Positive Disruptor – the 3 agri acts

By Mrgya V

The three agricultural acts can change the face of Indian agriculture but there are few cautionary steps.

Recently , the government of India passed 3 acts named-The farmers` produce trade and commerce (promotion and facilitation) Act, The farmers ( empowerment and protection) Agreement on price assurance and farm service Act, The essential commodities Amendment Act. 

The first one, The farmers` produce trade and commerce (promotion and facilitation) Act, is supposed to break the monopoly of government regulated mandis as it allows farmers to sell their produce directly to private players. This move is actually transforming in nature , as it gives more authority to the farmers to choose the  buyer for their produce. However, the critics point out that nearly 90% of the farmers in India are small and marginal land holders. This number of small and marginal farmers is continuously increasing year after year. They mostly consume whatever they grow. They  lack proper awareness and knowledge about market prices across the mad also . Even when they have freedom to sell their produce outside the government regulated mandis , there are less chances for them getting fair prices. The situation will become worse in the years of bumper crop when farmers will completely be at the mercy of private players. All this can be avoided if, along with the above Act,  either government sets a floor price for agri produce or farmers on their own decide not to sell their produce at loss, of course, when provided with better storage facilities. 

The second act, The farmers ( empowerment and protection) Agreement on price assurance and farm service Act, is to provide a legal framework for farmers to enter into contract with companies and to produce for them. As a company mostly tries to buy a large chunk of raw material in one go they prefer to get into contract with farmers who have large areas under cultivation, thus sending the small and marginal farmers out of this race. The opposition is of the view that as there are 10% farmers India who own 50% of cultivable land of India, so they look like probable beneficiaries of this act. This leads to 90% of the farmers not benefitting from the Act. This will create class distinction among farmers also. These large farmers with the help of private companies can exploit small farmers and may reduce them to mere daily wage labourers. The private players can exploit farmers for their own benefit. This situation can be avoided if we promote cooperative farming, leasing laws are more in practice and ownership of land is secured. This act with these complementary steps can change the structure of Indian agriculture.

The third act, the essential commodities Amendment Act, allows agri-businesses to stock food articles and remove government ability to impose restrictions arbitrarily. The critics are of the view that through this act the companies and a few large farmers will be able to control the market of essential products. They can buy on season crops at a minimal price and can export or store the same so that they can make heavy profit out of this. To counter this, the government procurement through FCI will need to be transparent and efficient. By providing farmers with storage infrastructure at a lower price, the government can avoid the situation of a market controlled by a few for their own profit.

Thus the above acts have the capability to reform the Indian agriculture sector structurally. It needs a few complementary steps with it. 

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