The Background

India is a land of farmers, which can be understood by the facts that the former Late Prime Minister of India Mr. Lal Bahadur Shastri in 1965 gave the famous slogan of “Jai Jawan Jai Kisan”. This slogan pays respect to the farmers of India who are regarded as “Ann Daata” and the great soldiers who protect countries border. The agriculture has been the largest contributor to the GDP say more than 50% of Indian economy at the time of independence. Slowly and gradually its supremacy was taken away by Secondary Sector and now it is the least contributor to the country’s GDP. Indian agriculture is known for its small holdings and fragmented poor farmers! These farmers primarily have subsistence farming and could barely make some money. Furthermore, Indian agriculture is also heavily dependent upon rain because of very poor and old technology for irrigation facilities. At the same time the farmers have very tough time because of the natural calamities like floods and drought are major ones to quote. The worst scenario w.r.t. the farmers is that they do not have a right to decide the price of their produce, no right to sell their produce wherever they want and to who so ever they want, cannot get into any agreement with anyone i.e. in terms of capital market cannot get into futures agreement. Hereby, these small farmers were forced to sell their produce to middlemen who runs a well – developed and established nexus. The poor small farmers were not even facilitated to sell their produce at any wholesale market because the established members of these markets do not allow them to do so. Also, forget about selling it in the retail market. As a result, the poor farmer gets poorer and debt burdened, to an extent where he has to commit suicide! The NCRB data shows an average of more than 10 suicides per day in the country of farmers! The Indian farming at large is still primitive in nature, it's only large farmers of Punjab, Eastern UP and some areas of East and South India are using latest technology like HYV seeds, harvesters etc. Farmers are also in the country are illiterate at large which again contributes to their ordeal. Therefore, the Indian farmers or agriculture industry has been waiting for the reforms since ages to end this misery and pain of these farmers.

The Scenario

The Government of India under of current leadership finally finished the one of the most sought reforms awaited i.e. the Agriculture reforms in the form of “Farmers (Empowerment and Protection) Bill, 2020 in short, is also known as “Farmers (Empowerment and Protection) Agreement on Price Assurance and Farm Service Bill, 2020. Through this bill the current GoI has a vision where poor and small farmers of India will no longer commit suicide and rather contribute more to the Indian economy through the usage of state of art technology being used in the developed economies by help of the state and the corporates!

The table below shows the various reasons to which a farmer in India commits a suicide:

Source:  Panagariya, Arvind (2008). India. Oxford University Press. p. 153. ISBN 978-0195315035

The reform in the form of the bill has the following aspects w.r.t. the farmers:

1.     The Farming Agreement:

 a.     Farmer is now a price maker on the following counts:

  i.     Now farmer can enter into contract i.e. futures contract for its produce,     with an individual and / or corporate, subject to;

   1.     Validity of term being for a minimum period of one crop season or one      production cycle of livestock, with a maximum period of 5 years. If the      period is more than 5 years than it shall be decided mutually in      between the farmer and the buyer.

   2.     Agreement must be entered into a written document form with      following guidelines as laid down by the Central Government.

   3.     The agreement will focus only on produce as agreed with the      specifications mentioned i.e. quality, grade and quantity etc with timely      delivery, as per section 4.

   4.     On failure of delivery cannot be recovered from the land of the farmer.      Thus, the farmer remains the owner of the land.

   5.     No farming agreement shall be entered into by a farmer under this      agreement section 3 sub section 2, in derogation of any rights of a share      cropper.

   6.     Thus, there is a guaranteed price to be paid for the produce, as      advocated under section 5.

  ii.    Electronic platforms to be made available to the farmers and to be used by     them

  iii.   Section 6 of the bill states that the buyer, shall make two third of the     payment at the time of delivery and remaining at the time of due                      certification i.e. receipt slip of sale or maximum with in 30 days of such     issue of certificate.

  iv.    Section 7 lays down that such agreements are exempted from any state     Act that regulates sale and purchase of farm produce. Also sections that     such agreements notwithstanding with any provision of Essential     Commodities Act 1955.

  v.     Section 8 (a) states that no agreement can be done w.r.t. an act that takes     away the ownership of the of land from the farmer. Further, sub section     (b) states that buyer cannot make any permanent structure or                       modification on the farmers land unless the buyer commits to remove     such structure at his or her cost at the termination or expiry or conclusion     of agreement.

  vi.   Section 9 says that such agreement shall be linked with any insurance or     credit scheme being launched by the Central or State Government for the     aid of farmer or the buyer or both.

  vii. Section 10 introduces the Aggregators (i.e. any person or farm production       organisation) or Farm service providers can be included in the agreement       but with specified roles, responsibilities and services to be performed.

  viii. Section 11 states that such agreement can be rescinded at any point of     time.

  ix.   Section 12 tells about the Registration Authority to be notified by a State       Government for electronic registration of such agreements.

2.     Dispute settlement mechanism

 a.   Section 13 to 15 describes the dispute settlement mechanism.

 b.   Every such agreement has to be a conciliation clause, so that in case of                disputes, the matter shall be sent to the conciliation board which shall be     comprised of fair and balanced representation of parties.

 c.  These sections have empowered SDM to settle such disputes, if not settled in     abovementioned point. Such orders to have same force as being passed by a     competent Civil Court under the Code of Civil Procedure (CPC) 1908.

 d.  The bill has barred the Civil Courts to entertain such disputes. But an appeal     can be raised to the Appellate Authority as prescribed by the Central                 Government.

3.     Other clauses

 a.     Section 16 to section 25 explains the various other aspects like;

  i.     Powers of Central Government to issue guidelines.

  ii.     All authorities like, Registration Authority, SDM etc are to be covered as     Public Servant under Section 21 of IPC.

  iii.     Section 18 bars all suits, legal proceedings or prosecution of any nature     against Central and / or State Government and Authority(s) acted being     Bonafide i.e. acted in good faith.

  iv.     Bar of jurisdiction of Civil Court.

  v.     This bill to override any law of State established being inconsistent with     this bill.

  vi.     This bill is not applied to the Stock Exchanges and Clearance               Corporations.

Thus, the above highlights clearly show that how the farmer and the Indian economy is going to be benefitted in the following aspects:

1.     Allowing of intra and inter trade of farmers produce.

2.     Electronic platforms to be used for farmers produce trade.

3.     Trade can be done outside the physical premises of the market as per APMC   Act.

4.     Trade can take place outside the farm area, thereby a farmer can sell it              produce anywhere now.

5.     Farmer is now a price maker of its produce.

6.     Market fees has been abolished and therefore, free access of market pan India   by a farmer.

7.     The cartel in form of middlemen has been abolished now.

8.     Promoting competition in the market by increasing the number of players and   abolished the monopoly power being abused by mandi players.

9.     Central Government to act as a watchdog and almost zero State interference.

10.  Disputes to be solved by SDM than Civil Courts, this move has almost zeroed   the physical harassment of the farmers in terms of case hearings and              minimised the cost of litigation and also time frame has been cut for dispute   solution.

11.  Linking of insurance and credit schemes of the Government will be an added     advantage.

12.  The induction of state of art technology will be possible with ease. This will   improve the productivity of the farms and will save time.

13.  FDI seems to be more feasible and possible to foster the productivity of             agriculture produces.

14.  This bill will facilitate the agriculture to increase its share in the GDP              contribution of the country.

15.  This will help the economy to increase not only the GDP but also PPP because   the economy will witness the upliftment of economic status of the real poor   people in the economy.

16.  Saving of precious life of farmers in forms of human capital of the economy.

17.  Now if the produce is destroyed by the act of god then the farmer will not be in        a total loss as a minimum guaranteed price will be paid by the buyer.  

The Endnote

I remember a program being aired on TV that was showing interviews of real time small farmers. These farmers were from the Nasik the famous belt of Onion produce in India. The horrifying ordeal of these farmers can be imagined the moment a farmer says, “that babuji my produce is sold for 30 paise a Kilo Gram.” Now just imagine how much such farmer can earn from a produce? During that onion crisis in the country, I remember people buying onions for Rs. 100 per Kilo Gram! The hell of a difference in the cost and the selling price is the profit being earned by the cartel! Today, in the news it was being flashed that how influential cartel being earning Rs. 10000 crore from commission of Onion, chilies and grapes while another big cartel being earning Rs. 5000 crore as commission in an another farm produce! Hope to see disinflation in the economy backed by this new bill on one hand and on the other to see improvement in the economic status of these marginal or small farmers. A new path being engineered by the GoI to ensure the prospering small farmers so that none commits suicide! Indeed the dream of 1 trillion USD of Indian Economy by the present Prime Minister of India to be a bit nearer with passing of this bill 2020, a starting of new era in the agriculture field!