Central law on the freedom of agricultural trade: unlikely path of ordinance

However, a final decision will be taken by Prime Minister Narendra Modi as it is a politically sensitive issue, the source added.

By Prabhudatta Mishra

The Center is unlikely to enact an ordinance to bring in new legislation to remove agricultural trade barriers as it does not want to move forward without involving the states. He may choose to table a bill in Parliament in this regard, at the appropriate time, according to an official source.

However, a final decision will be taken by Prime Minister Narendra Modi as it is a politically sensitive issue, the source added. This means that if the monsoon parliamentary session is postponed due to the Covid-19 pandemic, the proposed new legislation could be delayed for a considerable period of time, compromising its usefulness in addressing the immediate distress of the farming community. The legislative route, even under normal circumstances, could take some time to reach the stage of presidential assent and the entry into force of the new law.

The central bill aims to improve farmers’ access to the markets of their choice, bypassing the APMC’s organized mandis. The proposed reform, while aimed at liberalizing trade between states, will effectively allow for the smooth flow of agricultural products not only across state borders but also within states, experts believe. The idea is to let anyone licensed under the central law have the freedom to buy and sell agricultural products anywhere in the country. On the other hand, proposed amendments in the Essential Commodities Act 1955 removing stock limitation restrictions along the value chain, including with food processors, and facilitating exports are said to have been finalized by the ministry. of food and are currently under discussion at the summit. level. The plan is, of course, to bring in an order to effect the changes in EC law.

“Such a new central law has been devised for the first time, and it is a great reform of agricultural marketing. All stakeholders should be consulted for which sufficient time should be given. The priority now is to prepare large outlines and get feedback,” the source said. The Ministry of Justice has already given its approval in principle to make such a central act which it says complies with constitutional provisions.

As part of the reforms under EC law, it is proposed to deregulate agricultural food products, including cereals, edible oils, oilseeds, pulses, onions and potatoes, and the “limit of draconian stock’ must be imposed in very exceptional circumstances such as national calamities such as famine when the rise in prices exceeds certain limits. The stock limit will also not apply to food processors and exporters, the government had said.

Entry 42 of the Union List grants the Center the authority to make laws relating to “interstate commerce and commerce”. But there was a problem as to whether a central law could also have the power to enforce intrastate agricultural trade. Experts have stated that entry 26 of the state list speaks of “intra-state trade and commerce subject to the provisions of entry 33 of list III” (concurrent list). Thus, the Center also has overriding powers to enact intrastate commerce law, the source said.

Finance Minister Nirmala Sitharaman announced on May 15 that a central law would be enacted for interstate free movement of agricultural products from the farmer’s field to anywhere without going through a mandi. She had said that in no other sector had a producer ever been told who they would be selling to. Yet the practice of asking traders and others to buy only from mandis, not directly from farmers, has been in place for years, only to be partially relaxed by many states after the lockdown. Ironically, all parties swear by farmers to protect their interests.

“The central law proposed to allow farmers to sell to anyone outside the APMC yards will lead to greater competition among buyers, lower mandi fees, an arhatiya commission and other measures imposed by many many state governments in APMC markets,” said Infosys Full Professor Ashok Gulati. for agriculture at ICRIER, written in FE on May 19. “APMC markets have become monopsonistic, with high intermediation costs. This law will give farmers more choices and help them get better prices. Thus, farmers’ incomes are expected to improve,” he said.

According to the Dalwai Committee on Doubling Farmers’ Incomes, the average monthly income of a farming household in the 2012-13 crop year (July-June) was as low as Rs 6,426, against their monthly consumption expenditure averages of 6,223 rupees, while as much as 22.5% of farmers live below the poverty line. The annual income of agricultural households at the All India level is estimated at Rs 96,703 at current prices in 2015-16 and the Center aims to double this by 2022-23.

The committee had suggested that the Center promote a national market for agricultural products through the provision of interstate trade licensing, grading, standardization and quality certification. “Allow farmers the freedom to sell their produce to buyers and where and when they choose, to whom and where they get better prices” was one of many other recommendations made by the committee on structural reforms marketing of agricultural products.

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