Government intervention in Agricultural industry and marketing, New farm laws 2020- boon or bane, impact on future farming
1. Seminar Incharge
Dr. Mirza I.A.B.
Assistant Professor
Dept. of Agronomy
COA, V.N.M.K.V. Parbhani.
Major Advisor
Dr. W. N. Narkhede
Chief Scientist
AICRP for Dryland Agriculture
VNMKV, Parbhani.
Vasantrao Naik Marathwada Krishi Vidyapeeth
Department of Agronomy
College of Agriculture, Parbhani
Presented by
Yallanagouda Madagoudra
Reg. no.:2019A/04P
PhD. Scholar
Dept. of Agronomy
2. 1 • Introduction
2 • Government intervention in agriculture
3 • Agricultural schemes
4 • APMC, MSP and e-NAM
5 • Agricultural Reforms 2020
5 • Conclusion
CONTENTS
3. INTRODUCTION
• Indian Agriculture – Low and stagnant
productivity after Independence.
• India was a food scarce country.
• Import food grains under PL-480 scheme.
• Government intervention in agriculture
began immediately after formation of first
govt. and gained its phase in 1960’s.
• Green revolution- To revamp and
incentivise the agriculture sector by using
HYV seeds and technological inputs with
the ultimate aim of increasing food grain
production.
• Increasing production alone is not
sufficient, the government needs to ensure
that increase in production benefits the
poor/consumer.
4. • Several measures were undertaken to achieve the twin objective
of ensuring food security and raising food production.
• The key measures were:
Price assurance to producers using the system of Minimum
Support Prices.
Maintaining Buffer Stocks.
Distribution of food grains at a reasonable price through a
network of fair price shop under Public Distribution System.
• The government has been carrying out procurement and storage
of food grains in India since 1960’s through mainly two
institutions:
The Commission for Agriculture Cost and Prices (CACP).
The Food Corporation of India (FCI)
5. Share in national
income
Largest
employing sector
Contribution to
capital formation
Food surplus to
expanding
population
Raw material to
industries
Importance in
international
trade
Importance of
Agriculture in
Indian Economy
6. REASONS FOR GOVERNMENT INTERVENTION IN
AGRICULTURE INDUSTRY AND MARKETING
• To provide food security
• To protect small scale farmers
• To provide price assurance and income support to
farmers
• To minimize dependence on imports
• To expand agricultural exports
• To respond to a food problem/farm problem
• To curb market powers of imperfect competitors
• To protect consumer against severe price hikes.
7. MODES OF GOVERNMENT INTERVENTION
SCHEMES/
POLICIES
SUBSIDY
MARKET
REGULATION
• To support & promote
agriculture
• Protect farmers
• Facilitate farming
• Credit support
• To adopt new technologies
• Inputs
• Credit
• Power
• Infrastructure
To provide
• Different marketing platforms
• Best price to farmer
• Reasonable price to consumer
8. Schemes and Policies
• A systematic plan for a course of
action.
• Launched by government
(state/central)
• To address the social and
economic welfare of the farmers
of this nation.
• To promote, facilitate and
enhance agricultural production.
9. Rashtriya Krishi Vikas Yojana
• Launched in August 2007.
• Renamed as Remunerative Approach
for Agriculture and Allied sector
Rejuvenation (RAFTAAR)
• State Plan Scheme with Additional
Central Assistance.
• Gives autonomy to the state government
to draw up plans for increased public
investment in Agriculture.
• To significantly increase the productivity
of Agriculture and its allied sectors (4%
per annum)
• To maximize the returns of farmers in
agriculture and its allied sectors.
10. Pradhan Mantri Fasal Bima Yojana (PMFBY)
• Launched on 18 February 2016.
• To provide insurance coverage and financial support to the farmers under crop failure as a result
of natural calamities, pests & diseases.
• Farmer has to pay maximum premium of 2% for Kharif, 1.5% for Rabi & oilseed crops and 5%
for annual commercial or horticultural crops
• The remaining part is equally shared by the Central & State Government.
• Main goal-
• stabilize the income of farmers to ensure their continuance in farming.
• To encourage farmers to adopt innovative and modern agricultural practices.
Kisan Credit Card (KCC) scheme
• Introduced in 1998-99.
• Prepared by NABARD on the recommendation of R. V. Gupta
committee.
• Provides farmers with timely access to credit.
• Provide short-term credit to the farmers. to purchase
equipment & for their other expenses as well.
• All cooperative, regional rural banks as well as commercial
banks offer KCC.
11. Pradhan Mantri Krishi Sinchai Yojana (PMKSY)
• launched on 1 July 2015
• motto ‘Har Khet Ko Paani’
Major objectives
• Expand cultivable area under irrigation.
• Improve On-farm water use efficiency
• Enhance the adoption of being precise in irrigation and
other water saving technologies (Per Drop More Crop)
Soil Health Card Scheme
• launched in the year 2015.
• To issue Soil Health Cards to farmers of India.
• The Soil Health Cards gives information on nutrient status of
their soil along with recommendation on appropriate dosage of
nutrients to be applied for improving soil health and its fertility.
• 12 parameters, namely N,P,K (Macro-nutrients); S (Secondary-
nutrient); Zn, Fe, Cu, Mn, Bo (Micro - nutrients); and pH, EC,
OC (Chemical parameters).
12. Paramparagat Krishi Vikas Yojana (PKVY)
• launched in 2015.
• Aim- to promote organic cultivation in India.
• To improve soil health as well as organic matter content and to boost the net income of the farmer so
as to realize premium prices.
• An area of 5 lakh acre is targeted to be covered through 10,000 clusters of 50 acre each, from 2015-
16 to 2017-18.
13. PM-Kisan Scheme
• Pradhan Mantri Kisan Samman Nidhi Yojana
• 120 million small and marginal farmers of India with less than two
hectares of landholding
• will get up to Rs. 6,000 per year as a minimum income support.
• PM-Kisan scheme has become operational since 1st December
2018.
Pradhan Mantri Kisan Maandhan yojana
• Pension scheme for the small & marginal farmers of India.
• About 5 crore marginalised farmers will get a minimum pension
of ₹ 3000/month on attaining the age of 60.
• Those who fall in the age group of 18 - 40 years will be eligible
to apply for the scheme.
• Under this scheme, the farmers will be required to make a
monthly contribution of Rs 55 to 200, depending on their age
of entry, in the Pension Fund till they reach the retirement date,
60 years.
• The Government will make an equal contribution of the same
amount in the pension fund for the cultivators.
14. PM-Kusum scheme
• Pradhan Mantri Kisan Urja Suraksha Evam
Utthaan Mahabhiyaan (PM-Kusum)
• Launched on February 19, 2019.
• With a total Central financial support of Rs. 34,422
crore, PM Kusum scheme aims to add solar and other
renewable capacity of 25,750 MW by 2022.
• Under the scheme,
• Ministry of New and Renewable Energy has
targeted to install 10,000 MW of decentralised
grid connected renewable power plants of
individual plant size up to 2 MW,
• Installation of 20 lakh solar powered
agricultural pumps of individual pump
capacity up to 7.5 HP.
• Solarisation of 15 lakh grid-connected irrigation
pumps of individual capacity up to 7.5 HP.
15. Agricultural Price Policy
is a tool to influence the price of agricultural product.
Objectives of Price Policy:-
1. To provide incentives to the producers for crop production
2. To provide price stability in the agricultural product
3. To provide the consumer food grains at reasonable price
4. To maintain favourable agricultural Terms of Trade (ToT)
5. To increase the production and exports of agricultural product.
6. To maintain balance between food and non-food crops
7. To promote adoption of latest technologies of production
22. HISTORY
• Agriculture requires capital like all
other industries.
• Since a farmer's capital is locked up in
his land and stocks he is obliged to
borrow money for stimulating his
production.
• Main suppliers of money to farmers
are money lenders , traders, who
charge high rate of interest.
• All India Rural Credit Survey
Committee (1954) showed that the
share of money lenders stood as high
as 68.6% of total rural credit.
23. Agricultural Produce Market Committee (APMC)
• Marketing Board established by the
state governments.
• The introduction of APMC was to limit
the occurrence of Distress Sale by the
farmers under the pressure and
exploitation of creditors and other
intermediaries.
• All the food produce must be brought
to the market and sales are made
through auction.
• The market place i.e., Mandi is set up
in various places within the states.
24. • These markets geographically
divide the state (Trade areas).
• Marketing in trade area only.
• Licenses are issued to the traders to
operate within a market.
• The mall owners, wholesale
traders, retail traders are not given
permission to purchase the produce
from the farmers directly.
• At APMC farmers get worthy
prices and timely payments for
their produce.
Maharashtra State Agricultural
Marketing Board
(MSAMB) runs 295 APMCs
in Maharashtra, under
the APMC Act
There are about 2477 principal
regulated markets based on
geography (the APMCs)
and 4843 sub-market yards
regulated by the respective
APMCs in India.
26. Negatives
1. Cartelization
2. High degree of intermediation:
Farmers’ share in consumer
prices range between 10-40%
(Ashok Dalwai committee)
3. High licence fees + APMC cess
and taxes: High commission is
levied on both farmers and
buyers create artificial Inflation.
Final price to the consumer is
high but benefit does not reach
the farmer.
4. Only 6% sell at MSP
27. Model APMC Act, 2003
Some of the salient features of
the APMC Model Act 2003 include:
• Facilitating contract farming model.
• Special market for perishables
• Allowing farmers and private
persons to set up their own market.
• Relaxation of licensing norms.
• Single point levy
• Provision of e-trading
• APMC revenue to be used for
improving market infrastructure.
28. Minimum Support Price (MSP)
• The MSP system was started in 1966-
67 for wheat and was expanded further
to include other essential food crops.
• In 1966, wheat’s MSP was Rs. 54 per
quintal. Currently, it is at Rs. 1,975 per
quintal.
• Announced at the beginning of the
sowing season.
• The MSP is fixed twice a year (kharif
and rabi seasons)
• Recommended by Commission for
Agricultural Costs and Prices
(CACP).
29. • MSP is price fixed by Government of
India to protect farmers- against excessive
fall in price during bumper production
years.
• The minimum support prices are a
guarantee price for their produce from
the Government.
• The major objectives are to support the
farmers from distress sales and to procure
food grains for public distribution.
• In case the market price for the
commodity falls below the announced
minimum price due to bumper production
and glut in the market, government
agencies purchase the entire quantity
offered by the farmers at the announced
minimum price.
30. WHO?
Commission for
Agricultural Costs
And Prices (CACP)
(recommends)
Cabinet Committee
On Economic
Affairs (CCEA)
Chaired by the
Prime Minister
DECIDES
1. Agricultural
Produce Market
Committee
(APMC)
2. Food
Corporation Of
India (FCI)
OPERATES
31. WHICH CROPS?
7 Cereals (Paddy, Wheat, Maize,
Sorghum, Pearl Millet, Barley And
Ragi)
5 Pulses (Gram, Tur, Moong,
Urad, Lentil)
7 Oilseeds (Groundnut, Soyabean,
Sesamum, Niger, Rapeseed-
mustard, Sunflower, Safflower)
4 Commercial Crops (Copra,
Sugarcane, Cotton And Raw Jute).
YES
Fruit crops
Vegetables
Dairy products
Dairy products
Fisheries
poultry
NO
22+1
32. Fixing of MSP
A2
• Expenditure of
the farmer
A2 + FL
• Expenditure +
Family labour
C2
• A2 + FL + Rent
on land and
interest on
capital invested
• National farmers Commission (2004) was constituted under the
chairmanship of Professor M.S. Swaminathan to address the
nationwide calamity of farmers suicides in India.
• The commission submitted the report suggesting that farmers get
justice only when they get MSP of 1.5 times C2.
• At present farmers get 1.5 times A2 + FL as MSP.
Cost concepts that CACP considers while recommending MSPs of
23 crops.
33. NAM/e-NAM
• National Agriculture Market (NAM) is a pan-India electronic
trading portal.
• It networks the existing APMC mandis to create a unified
national market for agricultural commodities.
• On 14th April 2016, NAM was launched for trading in 21
markets in 8 States on pilot basis.
• The NAM Portal provides a single window service for all
APMC related information and services.
• This includes commodity arrivals & prices, buy & sell trade
offers, provision to respond to trade offers.
• an online market reduces transaction costs and information
asymmetry.
34. eNAM
• promotes real time price
discovery, based on actual
demand and supply
• promotes transparency in
auction process
• access to a nationwide market
for the farmer
• prices commensurate with
quality of his produce
• online payment and availability
of better quality produce and at
more reasonable prices to the
consumer SFAC, 2019
35. Steps for sales through eNAM
• To register Vehicle in which crop / sale
product is brought in Mandi
• Farmer Quick Registration
Step 1@ Entry Gate
Step 2 @ Weighment
Step 3 @
Quality Assaying
Step 4 @ e-Auction
Step 5 @ Exit Gate
• Seller has to get his vehicle or product
weighment done
• Seller has to get quality check of his crops or
product brought into Mandi
• Seller has to participate in e-Auction to sell his
products/crops
• Seller has to lead to exit gate after settlement
• Seller after trade settlement has to exit gate with
post trade slip
• If product / crop not sold, seller has to exit
mandi gate with goods return slip
36.
37. ADVANTAGES
• Quality based trading
• Better prices
• Nationwide market for the farmer
• Quick payment-online payment
• Reduced intermediation
• Better monitoring and regulation of
traders and commission agents.
• Single point levy of market fees, i.e.
on the first wholesale purchase from
the farmer.
• Availability of the activities of each
APMC on the website directly.
39. Model Agricultural Produce and Livestock
Marketing act, 2017 (Model APLM act, 2017)
• Develop state/UT level unified market
• Setting up of wholesale markets in private sector
• Allow direct marketing- direct purchase from agriculturists at farm gates
by processors/exporters/bulk purchasers/organised retailers or ultimate
consumers.
• Declare warehouses/cold storages as deemed markets.
• Unified single trading licence
• Single point levy of market fee across the state/UT.
• Trading through competitive e-platform.
• Provision of deregulation of fruits and vegetables.
Most of the
states
neglected
the act
40. Status of Marketing Reforms
Complete
adoption
PVT: Private Market; DM: Direct Marketing; CF: Contract Farming; FM: Farmers Market;
ET: e-Trading; SLV: Single Point Levy; SLN: Single License
(as on 08/12/2019)
Source:
DMI
41. Need of Policy Reforms in Agricultural
Marketing
• Empower Producers with knowledge,
information & capability to undertake
market-driven production.
• Provide Multiple Choice and
competitive Marketing Channels to
farmers.
• Attract Large Scale Investments
needed for building Post-Harvest
infrastructure.
43. Introduction
• The Indian Farm Reforms 2020
comprises of three agriculture
bills passed by Indian
Parliament in September 2020.
• The bills collectively seek to
provide farmers with
• multiple marketing channels
• provide a legal framework
for farmers to enter into pre-
arranged contracts
44. WHY THESE BILLS ARE PASSED?
• The Standard Committee on
Agriculture found that laws that
regulated the Indian Agriculture were
not being fairly implemented.
• In 2017 the Centre had released model
farming acts; however it was noted that
in many states these reforms were not
implemented.
• A Committee of 7 chief ministers was
set up in July 2019 to discuss
implementation.
• Accordingly , the Centre promulgated
three ordinances on 5th of June 2020.
45. AGRICULTURAL REFORMS 2020
THE FARMER’S PRODUCE TRADE AND
COMMERCE (PROMOTION AND
FACILITATION) ACT, 2020
THE FARMERS (EMPOWERMENT AND
PROTECTION) AGREEMENT ON PRICE
ASSURANCE AND FARM SERVICES ACT, 2020
THE ESSENTIAL COMMODITIES
(AMENDMENT) ACT, 2020
46. MAIN PROVISIONS
1. Trade areas outside APMC
(a) Farm gates
(b) Factory premises
(c) Warehouses
(d) Cold storages
(e) Export
THE FARMER’S PRODUCE TRADE AND
COMMERCE (PROMOTION AND FACILITATION)
ACT, 2020
47. 2. Intra-state And Inter-state market
• Other APMC
• Other state
• One nation one market
3. Online trading
1. Any person
2. Have PAN card
3. To operate an electronic trading and transaction platform
4. Facilitating inter-State or intra-State trade
5. Payment on the same day of delivery
Central Government in the public interest may
(a) specify the procedure, norms, manner of registration
(b) specify the code of conduct, technical parameters (logistics
arrangements and quality assessment)
48. 4. No market fee or cess or levy
• on any farmer or trader or
electronic trading and transaction
platform for trade and commerce
5. The Central Government may,
through any Central Government
Organization,
• develop Price Information and
Market Intelligence System for
farmers’ produce
• The Central Government may ask to
provide information regarding such
transactions as may be prescribed.
49. 6. Dispute settlement mechanism
Conciliation Board
2+1 or 4+1
No Yes
Memorandum
of settlement
Sub-Divisional
Magistrate
Collector/Add’l.
Collector
Settle the
dispute within
30 days
Appeal
Settle the dispute
within 30 days and
his order is final
30 Days
30 Days
30 Days
50. 7. Breach of Act
An officer of the State/central
Government or officer of
Directorate of Marketing and
Inspection
Electronic trading and
transaction platform
Breach of the procedures,
norms, and code of conduct
Pass an order for
the recovery of the
amount payable to
the farmers and
traders
Impose a penalty
Suspend/cancellation
of right to operate
51. 8. Appeal against cancellation of right to operate
An officer not below the
rank of Joint Secretary to
the Government of India
Pass the
order
60 days from the date of such order
Appeal
To be nominated
by the Central
Government for
this purpose
Appellant shall be heard
90 days
52. BOON OR BANE ?
BOON
• Freedom of choice to farmers to
sell their produce
• Better price discovery
• Transparency
• Efficiency
• Online trading
• Barrier free intra and inter state
trade (one nation one market)
BANE
• APMC’s might end
• No judicial intervention
• No strict regulations (PAN card)-
ply by operators
54. THE FARMERS (EMPOWERMENT AND
PROTECTION) AGREEMENT ON PRICE
ASSURANCE AND FARM SERVICES ACT, 2020
MAIN PROVISIONS
1. Agreement-(farmer-Sponsor) farm produce
farm service
2. Period- One crop season/one production cycle
of livestock to maximum of five years.
Contract
farming
55. 3. Model contracts- to facilitate farmers Govt. may
issue necessary guidelines along with model contracts.
4. Mutually agreed quality, grade and standards to
be mentioned in the contract.
Formulated by
5. Price fixing mechanism
Guaranteed
price
Guaranteed price +
bonus/premium
Provided that the method of determining such price
shall be annexed with the agreement.
Agency of central/state Govt.
Agency authorised by central/state Govt.
56. 6. No farming agreement shall be entered for the
purpose of
7. An aggregator or farm service provider may
become a party to the farming agreement
-the role and services of such aggregator or farm
service provider shall be explicitly mentioned in such
farming agreement.
Any transfer, including
sale, lease and mortgage
of the land or premises
of the farmer
Raising any permanent
structure or making any
modification on the land or
premises of the farmer
57. 8. Registration of contracts
• State government may notify a
registration authority to electronic
registry for that state.
• The constitution, composition, powers
and functions of the Registration
Authority and the procedure for
registration shall be such as may be
prescribed by the State Government.
9. Force majeure (clause)
• Drought, flood/crop failure due to
natural calamities.
• No order for recovery of amount shall
be passed against the farmer.
58. 10. Dispute settlement mechanism
Conciliation Board
2+1 or 4+1
No Yes
Memorandum
of settlement
Sub-Divisional
Magistrate
Collector/Add’l.
Collector
Settle the
dispute within
30 days
Appeal
Settle the dispute
within 30 days and
his order is final
30 Days
30 Days
30 Days
60. Boon
• Like every sector contract
trading
• Good price
• No impact of price
fluctuation
• Protection under the Force
majeure clause
Bane
• No judicial intervention
• Poor/weak regulations
• Model contract should be
given.
BOON OR BANE?
62. The Essential Commodities (Amendment) Act, 2020
• Principle Act – The Essential
Commodities Act, 1955
• Used by the Government to regulate
the production, supply, and
distribution of commodities that it
declares ‘essential’
• To make them available to consumers
at fair prices.
• The government can also fix
the minimum support price (MSP) of
any packaged product that it declares
an “essential commodity”.
63. • Essential commodities- contains
seven commodities
1. Drugs
2. fertilizers, whether inorganic, organic
or mixed
3. Foodstuffs including edible oils
4. Hank yarn made wholly from cotton
5. Petroleum and petroleum products
6. Raw jute and jute textiles
7. Seeds of food-crops and seeds of
fruits and vegetables, seeds of cattle
fodder, jute seed, cotton seed.
64. • The Centre can include new commodities as and when the need arises,
and take them off the list once the situation improves.
• Anybody trading or dealing in the commodity is prevented from
stockpiling it beyond a certain quantity.
• On 14 March 2020, the Union Government brought masks and hand-
sanitizers under the act to make sure that these products (key for
preventing the spread of COVID-19) are available to people at the right
price and in the right quality during the COVID-19 pandemic in India.
• As of 1 July 2020, however, the Government has removed masks and
hand-sanitizers from its Essential Commodity List.
65. The Amendment
• The foodstuffs have been removed from the
Essential commodities list.
• The supply of certain foodstuffs —
including cereals, pulses, oilseeds, edible
oils, potato — will be regulated only under
extraordinary circumstances.
• Stocking of such foodstuff under such
condition is barred.
• Criminal proceeding against breach of act.
67. BOON OR BANE?
BOON
• More investment in cold
storage, processing and
export
• Remove fear of deregulation
• Raise in farmers income
• Freedom to produce, hold,
move, distribute and supply.
• Harness economies of scale
BANE
• Artificial demand
• Manipulation of rates
68. Impact of amendment
• Attract private investment in the value chain of
commodities removed from the list of essentials,
such as cereals, pulses, oilseeds, edible oils, onions
and potatoes.
• The purpose of the Act was originally to protect the
interests of consumers by checking illegal trade
practices such as hoarding, it has now become a
hurdle for investment in the agriculture sector in
general, and in post-harvesting activities in
particular.
• Investing in cold chains and storage facilities for
perishable items
69. IMPACT OF 3 ACTS ON FUTURE AGRICULTURE
• Freedom of choice of sale and purchase of Agri-produce.
• One nation one market
• Online marketing
• Higher economic returns to farmers
• Free to make contracts and transfer risk to businessmen
in deals made over a crop even before yield is made or
met.
• Change in cropping pattern
• Free to store and handle farm produce
• High investment in cold storages and food processing
• Post harvest value addition
71. WHY PUNJAB AND HARYANA ?
• Green Revolution-Punjab, Haryana and parts of west UP.
• Farmers of these region became rich
Of PB & HR
Rice- 88%
Wheat- 70%
Sold at MSP
All India
Rice 35%
Wheat 62%
Coarse cereals 50%
AP
TS
OD
UP
UP
MP
Rice
Wheat
44%
23%
• Almost agricultural economy depends on MSP
• Fear of loosing MSP
72. THE PROTEST
Farmers demand
• Take back all the three acts
• MSP legal right
• Conventional procurement
should continue
• Widrawal of cases against
leaders of farmer unions and
release them from jail.
Government’s say
• Ready to talk back
• MSP will continue
• Assure that the procurement
will continue
73. CONCLUSION
• Government intervention is necessary and it plays an
important role in promoting and stabilising agricultural
industry and marketing
• Farm laws are beneficial and should continue.
• Govt. need to educate farmers
• Essential amendments are to be made
• Govt. should assure MSP
• APMC’s should continue
• Strict regulations
• Judicial intervention
• Farmers should accept the acts
• Govt. should not step back.
74. References
• Programs and schemes. Department of Agriculture, cooperation and farmer’s
welfare.
• Doubling farmers income by 2022. Ashok Dalwai committee report.
• APMC and MSP. Department of Agriculture, cooperation and farmer’s
welfare.
• National Agricultural Market. Department of Agriculture, cooperation and
farmer’s welfare.
• The farmer’s produce trade and commerce (Promotion and Facilitation) act,
2020. The Gazette of India, The Government of India Press, Minto road,
New Delhi.
• The farmers (empowerment and protection) agreement on price assurance
and farm services act, 2020. The Gazette of India, The Government of India
Press, Minto road, New Delhi.
• The Essential Commodities (Amendment) Act, 2020. The Gazette of India,
The Government of India Press, Minto road, New Delhi.