Hello Everyone,
We have discussed
1. Local Market
2. MSP (Minimum Support Price)
3. APMC (Agricultural Produce Market Committee)
Also, we have discussed all three new bills in detail and their pro/ cons.
1. Promotion and Facilitation Bill, 2020
2. Empowerment and Protection Bill, 2020
3. Essential Commodities Bill, 2020
The bill will allow farmers to sell their produce outside APMC ?mandis? to whoever and wherever they want. Anyone can buy their produce even at their farm gates. Though ?commission agents? of the ?mandis? and states could lose 'commissions' and 'mandi fees' respectively, farmers will get better prices through competition and cost-cutting on transportation.
The contract farming with private companies will, on the other hand, allow farmers to enter into a contract with private agri-business firms or large retailers on pre-agreed prices of their produce. This will help small and marginal farmers as the legislation will transfer the risk of market unpredictability from the farmer to the sponsor.
The Essential Commodities (Amendment) Bill, 2020, seeks to remove commodities like cereals, pulses, oilseeds, edible oils, onion and potatoes from the list of essential commodities. It means the legislation will do away with the imposition of stock-holding limits on such items except under extraordinary circumstances such as war and natural calamities. This provision will attract private sector direct investment into the agriculture sector.
The state governments of Punjab and Haryana will be affected most because of loss ?Mandi Tax?, a good source of revenue.
The issues and raised by the protesters include end of ?minimum support price? (MSP) regime in due course, irrelevance of state-controlled Agricultural Produce Market Committee (APMC) ?mandis?, risk of losing out land rights under contract farming rule, reduction in price of farm produce due to market domination by big/ private agri-businesses and exploitation of farmers by big contractors through contract farming provisions.
In current situation, an Indian farmer can sell his crop in 3 ways:-
1. Local Market
2. APMC Mandi
3. MSP
The first option is the "local market" in which the farmer sells his crops by going to the near by market of his village but it Only possible in small scale agriculture. Where's farmer owns and cultivates a small piece of land, but when it comes to large scale farming where grains are produced in a quintal, then the farmer is not able to send that much crop to the local market. In that case they require cold storage and infrastructure to store those crops which a common Indian farmer can't afford.
By the way, the government gives second option to the large scale farming i.e APMC mandi, APMC mandi which state government rules, in that they provide cold storage, infrastructure and takes care of everything. The farmer now has to reach the APMC mandi just by spending his transportation and have to sell their crops. When the farmer reaches the APMC market with the grain, then there are commission agents. Their work has to be seen from loading, unloading to subprocess, in a way they act like the representative of the farmer.
Then there is a crop auction which pays the most money the farmer sells all his grain to him. If the APMC mandi is to be understood in a simple way, then they just like the Amazon Flipkart and other ecommerce sites work the APMC mandi also works. The e-commerce site provide platform for the buyers and Sellers and take their commission same as APMC Mandi, just one thing is difference in both that there do not have transparency in APMC mandi, the rest Amazon and Flipkart have transparency.
Now the problem is that the agent who should getting 6% to perform the entire deal which is slightly different in every state, so we have taken on and average 6% (six percent). Let's assume A farmer sell his potato of ₹ 100. The farmer should get ₹ 94 and agent should get ₹ 6 but it is that if the agent buys potatoes from the farmer himself for Rs. 100 and sells it further for ₹ 150. So the farmer should get ₹ 141 in actual and the agent gets ₹ 9 should get but it is that the farmer gets ₹ 94, the farmer gets ₹ 56.
To prevent such scam, the government brought a third option, by bringing of MSP (Minimum Support Price). The MSP rate for crops were decided by government. Now, farmers will not sell crops at least if a farmer is getting a lower rate than MSP. So, he can go directly to the government and send his crops at MSP rate, but it is not for every one of the crops, there are twentythree essential crops on which the MSP is charged. In the MSP, farmers started facing problems that the people who used to do the government site of the MSP stopped giving more than what was auctioned, the farmers got around the MSP rate.
Even the local market shopkeepers used to say to the farmers that "if you have to sell at MSP rate then send to us, then you are going to spend so much money on transportation". Now, this minimum support price become maximum support price for farmers. Another problem was that the MSP rate remains same in the whole country, but the cost of farming is different in every state, it is all the current situation that the farmer is facing. Now, what changes will be made by the new farming bill 2020 that government have brought.
The 3 farmer bill 2020 are:-
1. Promotion and Facilitation Bill, 2020
2. Empowerment and Protection Bill, 2020
3. Essential Commodities Bill, 2020
So the first bill is "Promotion and Facilitation Bill". With the introduction of this bill, farmers doing large scale farming can sell their crop to any APMC mandi or private company of the country online or offline, it is not necessary that the farmers are selling in the APMC mandi of their area and the state government will not pay tax on it. So, why is it that the farmers (specially Punjab and Haryana) are protesting this bill ?
The first reason is that Punjab and Haryana are agriculture based states, whose economy and state fund depend on agriculture and the tax it receive agriculture. The state government will not be able to get any tax. The second readon is that when farmers will join the private company, APMC mandi will suffer from it and no mandi wants to run in the loss then it is believed that for four-five years, private companies will give very good rate to farmers and when farmers become fully dependent on it So APMC mandi will be dead and then this private companies will do their own arbitrary.
If it is to understand on the real world platform, then BSNL, Airtel and Jio are best example of it.
When Airtel came to the parallel of BSNL, people seemed to have found a better alternative and when BSNL was dead, Airtel started doing its own thing. The same way when Airtel and jio came in parallel then initially jio provided free internet and calling facilities and When the market took hold, Airtel went into loss then Jio started charging on the internet and call.
Now second bill is "Empowerment and Protection Bill". If the production is high in the farm, then the price is low and if the production is low then the price is high, now a farmer cannot produce all these things, due to which he has to bear the loss sometimes. If the farmer wants to avoid all these losses, he can sign a legal contract from any private company, in which the rate of the crop is already decided, the problem may be that if the company went into loss or closed before the harvest was completed. What will happen if the second problem comes, that the starting 4-5 years private sector will give good rate to the farmers and once the option of APMC mandi is over, then they will start doing their own arbitrariness.
Now third bill is "Essential Commodities Bill". This bill was brought to curb black money. No person can store any crops according to this bill. Now what is the need, the government has a essential list in which they add or remove crops according to needs of the situation. In March 2020, the hand sanitizer and Mask were added by the government, and in July 2020 they were removed. If any product is added to this list, then the whole production, supply and distribution are controlled by the government. In this new bill, all the grains have been excluded from the essential list and said that "they will be put again in the essential list only if there is a situation like war or natural disasters". According to the government, farmers will get the right rate for their crop from this bill. You must have noticed that from the day it is out of all the essential list, the price has suddenly increased, now what is the problem in this bill, do the farmers have the right rate is reaching or the consumer is getting the right rate, cross-checks everything.
Wheat rate in current MSP is quintal at ₹ 1925 meaning KG is ₹ 19.3 and if you look at any e-commerce website or your local market, then the price of flour is KG at round ₹ 40. Even a huge profit is being hidden.
No rocket science is needed to correct the condition of the farmers. A small project work is needed in which the farmer who is the owner of the land, whose crop is, should get maximum profit.
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