Essential Commodities Act amended, Ordinance issued for free trade

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The Union Cabinet chaired by Prime Minister Narendra Modi has taken yet another historical and landmark decision to go a long way in helping India’s farmers to raise their agriculture income amending the Essential Commodities Act.

While India has become surplus in most agri-commodities, farmers have been unable to get better prices due to lack of investment in cold storage, warehouses, processing and export as the entrepreneurial spirit get dampened due to hanging sword of Essential Commodities Act. Farmers suffer huge losses when there are bumper harvests, especially of perishable commodities. With adequate processing facilities, much of this wastage can be reduced.

Benefits

With the amendment to Essential Commodities Act, commodities like cereals, pulses, oilseeds, edible oils, onion and potatoes will be removed from the list of essential commodities. This will remove fears of private investors of excessive regulatory interference in their business operations.

The freedom to produce, hold, move, distribute and supply will lead to harnessing of economies of scale and attract private sector/foreign direct investment into the agriculture sector. It will help drive up investment in cold storages and modernization of the food supply chain.

Safeguarding interest of consumers

The Government, while liberalizing the regulatory environment, has also ensured that the interests of consumers are safeguarded.  It has been provided in the Amendment, that in situations such as war, famine, extraordinary price rise and natural calamity, such agricultural foodstuff can be regulated. However, the installed capacity of a value chain participant and the export demand of an exporter will remain exempted from such stock limit imposition so as to ensure that investments in agriculture are not discouraged.

The amendment announced will help both farmers and consumers while bringing in price stability.  It will create a competitive market environment and also prevent wastage of agri-produce that happens due to lack of storage facilities.

Barrier-free trade in agriculture produce

Cabinet also approved ‘The Farming Produce Trade and Commerce (Promotion and Facilitation) Ordinance, 2020’ which would create an ecosystem where the farmers and traders will enjoy the freedom of choice of sale and purchase of agri-produce. It will also promote barrier-free inter-state and intra-state trade and commerce outside the physical premises of markets notified under State Agricultural Produce Marketing legislations. This is a historic-step in unlocking the vastly regulated agriculture markets in the country. 

It will open more choices for the farmer, reduce marketing costs for the farmers and help them in getting better prices. It will also help farmers of regions with surplus produce to get better prices and consumers of regions with shortages, lower prices. The ordinance also proposes electronic trading in transaction platform for ensuring a seamless trade electronically.

The farmers will not be charged any cess or levy for sale of their products under this Act. Further, there will be a separate dispute resolution mechanism for the farmers.

One India, One Agriculture Market

The ordinance basically aims at creating additional trading opportunities outside the APMC market yards to help farmers get remunerative prices due to additional competition. This will supplement the existing MSP procurement system which is providing stable income to farmers.

It will certainly pave the way for creating One India, One Agriculture Market and will lay the foundation for ensuring golden harvests for our hard-working farmers.

Farmers empowered to engage with processors, aggregators, wholesalers, large retailers, exporters

Cabinet approved ‘The Farmers (Empowerment and Protection) Agreement on Price Assurance and Farm Services Ordinance, 2020’ to empower farmers for engaging with processors, wholesalers, aggregators, wholesalers, large retailers, exporters etc., on a level playing field without any fear of exploitation. It will transfer the risk of market unpredictability from the farmer to the sponsor and also enable the farmer to access modern technology and better inputs. It will reduce the cost of marketing and improve the income of farmers.

This Ordinance will act as a catalyst to attract private sector investment for building supply chains for the supply of Indian farm produce to global markets. Farmers will get access to technology and advice for high-value agriculture and get a ready market for such products.

Farmers will engage in direct marketing thereby eliminating intermediaries resulting in full realization of price. Farmers have been provided with adequate protection. Sale, lease or mortgage of farmers’ land is totally prohibited and farmers’ land is also protected against any recovery. Effective dispute resolution mechanism has been provided for with clear timelines for redressal.