Central law to free farm trade: Ordinance route unlikely

Published: May 20, 2020 3:45:47 AM

However, a final decision will be taken by Prime Minister Narendra Modi since this is a politically sensitive issue, the source added.

The proposed Central law is aimed at improving farmers’ access to markets of their choice, circumventing the organised APMC mandis.The proposed Central law is aimed at improving farmers’ access to markets of their choice, circumventing the organised APMC mandis. (File image)

By Prabhudatta Mishra

The Centre is unlikely to promulgate an ordinance to bring a new law aimed at removing agriculture trade barriers as it does not want to move ahead without taking the states on board. It might choose to move a bill in Parliament in this regard, at an appropriate time, according to an official source.

However, a final decision will be taken by Prime Minister Narendra Modi since this is a politically sensitive issue, the source added. This means that if the Monsoon Session of Parliament is deferred due to Covid-19 pandemic, the proposed new legislation could get delayed for a considerable period, effectively undermining its utility to address the immediate distress among the farming community. The legislative route even under normal circumstances could take a certain period of time before it reaches the stage of presidential assent and the new law comes into force.

The proposed Central law is aimed at improving farmers’ access to markets of their choice, circumventing the organised APMC mandis. The proposed reform, even as it seeks to free inter-state trade, will effectively allow seamless movement of farm produce not only across state borders, but also within states, experts feel. The idea is to let anyone having a licence under the Central law have the freedom to buy and sell farm produce anywhere in the country. On the other hand, the amendments proposed in the Essential Commodities Act, 1955 removing stock limit restrictions across the value chain, including with food processors, and easing exports are understood to have been finalised by the food ministry and are currently under discussion at the top level. The plan is, of course, to bring an ordinance to effect the changes in the EC Act.

“Such a new Central law has been conceived for the first time and it is a big reform in agriculture marketing. All the stakeholders need to be consulted for which sufficient time has to be given. The priority now is to prepare broad contours and elicit feedback,” said the source. The law ministry has already given its in-principle nod to make such a Central act which, it feels, is in conformity with the Constitutional provisions.

As part of the reforms under the EC Act, agriculture food stuffs including cereals, edible oils, oilseeds, pulses, onions and potato are proposed to be deregulated and the draconian ‘stock limit’ is to be imposed under very exceptional circumstances like national calamities like famine when price rise breaches certain limit. The stock limit will also not apply to food processors and exporters, the government had said.

Entry 42 of the Union List vests powers with the Centre to make laws related to “inter-state trade and commerce”. But there was some issue regarding whether any Central Act can also have power for enforcing intra-state agriculture trade. Experts have said that entry 26 of the state list talks about “trade and commerce within the State subject to the provisions of entry 33 of List III” (concurrent list). Thus, the Centre has also got overriding powers to enact a law on intra-state trade, the source said.

Finance minister Nirmala Sitharaman on May 15 announced a Central law would be enacted for free inter-state movement of farm goods from farmer’s field to anywhere without going through a mandi. She had said in no other sector a producer was ever told to whom he would sell. Yet, the practice of asking traders and others only to buy at mandis, and not directly from farmers, was in force for years, only to be partially eased by many states after the lockdown. Ironically, all parties swear by the farmers to protect their interests.

“The proposed Central law to allow farmers to sell to anyone outside APMC yards will bring greater competition among buyers, lower mandi fee, arhatiya commission, and other cesses that many state governments have been imposing in APMC markets,” Ashok Gulati, Infosys Chair Professor for Agriculture at ICRIER, wrote in FE May 19. “APMC markets have become monopsonistic, with high intermediation costs. This law will open up more choices for the farmers, and help them get better prices. So, farmers’ incomes should improve,” he said.

According to the Dalwai committee on Doubling Farmers’ Income, the average monthly income of an agricultural household during 2012-13 crop year (July-June) was as low as Rs 6,426, against its average monthly consumption expenditure of Rs 6,223, while as many as 22.5% of the farmers live below poverty line. The annual income of agricultural households at all-India level is estimated to be Rs 96,703 at current prices in 2015-16 and the Centre targets to double it by 2022-23.

The committee had suggested to the Centre to promote a national market for agriculture produce through provisioning of inter-state trading licence, grading and standardisation and quality certification. “Giving freedom to agriculturalists to sell their produce to buyers and at the place and time of their choice, to whomsoever and wherever they get better prices” was one of the several other recommendations the committee made on structural reforms in marketing of agriculture commodities.

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