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NEW DELHI: President Ram Nath Kovind on Friday promulgated the Ordinances which will legally allow farmers to sell their produce without restrictions across the country and pave the way for ‘contract farming’ where they can engage with processors, aggregators, wholesalers, large retailers and exporters through contracts on pre-agreed prices.
The Union cabinet had approved these Ordinances on Wednesday, intending to create “one India, one agriculture market” while also attracting private investments in the agriculture sector which could not realise its full potential due to several regulations under states’ laws.
After promulgation of the Ordinances, the Union agriculture minister Narendra Singh Tomar wrote to all chief ministers, seeking their cooperation in implementation of these reform measures.
The three reforms, which have now got legal status with promulgation of these Ordinances, include laws on promoting barrier-free inter-state and intra-state trade in agriculture produce, empowering farmers to go for ‘contract farming’ and
removing certain farm commodities such cereals, pulses, oilseeds, edible oils, onion and potatoes from list of essential commodities under the Essential Commodities Act (ESA).
“When the whole ecosystem of agriculture and its allied activities was tested during the Covid-19 crises, it reconfirmed the necessity for the central government to speed up the reform process and to come up with a national legal facilitative ecosystem to improve intra-state and inter-state trade of agriculture produce,” said the agriculture ministry in a statement while referring to the rationale behind the Ordinances.
It said, “The government of India also recognised the need for the farmer to sell agriculture produce at a place of his/her choice at a better price by increasing the number of prospective buyers. A facilitative framework was also considered necessary for farming agreements.”
Key features of the Ordinances:
Making Farmers Free From Regulatory Regime Through Three Steps
1.The Farming Produce Trade and Commerce (Promotion and Facilitation) Ordinance, 2020
*Ordinance aims to create ‘One India, One Agriculture Market’
*Farmers can sell their produce outside regulated ‘mandis’ (agri markets)
(Currently, farmers cannot sell agri-produce outside notified market yards)
*Anyone/groups, holding PAN card, can buy agri produce from farm gates (directly from farmers outside mandis)
(Currently, farmers are restricted to sell produce only to registered licensees of state governments)
*No restrictions on inter-state and intra-state trade
(Currently, barriers exist in free flow of agri produce between states due to various APMC legislations
*It will open more choices for farmers, reduce marketing costs and help them in getting better price
*It will help farmers of regions with surplus produce to get better prices in other regions
*Farmers can sell their produce by creating their own e-platforms
2.The Farmers (Empowerment and Protection) Agreement on Price Assurance and Farm Services Ordinance, 2020
*Farmers can engage with processors, aggregators, wholesalers, large retailers, and exporters through contract on pre-agreed prices
*It will transfer the risk of market unpredictability from the farmer to the sponsor
*It’ll enable farmer to access modern technology and better inputs
*It will reduce cost of marketing and improve income of farmers
*This Ordinance will act as a catalyst to attract private sector investment for building supply chains for supply of Indian farm produce to global markets
*It’ll eliminate intermediaries, resulting in full realization of price
*Farmers to be provided adequate protection in terms of their ownership rights on land
*To have dispute resolution mechanism through SDM and district magistrate within time-bound manner
3.Amendment to the Essential Commodities Act
*Cereals, pulses, oilseeds, edible oils, onion and potatoes will be removed from list of essential commodities
*This will remove fears of private investors of excessive regulatory interference
*Freedom to hold, move, distribute and supply will lead to harnessing of economies of scale
*This will attract private sector/foreign direct investment into agriculture sector
*It will help drive up investment in cold storages
*It has provisions to safeguard interests of consumers
*Farm commodities can be regulated in situations such as war, famine, extraordinary price rise and natural calamity
*Export demand of an exporter will remain exempted from stock limit imposition so as to ensure investments in agriculture
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