Putting Farmers First

CONTEXT: Farmer Bills recently passed by the parliament are meant to implement the long-standing agriculture reform to transform the agriculture sector by unlocking value for farmers as well as improving market access and more opportunities for traders.

Overview of Agriculture Sector:

• Disguised Employment: Sectoral contribution of Agriculture in National Income has fallen from 50% to 16.5% from 1947 to 2020, while it employed 70% in 1947 and 42% currently.

• Land Fragmentation: Leads to increasing dependency on weather, increasing production uncertainty and wastage, therefore making the market unpredictable, risky and inefficient.
• Non Implementation of Recommendation: Reform long-awaited as per several committees and panels recommendations: 

• Swaminathan Committee: removing mandi tax, creation of a single market, and facilitating contract farming.
• Removal of APMC and creation of Agriculture Production Board responsible for contract farming and land leasing has been included in the manifesto of various political parties.

• Recent initiatives: 

• More than 11 times the increase seen in Agriculture budget in the last 10 years
• Implemented the Swaminathan Committee’s recommendation of fixing MSP at least 50% of profit over the cost of production.
• Establishment of E-NAM.
• Setting up of Agriculture Infrastructure fund of INR 1 lakh crore.
• Formation of 10,000 FPOs (Farmer Producer Organisations).
• MSP of paddy has gone up by 2.4 times and of wheat has gone up by 1.7 times in the past 5 years.

Benefits of Farmer Bills:

• Increase in choice: of sell and purchase of agriculture produce for both farmer and trader by providing competitive alternative trading channels

• Promote barrier-free inter and intra-state commerce of agriculture:  increasing the number of buyer for agriculture produce.

• Farmers will have access to flexible prices subject to guaranteed price in the agreement.

• Legal framework for farming agreements: for fair and transparent farming agreements to: 

• Facilitate greater certainty in price and quality

• Linkages with insurance and credit agencies

• Transfer the risk of market uncertainty from farmer to sponsors.

• To Prohibit sale, lease, or mortgage of farmer’s land against any recovery.

• To ensure the trader’s responsibility for timely acceptance of delivery and payment to the farmer, while Farmer’s responsibility is limited only to advance received and cost of input provided by the sponsor.

• Dispute resolution: through Conciliation Board to be set up by Sub-Divisional Magistrate (SDM)

• SDM can order recovery of the amount in dispute, impose penalties, and restraining order against a trader for trading in schedule farmers produce.

• Parallel Channel: The Farmer bills do not override state APMCs and will not affect MSP.

• Will help fetch better prices for farmers produce since the tax will not be levied for the trade of products in trade areas as defined under the bill.

Conclusion: Farmer Bills will increase farmer's income by unlocking the value of its produce and traders, as well as other stakeholders, will get better access to the market and opportunity to develop additional services beneficial for farmers such as soil testing and cold storages.