“A farmer is a magician who produces money from the mud”
This magic of the farmer has been the bright spot in our COVID-19 affected economy.
Though, the Gross Domestic Product of our country has contracted by 23.9% in 1st quarter of 2020-21, the primary sector has shown a growth of 3.4 percent. This indicates the potential of agriculture sector during these challenging times. The Government in order to boost this potential of the primary sector has promulgated three ordinances.
These are:
Essential Commodities Amendment Ordinance (2020)
This ordinance seeks to repeal an anachronistic intervention of the Government by removing
the stock limits imposed for agricultural commodities. Exhortations for such de-regulation
have been given by several expert committees including the Ashok Dalwai Committee on
Doubling Farmers Income.
One of the rationales behind amending this act was to ensure that there is a tangible
difference that can be made between “hoarding” and “storage”. While hoarding signifies
holding commodities to create market distortions and make opportunistic gains. On the other
hand, storage involves holding commodities to ensure a reduction in the price volatility of
foodstuffs. Lack of such differentia under the previous act has made farmers the biggest loser. For instance, during the season of a bumper crop, before the ordinance surplus supply of vegetables and fruits could not be “stored” as they would be deemed as “hoarding”. As a result due to the excess supply, prices would fall leading to diminished income for the farmer.
However, the ordinance seeks to impose stock limits under exceptional situations such as
war, famine, natural calamity or extraordinary price rise. Thereby, the fears of private
companies hoarding foodstuff to make opportunistic gains can be allayed.
The Farmers’ Produce Trade and Commerce (Promotion and Facilitation) Ordinance
2020
The Agriculture Produce and Marketing Committees (APMC) have been the prime sources
for marketing and selling agricultural produce. This ordinance aims to dismantle
monopolistic gains made by APMC‟s by allowing farmers to sell their agricultural produce in
any trade area outside APMC yards.
The lacunae in the working of APMC‟s have been succinctly indicated by 8th standing
committee report on agriculture (2019-20). The ill-effects of cartelisation, reduced
competition, exorbitant market fees have led sub-optimal functioning of APMC‟s.
In certain states, the levies charged by APMC yards are about 15% as shown in figure 1. This
acts like an “Income Tax” on the farmer though agriculture is exempt from the provisions of
income tax. To ensure maximum price realisation for the farmer this ordinance prohibits state
governments from levying any market fee on farmers selling their produce outside APMC
yards.
In addition to this, the ordinance paves way for electronic trading platforms to ensure farmers are in consonance with evolving technology. The successful working e-National Agricultural Market is the right example to indicate the potential of Digital India initiatives in augmenting farmers’ income.