3 Agricultural Ordinances

Government issued 3 ordinances on 5th June, 2020, which refer to Essential Commodities Act, and two legal frameworks for agricultural marketing and contract farming. This is a analysis.

1. Three Ordinances: TrishulEffect on
State Powers and Farmers
Dr. Narasimha Reddy Donthi
Public Policy Reviewer

2. Three Ordinances: 5 Three Ordinances: 5 Three Ordinances: 5 Three Ordinances: 5
ththth th
June, 2020 June, 2020 June, 2020 June, 2020
The Essential Commodities
(Amendment) Ordinance, 2020 The Farmers’ Produce Trade and The Farmers’ Produce Trade and
Commerce (Promotion and Facilitation)
Ordinance, 2020
Farmers (Empowerment and Protection)
Agreement on Price Assurance and Farm
Services Ordinance, 2020

3. The EC (Amendment) Ordinance, 2020 Objectives

Increasingagriculturecompetitiveness

Enhancefarmersincome

Liberaliseregulatorysystem

Protecting
consumers
interests

Protecting
consumers
interests
Provisions
Supplyoffoodstuffsregulatedonlyunder extraordinarycircumstances

Regulatoryorder doesn't applyif stock
limitiswithininstalledcapacityorexport
demand

4. Hoarding
Storage

5. Trade and Commerce Ordinance, 2020 Objectives

Farmersandtraderstoenjoyfreedom

Barrier-freetrade

Framework
for
electronic
trading

Framework
for
electronic
trading

Traders,Farmersproducerorganisationsor
cooperative

PANfortrader

Payment tofarmer same dayor within3
days

6. Trade and Commerce Ordinance, 2020

Any person can open/ establish electronic
tradingandtransactionplatform

Nomarket fee, cess or levyunder any APMC
or
any
State
law
APMC
or
any
State
law

Price informationandmarket intelligence
systembycentralgovt

SuspensionofplatformbyCentralgovt

7. Trade and Commerce Ordinance, 2020

DisputeSettlement

Settlement within 30 days by designated
authority

Sub-DivisionalAuthorityforDS,Collectoras Appellate
Authority
Appellate
Authority

Baronjurisdictionofcivilcourt

NottoapplyforStockExchangesandClearing
Corporations

Central government has powers togive
directions

8. e-NAM Trading -Commodities
CategoryNo. Food Grains/ Cereals25 Oil Seeds
13
Oil Seeds
13
Fruits29
Vegetables40
Spices14

9. Contract Farming Ordinance, 2020
National frameworkonfarming
agreements

Farmercanenterintoagreement

Termsandconditionsofsuchsupply,including time of supply, quality, grade standards, price
andothersuchmatters

Termsrelatedtosupplyoffarmservices

Minimumperiodof1cropseasonto5yrs
orasmutuallyagreed

10. Contract Farming Ordinance, 2020
Sponsor prohibited fromacquiring ownership
rights

Linked to credit or insurance scheme of the
government

Electronic
registration
of
agreements,
by
a

Electronic
registration
of
agreements,
by
a
State-appointedAuthority

NottoapplyforStockExchangesandClearing
Corporations

Central government has powers togive
directions

11. Contract Farming Ordinance, 2020
DisputeSettlement

Settlement within 30 days by designated
authority

No action for recovery of dues against farmers farmers

Sub-DivisionalAuthorityforDS,Collectoras
AppellateAuthority

Baronjurisdictionofcivilcourt

OverridingeffectonanyStatelaw

SharecroppersAct,inAPandTS?

12. Crops and Contracts
Sugarcane
•Contract
farming with
sugar factories
Potato
•Contract
farming with
PEPSICO India
Oil Palm
•Contract
farming with
processing units
sugar factories
•Pricing
•Delayed
Payments
PEPSICO India Holdings
•Pricing
•Violations
processing units
•Pricing
•Imports
•Delayed
Payments

13. TrishulEffect

Role and powers of State governments is
minimised, almost zero

State income becomes zero

APMCs role reduced

Impact on MSP, procurement and global trade

Impact on MSP, procurement and global trade

Facilitates investment by MNCs and foreign
investment in agriculture

Regulation of agricultural inputs becomes
‘centralised’

Enables growth of commodity monopolies

14. Constitution: source of power
T
empowers the Statesto enact
APMC Acts under some entries T
List II of Seventh Schedule
(State List),
T
Entry 14: ‘Agriculture …’,
T
Entry 26
: ‘Trade and
T
Central Government
T
List III of the Seventh
Schedule (Concurrent List)
T
Entry 33
which covers trade
and commerce and
production, supply and
distribution of foodstuffs,
T
Entry 26
: ‘Trade and
Commerce within the State
….’ T
Entry 28: ‘Markets and fairs’.
distribution of foodstuffs, including edible oilseeds and
oils raw cotton, raw jute etc.
T
Entry 42
in the Union List,
viz., ‘Interstate Trade and
Commerce’ also allows a role
for the union.

15. APMCs
T
2,477 principal regulated markets based on geograph y (the
APMCs)
T
4,843 sub-market yards regulated by the respective APMCs
T
27,924 rural periodical markets or haats(regulated and
unregulated)
T
APMC charges include Market Fee (1/2%,) VAT (5%),
T
APMC charges include Market Fee (1/2%,) VAT (5%), Driage(1%), RD Cess(5%), Comm. To society (2.5%,)
Admin. Charges (2.5%), Custody & Maintenance charge s+
Interest Charges (2.5%), Comm. To society (2.5%),
NirashritShulk(0.2%)
T
305 APMCs in Maharashtra are set to lose 30-40 perc ent
income (Rs.120-150 crores) from a annual turnover o f
Rs.48,000 crores

16. Issues: NAM vs. APMCs

Model APMC Act, 2003
Contract farming allowed

Direct sale allowed

Bihar in 2006 scrapped APMCs
Farmers have not benefitted

33 Recommendations of the State Ministers’ Committee on Agricultural Marketing Reforms
2013
Agricultural Marketing Reforms
2013

Reforms to Agriculture Markets

Promotion of Investment in Marketing Infrastructure Development

Rationalization of Market Fee/ Commission Charges

Contract Farming

Barrier Free Markets

Market Information System

Grading and Standardization

Other Recommendations

17. Institutional Impacts of Trishul–1/2
T
Institutions aimed at regulating the market conduct, structure
(a) Regulation of primary agricultural produce mark ets; and
(b) Legal and regulatory provisions relating to sto rage, transportation,
packaging, processing, buying/selling and quality s pecifications. The
specific institutions in this category are: State A gricultural Marketing Board specific institutions in this category are: State A gricultural Marketing Board (SAMB), State Department of Agricultural Marketing (SDAM),
Agricultural Produce Marketing Committee (APMC), Di rectorate of
Marketing and Inspection (DMI), Health Department, Civil Supplies
Departments of the Central and State Governments, e tc.
T
Institutions providing Physical infrastructure
:SAMB,
APMC, Public Works Department (PWD), Food Corporati on of India (FCI),
Central and State Warehousing Corporations and coop eratives.

18. Institutional Impacts of Trishul–2/2
T
Institutions involved in administered prices
: FCI,
National Agricultural Marketing Federation (NAFED),
Cotton Corporation of India (CCI), Jute Corporation of
India (JCI), Commission for Agricultural Costs and
Prices (CACP), State agencies, and Fair Price Shops
(FPS). (FPS).
T
Institutions entering the markets directly
: some of the
above plus commission agents, producers or consumer
cooperatives, FPOs and processors.
T
Institutions influencing foreign trade
: Agricultural and
Processed Food Export Development Agency
(APEDA), and some Commodity Boards

19. THANK YOU
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