● The Essential Commodities (Amendment)
Ordinance, 2020 allows the central government
to regulate the supply of certain food items only
under extraordinary circumstances (such as war
and famine). Stock limits may be imposed on
agricultural produce only if there is a steep price
rise.
FEATURES

● Removes commodities like cereals, pulses, oilseeds, edible oils, onion and
potatoes from the list of essential commodities.
● Aims to remove fears of private investors of excessive regulatory interference
in their business operations.
● Ensures that interests of consumers are safeguarded by regulating
agricultural foodstuff in situations such as war, famine, extraordinary price
rise and natural calamity.
● However, the installed capacity of a value chain participant and the export
demand of an exporter will remain exempted from such regulation so as to
ensure that investments in agriculture are not discouraged
BENEFITS

● 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.
● Investment in cold storages and modernization of the food supply chain will
increase.
● It will create a competitive market environment and also prevent wastage of
agri-produce that happens due to lack of storage facilities.
● It will help both farmers and consumers while bringing in price stability.
FACTOIDS
Q. What is the purpose of the Essential Commodities Act, 1955?

The 1955 Act aims to regulate the production, supply and distribution of, and trade
and commerce in, certain commodities, in the interest of the general public.

Essential commodities refers to fertilisers – inorganic, organic or mixed; foodstuffs

including edible oilseeds and oils; hank yarn made wholly from cotton; petroleum
and petroleum products; raw jute and jute textiles; seeds of food crops, cattle
fodder, fruits and vegetables; cotton and jute seeds; drugs, surgical and N95
masks, and hand sanitizers.
Q. How does the Amendment alter the 1955 Act?

The Amendment adds sub-section (1A) to section (3) of the 1955 Act. The original
section (3) said that the central government may regulate or prohibit the production,
supply and distribution of, or trade and commerce in, essential commodities. The
government may do so if it is of opinion that it is ‘necessary or expedient’ for
maintaining or increasing supplies of any essential commodity, ensuring its ‘equitable
distribution’ and ‘availability at fair prices’, or securing such commodities for the
defence of India.

The Amendment states that the supply of ‘foodstuffs’ – including cereals, pulses,
potato, onions, edible oilseeds and oils – may only be regulated under ‘extraordinary
circumstances’ such as war, famine, ‘extraordinary’ price rise and ‘natural calamity of
grave nature’. The central government may do this through a notification in The Gazette
of India.
What does the Amendment mandate about stock limits on essential commodities?
Any action on imposing stock limits on agricultural produce shall be based on price
rise. An order for regulating the stock limit of such produce may be issued under this
Act only if there is a 100 per cent increase in the retail price of horticultural produce, or
a 50 per cent rise in the retail price of ‘non-perishable agricultural foodstuffs’. The
increase should be over the price prevailing in the preceding 12 months, or the average
retail price of the last five years – whichever is lower.

Such orders for regulating stock limit shall not apply to a ‘processor’ or ‘value chain
participant’ of any agricultural produce, “…if the stock limit of such person does not
exceed the overall ceiling of installed capacity of processing, or the demand for export
in case of an exporter.” A ‘value chain participant’ for agricultural products, includes
those involved in production, processing, packaging, storage, transport and distribution
– each stage where ‘value is added’ to the product.
Government View on this issue

● Farmers will have a choice to sell their produce to anyone without APMC
(Agricultural Produce Market Committees) getting in the way
● Monopoly of APMC will be destroyed.
● The changes proposed will take out the middlemen who essentially run
APMC.
● Payment will be made to farmers in three days.
Farm laws 2020: Who are they meant to serve?

● To build trust among farmers and the states would be to include a mandate
for MSP, within the ambit of the bills. Another would be to plug the holes in the
current system instead of trying to dismantle and introduce a new structure.
● The government also needs to make it mandatory for firms to draw up written
contracts in vernacular languages and do away with verbal contracts. It may
also be necessary to declutter the complexities surrounding export and
import of agricultural produce, in alignment with the new bills.