The Farmers (Empowerment& Protection) bill, 2020 – Better version of Contract Farming

Hi , guys like the previous farm bill, The Farmers (Empowerment and Protection) Agreement of Price Assurance and Farm Services bill, 2020 was introduced in Lok Sabha on 14th  September 2020 by Union Agriculture and Farmers’ welfare minister Shri. Narendra Singh Tomar .This bill is an extended version of contact farming. Aimed at providing protection and price assurance to farmers, traders under contract farming system. So in this blog I am going to explain about this new bill.

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Highlights:

*Contract farming concept 

*About New Bill: Concept, Need

*Provisions/Clause of new bill

*Benefits of new bill

*Difficulties/problems in contract farming 

The Contract Farming System :

Before going to the details of the actual details about the bill let’s know about the contract farming Contract farming is nothing but carrying out the agricultural production according to an agreement between a buyer and farmers, which establishes conditions for the production and marketing of farm produce. There will be pre-agreements like the quantity, quality to be maintained, timing of delivery and the price for the produce to be paid.

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Advantages for farmers:

*On time provision or supply of inputs and production services.

*Better and on time access to credit.

*Introduction of innovative and appropriate technologies in the production.

*Farmers will get guaranteed and fixed pricing structures and have access to reliable markets.

Disadvantages faced by the farmers:

* Possibility of greater risk

*Outdated technology adoption

*Malpractices and corruptions involved.

As we are focusing on farmers issue I discussed the advantages and disadvantages faced by the farmers. Sponsors/ Traders have different kind of advantage and dis advantages.

The Farmers (Empowerment and Protection) Agreement of price Assurance and farm services bill 2020:

According to the Government the basic aim of this bill was to provide for a national framework on farming agreements that protects and empowers farmers to engage with agri-business firms, processors, wholesalers, exporters or large retailers for farm services and sale of future farming produce at a mutually agreed remunerative price framework in a fair and transparent manner and for matters connected therewith or incidental thereto.

Need of the bill:

*If we look at history of Indian agriculture it was characterized by fragmentation due to small holdings and has certain weaknesses such as dependence on weather, uncertainties in production and unpredictable market. This makes agriculture risky and inefficient in respect of both input and output management.

* Apart from these problem there was need of higher productivity, cost effective production and efficient monetization of the produce to increase the farmers' income.

* Even the COVID-19 pandemic and resultant lock down also threw up challenges for agriculture and impacted the livelihood of farmers.  As agriculture sector has immense potential to make significant contribution to the economic growth, there was a need to find long term solutions for farmers and for agriculture as a whole.

Through subsistence or traditional farming system it was difficult to achieve the above mentioned targets. It was felt that promotion of agreements for farming produce may strengthen the process of monetization whose primary objective is to de-risk agriculture at various stages, enable scaling of investment by industry for production and processing of high value agriculture produces, give fillip to exports and help farmers to enjoy the additional benefits of operational efficiency. The contract farming is best option available right now.

Provisions/ Clauses under new bill:

* Farming agreement means a written agreement entered into between a farmer and a Sponsor, or a farmer, a Sponsor and any third party, prior to the production or rearing of any farming produce of a predetermined quality, in which the Sponsor agrees to purchase such  farming produce from the farmer and to provide farm services.   

*The minimum period of the farming agreement shall be for one crop season or one production cycle of livestock, as the case may be, and the maximum period shall be five years.

*The parties entering into a farming agreement may identify and require as a condition for the performance of such agreement compliance with mutually acceptable quality, grade and standards of a farming produce.

*The price to be paid for the purchase of a farming produce may be determined and mentioned in the farming agreement itself, the farming agreement relates to seed production, make payment of not less than two-third of agreed amount at the time of delivery and the remaining amount after due certification, but not later than thirty days of delivery.

*Sponsor prohibited from acquiring ownership rights or making permanent modifications on farmer’s land or premises.

*A farming agreement may be linked with insurance or credit instrument under any scheme of the Central Government or the State Government or any financial service provider to ensure risk mitigation and flow of credit to farmer or Sponsor or both.

*A State Government may notify a Registration Authority to provide for electronic registry for that State that provides facilitative framework for registration of farming agreements.

*If the farming agreement does not provide for conciliation process as required under sub-section (1) of section 13, or the parties to the farming agreement fail to settle their dispute under that section within a period of thirty days, then, any such party may approach the concerned Sub-Divisional Magistrate who shall be the Sub-Divisional Authority for deciding the disputes under farming agreements.

*There will be no action for recovery of any amount due in pursuance of an order passed under that section, shall be initiated against the agricultural land of the farmer.

Benefits of new bill:

1. This act will facilitates the written farming agreement to be entered into in respect of a farming produce.

2. Conditions for performance of farming agreement, including compliance with mutually acceptable quality, grade and standards of farming produce including the pricing of farming produce even the manner of delivery of farming produce;  

3. This new act  exempting the farming produce under a farming agreement from the application of a State Act regulating the sale and purchase of such farming produce and also from the provisions of the Essential Commodities Act, 1955 (10 of 1955) and the control orders made thereunder.

4.  The New act prohibiting the Sponsor from acquiring ownership rights or making permanent modification on farmers' land or premises.

5. The Sponsor to ensure timely acceptance of delivery and payment for such farming produce

6. This new act enable linkage of farming agreement with insurance or credit instrument to ensure risk mitigation and flow of credit to farmer or Sponsor or both.

7. Establishment of Registration Authority to provide for e-registry and for registration of farming agreements;

8. Conciliation and dispute settlement mechanism for settlement of disputes under the farming agreement.

Difficulties/ Problems:

Contract farming in India was an old practice. In fruits, Vegetables, Organic farming, Quality seed production and in commercial crop production the contract farming has been under practice but if we look  at the percentage and growth of contract farming it’s very poor the main reason is the faith, mutual understanding  between the farmers and trades. Majority of the farmers still not believe the industrial persons because of their bad experiences.
           On paper the act was very promising and looking strong but the proper implementation and execution of the act is challenge able. Government authorities, farmer producing organization and other agencies should encourage the farmers to adopt contract farming through awareness programme and other means by informing them about the benefits out of contract farming system. 

(Content source: www.pib.gov.in)