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Mainstream, VOL LVIII No 41, New Delhi, September 26, 2020

Agri Market Reforms Bills may Dismantle APMC and MSP Regime | Sher Singh Sangwan

Friday 25 September 2020

by Dr Sher Singh Sangwan

The three Agriculture marketing reform bills introduced in Parliament on 14 September 2020 are strongly protested inside and outside parliament. Despite that Lok Sabha has already passed these bills including the two controversial bills viz., the Farmers’ Produce Trade and Commerce (Promotion and Facilitation) and Farmer (Empowerment and Protection) Agreement on Price Assurance and Farm Services, on 18 September 2020. These two bills are apprehended against the APMC and MSP regime. The strongest opposition against these bills is from farmers’ groups in Punjab and Haryana where these systems are almost 100 per cent in operation. Farmers of Uttar Pradesh and Madhya Pradesh are also joining in the protest. To bring out the reasons for opposition, some salient features of these bills are discussed here.

The Salient Features of the Bills

One of the bills ‘The Essential Commodities (Amendment)’ is an attempt to deregulate the marketing. It states that the supply of foodstuff including cereals, pulses, edible oils, oils, potato, onions may be regulated only under extraordinary situations of war, famine, extraordinary price rise and natural calamity of grave nature. Even the Stock limit may be imposed if, there is 100 % price increase in horticulture produce and 50 % in non-perishable agricultural foodstuff, over the prices in preceding 12 months or the average of 5 years retail price whichever is lower. Further, the stock limit shall not apply to a processor or value chain participants and their limit will be as the installed capacity of processing or export order. This bill may not be opposed by the farmers.

The other bill ‘The Farmers’ Produce Trade and Commerce (Promotion and Facilitation) wherein, any trader with permanent account number may engage in interstate and intra-state trade of the ‘scheduled farmers’ produce’ with a farmer or another trader in a ‘trade area’. Whereas, the ‘Scheduled farmers produce’ are the commodities specified under any state APMC Act and the ‘Trade area” means any location such as farm-gates, factory premises, silos, cold storages or any other structures or places from where the trade of farmers’ produce may be undertaken in India. But the trade area does not include the premises, enclosure and structures constituting- markets under APMC and its licensed private markets. In a trade area, no market fee or cess or levy, whatever name as per a State APMC Act or other law, shall not be levied on any farmer or trader or electronic trading and transaction platform for trade and commerce in scheduled farmers’ produce whereas it may be in APMC market. Obviously, the buyers even individuals may not go to APMC market due to additional fees & cess; so it will die its own death.

Further, as per the above Act, the Central Government through its any organization may develop a price information and market intelligence system for farmers’ produce and mechanism for its dissipation. Discrimination in price is apprehended when a single factory owner is chased by 100 sellers. Moreover, all the produce of farmers especially of lower grade may not be purchased and it will be a problem of market clearance. A farmer may have to go at many places to sell its left out lower-grade produce. There is no mention of the Minimum Support Price (MSP) in this bill. Even in other bills ‘The Farmers’ Produce Trade and Commerce (Promotion and Facilitation)’; for Farm Agreement between farmer and Sponsor, there is more emphasis on quality, grade, pesticide residue and standard of farm produce. As regards the Prices of standard produce, it says that price to be paid may be determined and it may be mentioned in Agreement. The process determining price is not explained. The price may be linked with any suitable price but the Act does mention the reference price as the MSP.

It is to be noted that the regulated markets for the regulation of marketing practices were put in operation during the sixties after enacting Agricultural Produce Markets Regulation (APMR) Acts. All primary wholesale assembling markets were brought under the ambit of an Agricultural Produce Market Committee (APMC) which framed the rules and enforced them. The APMC was the outcome of recommendations of Royal Commission on Agriculture, 1928 which wanted the regulation of marketing practices to reduce the exploitation of farmers from traders. Though, the Model Bill was prepared in 1938 by GOI but it lingered on till 1960s. Ultimately, the APMCs came into force in 1960s and 1970s. In last 50 years of APMC regime, there is hardly any agitation by farmers against its regulations. However, the corporate have expressed concern against the APMC due to its fees and other taxes being realized there. Now the ‘The Farmers’ Produce Trade and Commerce (Promotion and Facilitation) Act may dismantle the APMC to promote tax-free ‘trade areas’ for the processors, stockiest, etc like the primary assembling markets which existed before APMC.

It is to be noted that the MSP was started in1970s for wheat and rice but over time it has covered about 24 Crops. It is well documented that the procurement at MSP in Punjab and Haryana has been the strongest incentive for the farmers to make India as an exporter of wheat & rice instead of an importer in 1970. Similarly, more procurement of Pulses at MSP in recent years has also resulted in their self-sufficiency in 1918-19. But these two bills will start the dismantling APMC due to no tax in ‘trade areas’ and do way with MSP regime which was protecting and increasing the income of farmers.

Moreover, the two bills especially the Farming Produce Trade and Commerce (Promotion and Facilitation) and The Farmers’ Produce Trade and Commerce (Promotion and Facilitation)’ will curtail the already limited autonomy of the states. It empowers the Central Government to give such instructions, directions, orders or issue guidelines as it may deem necessary to any authority or officer subordinate to the Central Government, any State Government or any authority or officer subordinate to a State Government
It is fact that owing to increasing stock of wheat and rice, the Government of India is under constant pressure to keep the stock within manageable limit. Even the stocks of pulses and oilseeds procured by Government at MSP are not disposed of before the next procurement season. The MSP has become nationwide phenomenon due to higher procurement in recent years and its non- mentions in the marketing reforms bills will certainly create apprehension in the minds of the farmers. In such situations, the better alternative would be the area planning through registering for procurement before sowing of crops. (Refer to my article in Tribune, 10 Oct 2017 and 10 June 2019 and Indian Express 17 January 2019).

(Dr Sher Singh Sangwan is Former Professor SBI Chair Chandigarh )

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