“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.

The Farmers (Empowerment and Protection) Agreement on Price Assurance and Farm
Services Ordinance
 
This ordinance provides legal parlance to contract farming in the country. By enabling farmer
trade agreements with private entities it ensures agriculture becomes a remunerative job and
reduces the risk involved in growing crops. This in-turn will increase entrepreneurial activity
at the grass-root level. Such an increase will lead rise in Gross District Domestic Product by
1.8 per cent as indicated in the economic survey 2019-20. This also in tandem with the NITI
Aayog’s Strategy for New India @ 75 which aims to convert farmers to “agripreneurs”. Besides the provision of a time-bound dispute redressal mechanism in the ordinance acts as a confidence-building measure for farmers to enter into such contracts.
 
The three ordinances work in collaboration with each other to ensure the doubling of farmer‟s
income by 2024. Previously farmers would sell most of their produce to APMC yards or
middlemen, now they have many options. These include private companies, directly to the
market, online portals and other state mandis.

If all these entities are not willing to buy above the Minimum Support Price prevailing in the
market, the farmer can choose to sell his produce to APMC yards. As a result, MSP will act
as the “floor” price the farmer needs to earn rather than as the “pseudo-ceiling” price the
farmer is currently earning.

As the stock holding limit is removed and farmer‟s options to sell are myriad, this will lead
rise in agricultural infrastructure investments such as warehouses, cold storages etc. Thereby,
improving the agricultural value chain of the country.

Moreover agriculture employs 80% of all economically active women as indicated by the
Oxfam Report and these ordinances will make agriculture a remunerative job. Hence,
augmenting women‟s income will empower them creating a domino effect in the progress of
the nation. Therefore these bonuses will ameliorate the value of mud from which the magicians will double their money.