Sunday Column - Point of Law

The Farmer’s Produce Trade and Commerce Law

The Farmer’s Produce Trade and Commerce Law

Dr. Bharat

 Continuing with the introduction to the three new farm laws passed recently, this week the Farmer’s Produce Trade and Commerce (Promotion and Facilitation) Act, 2020 is being taken up. Read on to understand the provisions and likely benefits of this new law.

 Farmer’s Produce Trade and Commerce (Promotion and Facilitation) Act, 2020 aims to provide

  • Creation of an ecosystem where the farmers and traders enjoy the freedom of choice relating to sale and purchase of farmer’s produce which facilitates remunerative prices through competitive alternative trading channels
  • To promote efficient, transparent and barrier-free inter-State and intra-State trade and commerce of farmer’s produce outside the physical premises of markets or deemed markets notified under various State agricultural produce market legislations
  • To provide a facilitative framework for electronic trading and for connected/incidental matters.

 Attributes of Farmer’s Produce Trade and Commerce Law

 The fundamental attributes of the law are as under:

 Freedom for sale of farmer’s produce: Eliminating intermediaries, it empowers farmers to freely sell their produce (including poultry, livestock, dairy intended for human consumption besides cattle fodder and raw cotton) to wholesalers, retailers, end-users, value-adders, processors, manufacturers, exporters, etc. (who have Permanent Account Number (PAN) or Government notified document) as an alternative to the Agricultural Produce Market Committee (APMC) and offer competitive prices over the Minimum Support Price (MSP).

Barrier-free inter-state and intra-state trade: Laying the foundation of ‘One Nation – One Agriculture Market’, it establishes a barrier-free inter-state and intra-state independent agricultural trade conducted in any place of production, collection, and aggregation of farmer’s produce including farm gates, factory premises, warehouses, silos, and cold storages (except APMCs) with access to all traders, thus promoting competition and thereby remunerative price to farmers.

Neither registration nor fee/cost: The farmers need not to register anywhere for selling their produce in the trade area. And no commission, market fee or cess or levy, by whatever name called, under any State law will be charged from any farmer or trader and even when it is materialized through electronic trading and transaction platform. Further, farmers will not have to carry their produce to distant markets, reducing transportation cost besides minimizing post-harvest losses.

Fair trade practices on e-platform: The network of electronic devices and internet applications with compliance to guidelines for ‘fair trade practices’ (such as mode of trading, fees, technical parameters, logistics arrangements, quality assessment, timely payment, etc.) disseminated in local language builds confidence and ensure a seamless transparent trade with time-saving. In public interest, the Government may even prescribe a system of electronic registration for traders with modalities of transaction and rules.

Payment: Traders who transact with farmers are required to make payments on the same day or within maximum three working days, if procedurally so required, subject to the condition that the receipt for delivery mentioning the due payment amount shall be given to the farmer on the same day. The Union Government may also prescribe the procedure of payment besides developing ‘Price Information and Market Dissemination System’ in the farmer’s interest.

Time-bound dispute settlement: In this, farmers and traders can settle their disputes within 30 days through a Conciliation Board (having equal representatives of both parties), under the auspices of Sub-Divisional Magistrate (SDM), in a cordial environment, which will be binding. If the dispute remains unresolved by the Board after 30 days, then SDM will resolve within 30 days from the receipt of application. Aggrieved party has a right to appeal to Collector/Additional Collector for disposal in 30 days.  

Penalty: Any person, doing trade on e-platform with farmer, who contravenes the provisions of the law shall be liable to pay a penalty which shall not be less than fifty thousand rupees but which may extend up to ten lakh rupees, and where the contravention is a continuing one, further penalty not exceeding ten thousand rupees for each day after the first day during which the contravention continues. Thus securing farmer’s interest.


 Illusion to Illumination

 Market integration without structural changes was a pipedream in agricultural sector. The National Commission on Agriculture, 1976 as well as the National Commission for Farmers, 2006 (under the stewardship of Prof. M.S. Swaminathan) had categorically emphasized that higher output alone will not provide higher income to farmers unless it is well marketed. Agricultural economist and NITI Aayog member Dr. Ramesh Chand opined that liberalising agricultural trade will lay the foundation for ensuring golden harvest for farmers and contribute to doubling their income.

 This thrust on connecting farmers to markets nowhere destabilises APMC or MSP procurement; the existing system will continue to function as before, without any change. The marketing ecosystem created through this law targets to provide market-driven competitive price, better than MSP. The definition of ‘farmer’ includes only Farmer Producer Organisations (FPOs), which are registered under any law or promoted/sponsored by any Government, apart from individual farmers.

 Agriculture not only meets the food security requirements of the country, but also provides raw material to the agro-industry which culminates into job creation and earning of foreign exchange through export. This law confers an integrated approach to endorse ‘faster and more inclusive growth’ by shortening the supply-chain and unlocking the vastly regulated agricultural markets so as to improve the lot of farmers and the efficiency of farmer’s produce markets. 

Dr Bharat, Asst Prof,
University Institute of Legal Studies
Panjab University, Chandigarh

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