Perhaps a bigger problem with the three bills is not what they are trying to do, but what they are not doing. In general, they lack transparent transaction recording and a credible regulatory architecture. The three bills jointly invisibilize commercial zone transactions, contract farming and seeding in a way that makes them unregulated. Until 14 September 2020, these regulations were submitted to Parliament as bills for «discussion», approval and have since been adopted. Unfortunately, the deliberations in Parliament have been totally insufficient to show the possible impact of the bills and to fill their many gaps. Nor has the government taken advantage of the parliamentary discussion to reveal and clarify its broader view of Indian agriculture, which these bills bring to the forefront. On the 27th. In September, the draft laws received the approval of the President and were notified to the Official Gazette. The new efforts are a lighter framework that allows contract cultivation with minimal obligations. A second important deviation is the extension of the scope of the bill to agricultural services, i.e. «the supply of seeds, feed, feed, agrochemicals, machinery and technology, advice, non-chemical agro-inputs and other inputs». The Contract Farming Act expressly excludes ground leases and prohibits the developer from erecting structures built on agricultural land.
The bill also provides for timely payments from the sponsor to the farmer. Like the APMC Bypass Act, this law exempts downstream actors in the supply chain from state APMC regulations and allows them to enter into written contracts across the country outside the scope of a «state law» or ECA (II.7.1 & 2). these include price-based interventions, the purchase and distribution of food with cereals, on the one hand, and public investment in infrastructure and institutions, including the existing APMC system, on the other. Here, the government`s efforts have been disappointing at best. Decisions to ban the export of onions and result in a meagre 2.6% increase in the minimum support price for anti-rabies wheat in 2020-21 hardly reassure a skeptical farmer that the government has farmers` interests in mind or that public support systems would not be weakened, especially if big business were tasked with stockpiling food for a guaranteed yield for the next 30 years. [12]. F.No. 26011/3/2020-M.II., Agricultural Marketing Division, Ministry of Agriculture and Farmers Welfare, 5 June 2020. On 5 September, the central government adopted a decision on 5 September.
June 2020 adopted three regulations: (i) the Agricultural Trade and Trade (Promotion and Facilitation) Regulations 2020, (ii) the Agreement on Agricultural Price Coverage and Services for Farmers (Empowerment and Protection), 2020, and (iii) the Essential Raw Materials (Amendment) Regulations, 2020. [6],[7],[8] The regulations jointly aim to: (i) facilitate barrier-free trade in agricultural products outside markets declared under the various state APMC laws, (ii) define a framework for contract cultivation, and (iii) set stock restrictions on agricultural products only when retail prices rise sharply. Together, the three regulations aim to increase opportunities for farmers to enter into long-term purchase agreements, increase the availability of buyers and allow buyers to purchase agricultural products in large quantities. The third regulation, the Farmers (Empowerment and Protection) Agreement on Price Assurance and Farm Services Bill, 2020, is more easily referred to as the «Contract Farming Bill» and aims to create a framework for written agreements between farmers and developers without obliging them to do so. It allows «sponsors» to connect with farmers through written contracts if they choose to use such contracts. Unlike the CMPA Circumvention Act, contract farming legislation has a long history of extensive consultations with stakeholders. Confusingly, however, the 2020 bill appears to have broken with the past by abandoning the model law on contract farming proposed in 2018 in favor of national legislation. [7]. Essential Raw Materials (Amendment) Regulations, 2020, Ministry of Consumption, Food and Public Distribution, June 5, 2020. One bill eases restrictions on the purchase and sale of agricultural products, the second relaxes storage restrictions under the Essential Products Act (ECA) of 1955, and the third introduces special legislation to allow contract cultivation on the basis of written agreements. 1.Je agree in principle, and the bill seems to be good and effective for the benefit of the farming population, especially small marginal landowners in remote villages.
2. The invoice must support the price of the finished or finished products, otherwise the end users can be exploited after a certain time. 3. The empowerment of the board of directors at the village/panchayet level should also have been mentioned categorically. There may be the possibility of interference by «powerful» individuals and/or «political» parties at the village level. 4. Since the price of the products is determined before sowing/cultivation, what will remedy both the farmer and the buyer in the event of a crop failure or a reduction in yield. 5. All contacts shall be renewed, taking into account the productivity and health of the soil, with the strict vigilance of those responsible for agriculture.
When it comes to contract farming, the Indian experience is not enviable and only works for a few niche products where there are no competing domestic markets and in some regions. In fact, the legal framework for the award of contracts was largely irrelevant to the decisions of the agricultural industry as to whether or not to conclude a contract and whether it should be concluded in the form of a written contract. In this context, the Contract Farming Act is unlikely to encourage an increase in the contraction of contracts. Due to the small size of the farm and the low volume of transactions, it is extremely expensive for companies to conclude contracts with a large number of small farmers. Many therefore prefer to conclude contracts with intermediaries who bundle farmers` products or buy them themselves from APMC-Mandis. In addition, widespread contract violations by farmers and businesses have resulted in few contract farming programs surviving beyond a few years. Most contractors tend to use the Mandi price to compare the contract price, rather than offering a guaranteed price for contract products (which the bill requires), in part to prevent violations in the event of a price spike in the local market. In general, neither farmers nor agribusinesses in India are interested in written agreements and prefer to rely on trust and mutual understanding to maintain the relationship, albeit for different reasons. Farmers are often afraid of written contracts, and even if they don`t, they are unlikely to be able to seek a formal settlement of disputes. On the other hand, companies only use written contracts to prove the seriousness of the intent, and even then they are unlikely to enforce the contract unless they issue a warning to all contract farmers. As a general rule, however, as one company put it, «we would never sue a farmer; it would jeopardize relations with all farmers, not just those who have fallen behind. The current law on contract farming therefore seems to overestimate the enthusiasm of agricultural companies for the conclusion of contracts. However, there is also concern that large companies will not use contract farming so much to guarantee markets or prices as to exercise indirect control over agricultural land under the pretext of guaranteeing farmers` services.
In reality, most large companies are able to sign contracts with about 5,000 farmers, but usually with less than a thousand. Disintermediated trade for interstate trade is unlikely to increase, where existing private actors would prefer to use intermediaries to procure the required quantities, verify quality and organize logistics, rather than work directly with a large number of small players. In fact, it is quite possible that OPFs and agri-technology platforms do not serve as alternatives, but are co-opted by the large companies that control logistics and retail as participants in their supply chains. For example, Central Arecanut and Cocoa Marketing and Processing Co-operative Limited (CAMPCO) used their chocolate factory in the 1990s to produce for Nestlé until the deal deteriorated because Nestlé wanted to take over the factory instead of signing an agreement with the cooperative. The emergence of business-to-business (B2B) models among agricultural technology firms, which are less challenging for the agricultural industry than business-to-consumer (B2C) models, suggests that these firms end up becoming intermediaries connecting large retailers to farmers, implying remediation rather than disintermediation of the supply chain. While there may be significant gains for these players, the question of what the position of farmers in these chains will look like is controversial. First, we look at the incremental contribution of these invoices. Many comments falsely suggest that farmers had no choice but to sell their products to greedy middlemen operating in the Mandis. This is far from the truth (Figure 1). Nationally representative data of farm households suggests that only 25% of all transactions in India in 2012-13 went through these mandis, while 55.9% were sold to private traders. Even before the adoption of these regulations, a number of states had already reformed their APMC laws, which allowed private actors to create markets, practice contract farming, buy products directly from farmers, etc. (Purohit, 2016).
A series of measures from 2012-2015 identified several horticultural products and exempted them from the requirement that the first sale take place on the APMC farm. Cotton grains and spinners, solvent extractors, sugar, oil and dal mills historically come directly from farmers in several states. Karnataka, for example, pioneered deep market reforms earlier this decade that unified markets through an electronic trading platform and simplified licensing procedures across the state. .
