Friday, May 20, 2022
Outlook.com

Two Acts And A Half

The new contract farming law doesn’t adequately protect farmers, and the new Essential Commodities Act is a windfall for speculators—but the fear on APMCs and MSP is very misplaced

Two Acts And A Half
Two Acts And A Half Photograph by Tribhuvan Tiwari

Agricultural market reforms have been on the agenda of both the UPA and the NDA governments, and were attempted in bits and pieces at the state level since 2003. Until now, it was being attempted more through cajoling and persuasion of the states as it is a state subject. Concluding that the states could not be pushed beyond a point, the Narendra Modi ­government took the ordinance route. The stated purpose is to create ‘One Nation, One Market’ and provide choice to farmers for selling their produce for better price discovery, ­besides attracting private investment in the agriculture ­markets. The government has released a full-page advertisement to counter what it calls the lies of the Opposition.

The Farmers’ Produce Trade and Commerce (Promotion and Facilitation) Act, 2020, creates a new ‘trade area’ outside the APMC market yards where any buyer with a PAN can buy directly from farmers and the state government can’t impose any taxes on such a transaction. There is a misperceived ­linkage being established between the new trade or APMC Bypass Act, 2002, and the MSP system in that the MSP would not remain once this law comes into force. The fear being ­expressed by farmers and their unions about MSP arises from the fact that the playing field between trade area and APMC market yards is unequal as there would not be any taxes in the trade area whereas there are significant buying costs in APMC purchase. This may lead to buyers from APMCs, including the government, shifting to buying from the new trade area to lower their buying costs and thus effectively kill the APMC mandis. But it may still not mean that private buyers in new trade area would pass on even a part of the lower buying cost to the selling farmers.

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