Farmers Bill 2020 and Concerns | UPSC
Farm Bills: who gains and who loses
WHY IN NEWS:
Will States and their Agricultural Produce Market Committees be impacted? What does it mean for government procurement?
SYLLABUS COVERED: GS 3: Agriculture
For PRELIMS it is important to understand the relationship between MSP and the Floor rates .
For MAINS go through the bills and revise them multiple times . One question this year will be on this issue . Let us dive in !
- BILL BECOMES ACT : These bills were passed by Parliament last week and will become laws once they are signed by the President.
- PROTESTS : In Punjab and Haryana, bandhs were observed, with blocked roads and mass rallies.
- APPREHENSIONS : This could corporatise agriculture, threaten the current mandi network and State revenues and dilute the system of government procurement at guaranteed prices.
WHAT ARE THE THREE BILLS?
- PROMULGATION : These bills were initially issued in the form of ordinances in June.
- VOTING IN PARLIAMENT : They were then passed by voice-vote in both the Lok Sabha and the Rajya Sabha during the delayed monsoon session this month.
BRIEFING THE BILL
- THE FARMERS’ PRODUCE TRADE AND COMMERCE (PROMOTION AND FACILITATION) BILL, 2020 : It allows farmers to sell their harvest outside the notified Agricultural Produce Market Committee (APMC) mandis without paying any State taxes or fees.
- THE FARMERS (EMPOWERMENT AND PROTECTION) AGREEMENT ON PRICE ASSURANCE AND FARM SERVICES BILL, 2020: It facilitates contract farming and direct marketing.
- THE ESSENTIAL COMMODITIES (AMENDMENT) BILL, 2020 : It deregulates the production, storage, movement and sale of several major foodstuffs, including cereals, pulses, edible oils and onion, except in the case of extraordinary circumstances.
WILL FARMERS GET MINIMUM SUPPORT PRICE?
- MINIMUM SUPPORT PRICES : Most of the slogans at the farmers’ protests revolve around the need to protect MSPs, or minimum support prices, which they feel are threatened by the new laws.
- SELECTED PURCHASE : However, the Centre only purchases paddy, wheat and select pulses in large quantities.
- MSP AND FARMERS : Only 6% of farmers actually sell their crops at MSP rates, according to the 2015 Shanta Kumar Committee’s report using National Sample Survey data.
- APMC MANDIS : However, most government procurement centres in Punjab, Haryana and a few other States are located within the notified APMC mandis.
- TAX-FREE PRIVATE TRADE : Farmers fear that encouraging tax-free private trade outside the APMC mandis will make these notified markets unviable.
- REDUCTION IN MSP RATES : Tax free trade could lead to a reduction in government procurement itself.
- MSP CAN SET A FLOOR PRICE : Farmers are also demanding that MSPs be made universal, within mandis and outside, so that all buyers, government or private will have to use these rates as a floor price below which sales cannot be made.
WHY ARE PROTESTS VOCIFEROUS IN SOME STATES?
- PROCUREMENT : More than half of all government procurement of wheat and paddy in the last five years has taken place in Punjab and Haryana.
- MSP RATES : More than 85% of wheat and paddy grown in Punjab, and 75% in Haryana, is bought by the government at MSP rates.
- INVESTMENT : These States are also most invested in the APMC system, with a strong mandi network, a well-oiled system of arthiyas or commission agents facilitating procurement.
- CONNECTIVITY : Link roads connecting most villages to the notified markets and allowing farmers to easily bring their produce for procurement.
- TAX COLLECTION : The Punjab government charges a 6% mandi tax (along with a 2.5% fee for handling central procurement) and earns an annual revenue of about ₹3,500 crore from these charges.
- STATE LIST : Agriculture falls in the State list, arguing that the Centre should not be making legislation on this subject at all.
- REVENUE LOSS : They are concerned about the loss of revenue from mandi taxes and fees, which currently range from 8.5% in Punjab to less than 1% in some States.
- INCOMES AT STAKE : Paddy farming has received a major boost with procurement at MSPs and farmers fear their newly assured incomes are at stake.
- VARIATIONS : Bihar, Kerala and Manipur do not follow the APMC system at all. However, most private buyers are currently small traders at local mandis.
- CORPORATE PLAYERS : The removal of stock limits and facilitation of bulk purchase and storage could bring large corporate players into the agriculture space.
- BARGAINING POWER : Although they will bring much-needed investment, they could also skew the playing field, with small farmers unlikely to match them in bargaining power.
- Punjab and Rajasthan are considering legal measures to expand the bounds of their APMC mandi yards.
- This will ensure that they can continue collecting taxes on all agricultural trade within their State’s borders.
- States such as Chhattisgarh and Odisha have only seen procurement increase over the last five years, after the implementation of decentralised procurement.
- This will also bring a surge of private investment in agricultural marketing, processing and infrastructure.
SOURCES:THE HINDU & PIB | Farmers Bill 2020 and Concerns | UPSC
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