Farm Products Trade and Trade Law: The Tribune India

Dr Bharat

Continuing the introduction of the three new agricultural laws adopted recently, the Agricultural Trade and Commerce (Promotion and Facilitation) Law of 2020 is adopted this week. Read on to understand the provisions and likely benefits of this new law.

The Agricultural Trade and Commerce (Promotion and Facilitation) Act 2020 aims to provide

  • Creation of an ecosystem where farmers and traders enjoy the freedom of choice regarding the sale and purchase of farmers’ products which facilitates remunerative prices through competitive alternative trade channels
  • Promote efficient, transparent and barrier-free inter-state and intra-state trade and commerce of farmers’ products outside the physical premises of markets or markets deemed to be notified under various national laws on agricultural product markets
  • Provide a framework facilitating e-commerce and related / ancillary issues.

Attributes of the Farm Products Trade and Commerce Act

The fundamental attributes of the law are:

Freedom to sell farm products: By eliminating middlemen, it allows farmers to freely sell their products (including poultry, livestock, dairy products for human consumption in addition to fodder for livestock and raw cotton) to wholesalers, retailers, end users , processors, processors, manufacturers, exporters, etc. (which have a Permanent Account Number (PAN) or government notified document) as an alternative to the Agricultural Commodity Market Committee (APMC) and offer competitive pricing against the Minimum Support Price (MSP).

Inter-state and intra-state trade without barriers: Laying the groundwork for “One Nation – One Agricultural Market”, it establishes barrier-free interstate and intrastate independent agricultural trade conducted in any place of production, collection and aggregation of farmers’ products, including including farm doors, factory premises, warehouses, silos and cold rooms (except APMC) with access to all traders, thus promoting competition and therefore remunerative prices for farmers.

No registration or fees / cost: Farmers do not need to register anywhere to sell their products in the trading area. And no commission, market charge, tax or levy, whatever its name, under any law of any state, will be charged to a farmer or trader and even when materialized through ‘an electronic trading and transaction platform. In addition, farmers will not have to transport their produce to distant markets, reducing transport costs in addition to minimizing post-harvest losses.

Fair business practices on e-platform: The network of electronic devices and Internet applications that comply with the guidelines for “fair business practices” (such as the mode of negotiation, fees, technical parameters, logistical arrangements, quality assessment, payment in time, etc.) broadcast in the local language builds trust and ensures seamless, transparent commerce with time savings. In the public interest, the Government can even prescribe an electronic registration system for traders with transaction terms and rules.

Payment: Traders who deal with farmers are required to make payments on the same day or within a maximum of three working days, if the procedure so requires, provided that the delivery receipt stating the amount of payment due is given to the farmer on the same day. . The Union government can also prescribe the payment procedure in addition to developing a “price information and market dissemination system” for the benefit of the farmer.

Time-limited dispute resolution: In this, farmers and traders can settle their disputes within 30 days through a Conciliation Board (comprising equal representatives of both parties), under the auspices of the Sub-Divisional Magistrate (SDM), in an environment cordial, which will be binding. If the dispute is still not resolved by the Commission after 30 days, then SDM will be resolved within 30 days of receipt of the request. The injured party has the right to appeal to the additional collector / collector for disposal within 30 days.

Sadness: Anyone doing business on the electronic platform with a farmer, who contravenes the provisions of the law will be liable to a fine which shall not be less than fifty thousand rupees but which may be up to ten rupees lakh, and when the contravention is a continuous penalty, an additional penalty not exceeding ten thousand rupees for each day after the first day on which the contravention continues. Thus securing the interest of farmers.


From illusion to enlightenment

Market integration without structural changes was a pipe dream in the agricultural sector. The National Agriculture Commission, 1976 as well as the National Farmers Commission, 2006 (under the leadership of Prof. MS Swaminathan) categorically emphasized that higher production alone will not provide higher incomes to farmers unless that it is well marketed. Agricultural economist and NITI member Aayog, Dr Ramesh Chand, said agricultural trade liberalization would lay the groundwork for a golden harvest for farmers and help double their incomes.

This push to connect farmers to markets nowhere destabilizes the supply of the APMC or the MSP; the existing system will continue to operate as before, without any changes. The marketing ecosystem created by this law aims to provide competitive, market-driven pricing better than MSP. The definition of “farmer” includes only agricultural producer organizations (OPAs), which are registered under a law or sponsored / sponsored by a government, with the exception of individual farmers.

Agriculture not only meets the food security requirements of the country, but also provides raw materials for agribusiness, which results in job creation and obtaining foreign exchange through export. This law provides an integrated approach to support “faster and more inclusive growth” by shortening the supply chain and unlocking largely regulated agricultural markets in order to improve the plight of farmers and the efficiency of agricultural commodity markets.

Dr Bharat, assistant professor,
University Institute of Legal Studies
Panjab University, Chandigarh


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