Ordinances on inter-state farm trade, contract farming out of judicial process

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Published: June 6, 2020 7:37 AM

Contract farming could also help the government’s crop diversification programme since farmers will be assured of sales and prices. The changes to the Essential Commodities Act will remove cereals, edible oil, oil seeds, pulses, onions and potato from its purview.

Farmers under the new Central law will now have freedom to sell their produce in any market.

State governments can’t tax farm trade under the new central law for inter-state trade that virtually allows farmers to sell their produce anywhere in the country without being impeded by the APMC mandis, according to the Ordinance issued on Friday. Via another Ordinance, farmers would get share of post-contract price surge, after they sign agreements of contract farming with private players. Also, they will have the cover of minimum guaranteed price if open market/mandi rates fall drastically.

While farmers under the new Central law will now have freedom to sell their produce in any market, disputes with buyers could be first raised with sub-divisional magistrate, while appeals will go the district magistrate. The two ordinances are kept out of judicial process. No state levies will be imposed on trade outside the APMC mandis. Payment has to be made to the farmer within three working days. According to the new law, anyone having PAN card can trade under the new law, while the Centre reserves the right to lay down any new procedures, including mandatory prior registration.

Farmer producer organisations and cooperatives can set up e-platform for trading but they cannot charge any fee for making available the services to the farmers. The two ordinances, along with another one in the offing to give effect to the amendments proposed to the Essential Commodities Act to ease stock holding restrictions on commodities till the food processors in the value chain, will together go a long way in unshackling the entire agriculture-to-food-processing-to-retailing value-chain and giving farmers the choice to sell their produce in any market across the country, analysts feel.

Under the law for contract farming, in case market prices of any agri produce go up substantially, the farmers will have some share (which will be defined in Rules) above the contracted price while they will also have a minimum guaranteed price if open market/mandi rates fall drastically. The recovery of amount from farmers will not exceed what the farmer has received as an advance from the processor/FPO/trader with whom contract was signed while his land rights will be protected at any cost.

Contract farming could also help the government’s crop diversification programme since farmers will be assured of sales and prices. The changes to the Essential Commodities Act will remove cereals, edible oil, oil seeds, pulses, onions and potato from its purview. The reforms will help evacuate the surpluses from production zones to demand zones seamlessly, to the advantage of farmer-producers and players across the agriculture value chain, who have also been promised solid support by way of schemes and outlays to build infrastructure and logistical chains from farm-gate to the retail trade, and even exports.

Farmer producers organisations (FPOs) and cooperatives have been allowed to set up their own trading platform, but they are not allowed to charge any fees for that. The law also allows the Centre to set up an organisation to disseminate market prices to farmers and also collect market intelligence.

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