Union govt ordinances give shield to farmers

NEWDELHI:A commercial buyer of farm produce will only need a permanent account number or PAN and no licence or other documentation to enter into a transaction, while a farmer’s land cannot be taken as a collateral or confiscated for violation of a farming contract, key provisions of the two ordinances announced by the Cabinet on June 4 show.

Late on Friday, President Ram Nath Kovind promulgated the two ordinances.

The Union cabinet had announced far-reaching steps to unshackle the farm sector, approving amendments to the six-decade-old Essential Commodities Act and pushing two ordinances, one aimed at freeing up farm trade from restrictions and the other guaranteeing a legal framework for purchases at pre-agreed prices to farmers.

According to the ordinances, a buyer will have to pay a farmer within three days and in the meantime give the farmer a revenue stamped money receipt. A farmer can directly approach district-level magistrate in case of dispute with a buyer. Such transaction will not be subject to any taxes at the point of sale, the draft provisions show.

The Farming Produce Trade and Commerce (Promotion and Facilitation) Ordinance, 2020 will effectively bring the curtains down on the decades-old agricultural produce market committees regulations (APMC) system that regulates buying and selling of farm produce. An ordinance is a law promulgated when Parliament is not in session.

APMC regulations require farmers to only sell to licensed middlemen in notified markets, usually in the area where farmers reside, rather than an open market, scuttling price discovery. Ushered in during the 1960s, APMC regulations were meant to protect farmers from distress selling. Over time, these have facilitated the creation of cartels and monopolies, evidence shows.

In December 2010, when onion prices peaked, a probe by the country’s statutory anti-monopoly body, the Competition Commission of India, revealed that one firm accounted for nearly a fifth of the total onion trade for that month at Lasalgoan APMC, Asia’s largest onion market in Maharashtra’s Nashik.

These reforms in “agricultural marketing” have been a long time in the making and government panels and economists have often argued for changing existing structures of agricultural trade.

ACCORDING TO THE ORDINANCES, A BUYER WILL HAVE TO PAY A FARMER WITHIN THREE DAYS