Brief of Agricultural Reforms 2020

Brief of Agricultural Reforms 2020

The President has given his assent to three new agricultural reform bills that were passed by the Parliament in its monsoon session this year, which have been discussed below:

1. The Farmers’ Produce Trade and Commerce (Promotion and Facilitation) Bill, 2020: The objective of the bill is to give farmers the option to sell their produce outside of the mandis registered under the Agricultural Produce and Marketing Committee (APMC). It enables farmers to sell their produce to private players outside APMC, thereby providing them the freedom to sell to an alternative platform. In an effort to transform the entire nation into one agricultural market, the bill is expected to encourage barrier-free inter and intra-state trade, along with electronic trading, thereby transforming the entire nation into one agriculture market.
2. Farmers (Empowerment and Protection) Agreement on Price Assurance and Farm Services Bill, 2020: This bill aims to empower farmers to enter into contracts with agri-business firms or large retailers at a pre-agreed price for their future produce. It provides a framework on the trade agreements for the sale and purchase of farm produce (to be entered in prior to its production or rearing), and lists the terms and conditions for its supply, quality, grade, standards and price. It aims to help farmers eliminate the uncertainty related to selling of produce once harvested and ensuring more assured returns.
3. Essential Commodities (Amendment) Bill, 2020: The bill aims to remove key food grains such as cereals, pulses, oilseeds, potatoes and onions from the ‘essential commodities’ list. It thereby aims to deregulate the production, movement, storage and distribution of these commodities and eliminate stock-holding limits. The amendment could attract investment from private players in the value chain of these commodities, especially post-harvest infrastructure such as cold-chain and storage facilities. It aims at removing reservations, if any, which private companies might have had earlier by eliminating the possibility of attracting sudden stock holding limits.

Various Challenges can be shown in picture form as:

The agricultural sector is the primary source of income for almost 58% of India’s population, but contributes around 15% of India’s GDP. Between 1970-71 and 2015-16, with the number of farms more than doubling from 71 million to 145 million and the average farm size reducing by more than 50% from 2.28 hectares to 1.08 hectares, the agricultural sector has not been very remunerative for farmers in recent years. With the Government’s objective of doubling farm income by 2022 in mind, these three agricultural reform bills may possibly play a crucial role in strengthening the linkage between farmers and the market forces and increasing investment in agricultural infrastructure over the long term.

Sources: Various publications

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