What is APMC ACT? Why Prime Minister Narendra Modi has announced to repeal 3 Farm laws on 19 November 2021.?

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What are recent happenings in Farm law? Why Prime Minister Narendra Modi has announced to repeal this

  • This law was passed in September, 2020 to modernize India’s agricultural sector last year. Since then many farmers organization has led protest against this law which have converted into violence in recent times. Lakhimpur kheri is one of the burning issues in current times.
  • Seeing all this things, government has decided to repeal these laws. Prime Minister Narendra Modi has announced to repeal this law on 19 November 2021.
  • Samyukt Kisan Morcha, the group of farm unions organizing the protests, said it welcomed the government’s announcement. But the group said the protests would continue until the government assures them guaranteed prices for certain essential crops — a system that was introduced in the 1960s to help India shore up its food reserves and prevent shortages.

Contents

  1. What is APMC ACT? What was the purpose of this act?. 2

  2. How APMC Act works?. 2

  3. What were the major shortcomings of APMC act?. 2

  4. What is Minimum Support Price system?. 3

  5. What are the major amendments made in APMC Act?. 3

  6. What are the objectives for these amendments?. 4

  7. What is ECA? And what are the changes made in this law in 2020 farm acts?. 5

  8. What was the major concern of the farmers regarding new farm acts?. 5

  9. What are the possible ways ahead in this direction?. 6

  10. What are recent happenings in Farm law?. 7

 

 

1. What is APMC ACT? What was the purpose of this act?

APMC stand for Agricultural Produce Market Committee. It was enacted in 1950s by all states to bring the transparency and food security in agricultural sector. Agriculture is a state subject.

Major objective of this act was;

  • Ensure food security to Indians especially poor section of society.
  • Ensure remunerative prices to farmers and fair prices to end consumers.

2. How APMC Act works?

Under this act, regions are geographically divided into market committee; popularly known as mandi used for sale and purchase of agricultural produce.

All notified agricultural produce are brought to mandi and auctioned in front of farmers. Notified agricultural products such as cereals, vegetables, grains and other horticultural products are subjected to state decision.

Each mandi consist of several middleman licensed by government known as “Arhatiyas”. These middleman purchase crops from farmers a suitable rate and sale to government and private parties.

3. What were the major shortcomings of APMC act?

  • Cartelization of agents and restraint from higher biddings is one of the major challenges APMC possess. Oftentimes agents used to purchase crops at very low price and sale at higher prices leaving farmers in poorer state.
  • Due to this many farmers are in perpetual indebtness in current scenario.
  • There has been monopoly of these mandis which hinders farmers from getting its better customer base.
  • These mandis charges high cost as license fee, rent, taxes, levies etc which hinders many small farmers from participating into APMC market. Oftentimes it has been subjected to only elite section of the farmer society.
  • It has been major complaint by the farmers that mandi’s head works in favor of middleman only. Hence conflict of interest is one of the major shortcomings in this act.
  • Inappropriate information and non-awareness of farmers is also a major challenge.
  • APMC market has become monopsonistic market with high intermediation costs. Monopsonistic means too many sellers and one buyer.

4. What is Minimum Support Price system?

It is the minimum guaranteed selling price of the certain crops set by the government. When farmers unable to get good return in open market then they can sale it to government at MSP rate.

Objectives of MSP

  • Provide price support to farmers
  • To secure food grains for Public distribution system for ensuring food security in India.
  • To maintain food stock to ensure price stability in case of scarcity.

Shortcomings

  • Overproduction of favored crops and wastage due to improper warehouse facilities.
  • Land degradation due to overuse of pesticides and fertilizers and overexploitation of natural resources.

5. What were the major amendments made in APMC Act?

  • The Farmers produce trade and commerce (Promotion and facilitation) Act: it allows barrier free intra and interstate trade of farm produce rather than going just only to mandis. Farmers are not mandate to bring their crops to mandi neither to sale their crop in mandi only. But it makes them ineligible for contesting APMC election.
  • The Farmers (Empowerment and protection) agreement on price assurance and farm services act, 2020: it empower farmers to trade at pre-agreed price as contract farming. Also it empowers private company to ensure the quality, grade, standard etc before sowing of seed. It allows quicker redressal mechanism on time.
  • The Essential Commodities (amendment) Act, 2020: It allows economic agent to stock crops as much as they can. Earlier stock limit was set by government only. However six crops i.e. cereals, pulses, onion, potatoes, edible oils and oilseeds from the list of essential commodities.
  • It also allowed alternate markets for farmers such as direct purchase centers, private market yards/mandis. Meanwhile responsibilities have also been increase for APMC for example full payment should be made on day of sale itself, quantity brought and prices should be displayed near arrival gate.
  • It is also responsible for the promotion of public- private partnership in management. It needs to make efforts to build facilities for Processing and other value additions.
  • It encourages contract farming and provides dispute resolution mechanism.
  • It is also responsible for the establishment of state agricultural produce marketing standard bureau for grading standardization and quality certification.

6. What were the objectives for these amendments?

  • As per government, this act will reduce farmers dependence on state controlled APMCs and makes them enable for better price discovery for their crops. In this way, farmer’s income will get doubled.
  • These amendments will introduce competition in trade and marketing. It would encourage research and innovation which will result in increase in efficiency and productivity of agricultural market.
  • Earlier state owned warehouses were not so aware about the safety of food. Hence more food gets wasted in godowns only. Government is expecting that private warehouses will be more proactive about safety of crops.
  • Entry of corporate sector will also bring more investment opportunity and capital access into agricultural sector. It enables farmers to adopt best practices by adopting new technologies in farming.
  • These amendments formalize contract farming and provide disputes resolution mechanisms.

7. What is ECA? And what are the changes made in this law in 2020 farm acts?

ECA stands for Essential Commodities Act which was enacted in 1955. This act looks into the matter of production, supply and distribution of essential commodities. However, it’s been thwarted the creation of integrated value chains across country which is against the interest of farmers.

It mandated Stock-holding limit on listed commodities to curb black marketing.

Amendments in ECA

  • Enable private sector investment in supply chains
  • The dismantling of such controls under ECA would expand India’s agri-exports and enable private investment in supply chains.
  • This could facilitate private investment in the food processing industries, strengthening the farm-to-fork chain, and benefiting both producers and consumers.

8. What was the major concern of the farmers regarding new farm acts?

APMC act or the Farmers’ Produce Trade and Commerce (Promotion and Facilitation) Act:

  • Farmers are worried about exposing to corporate sector that used to have more bargaining power and resources than small farmers. Almost 85% of farmers are small land holders who may have to sale their crops at lower cost in future.
  • APMC provides accountability mechanism and ensure reliable middleman. It Private Mandis may replace APMC mandi. Then it may increase in cheating cases with farmer which will ultimately leads to loss of jobs (people working in APMC) as well as farmers welfare.

Contract Farming Act or the Farmers (Empowerment and Protection) Agreement of Price assurance and Farm Services Act, 2020:

  • Farmers are worried as when private sector enters then government will have no control over price which makes them to sale their crops even at lower price too. In short they are worried about minimum support price (MSP) may remove in future.

Essential Commodities Act:

  • Farmers are concerned about the unlimited stocking which can create artificial price fluctuation of crops prices in capitalist agriculture market. It ultimately makes farmers to sale at lower price.
  • Farmers feel ignorance from government side and blamed government as favorable for corporate sector only.

State’s concern

  • Since agriculture is state subject under 7th schedule of constitution. So many states perceive this law as against the spirit of constitutional cooperative federalism. However central government has clarified it by putting these amendments under ‘trade and commerce in food items’ which come under concurrent list.
  • New changes are hindering states from collecting any kind of tax, levy or fee on selling of crops which will ultimately leads to loss of revenue for state government.

9. What are the possible ways ahead in this direction?

  • Government needs to assure farmers that these laws are not to dismantle MSP but to bring reform in APMC. Government needs to clear farmers that these changes are just to bring freedom of choice for both farmers and buyers of food crops.
  • Farmers are bit skeptical about government’s intension behind these amendments. There should be fair platform for discussion, to build consensus and restore the faith of its citizen. Farmers demand MSP in contract farming too so government should think about it.
  • Government needs to adopt better regulation system to bring security on a MSP system and also quicker grievance court for farmer in case they get cheated on.
  • Judiciary needs to align with dispute redressal process to avoid corruption in executive system.
  • In India almost 86% of farmers are small, marginal or landless farmers. But oftentimes subsidies benefit used to avail by rich farmers. So government needs to ensure better targeting subsidies.

10.

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