Farmers (Empowerment and Protection) Agreement on Price Assurance and Farm Services Bill, 2020

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Introduced: Lok Sabha

Passed: Lok Sabha

Passed: Rajya Sabha

Present status: Received assent of the President on 24th Sept 2020 & converted to Act. But recently the government has repealed the Act.

Farmers (Empowerment and Protection) Agreement on Price Assurance and Farm Services Bill, 2020 is aimed to provide a legal contract for farmers to enter into written contracts with companies and produce for them.

Key Features of Farmers (Empowerment and Protection) Agreement on Price Assurance and Farm Services Bill, 2020:

  • Farming agreement: It provides for a farming agreement between a farmers and buyers (processors, wholesalers, aggregators, wholesalers, large retailers, exporters etc.) before the production or rearing of any farm produce.
  • Pricing of farming produce: The agreement should mention the following:
    • The price of farming produce
    • For prices subjected to variation, a guaranteed price for the produce and a clear reference for any additional amount above the guaranteed price
    • process of price determination
  • Dispute Settlement: A farming agreement must provide for a conciliation board as well as a conciliation process for settlement of disputes.
  • Protection to farmers: Farmers have been provided adequate protection. Sale, lease or mortgage of farmers’ land is totally prohibited and farmers’ land is also protected against any recovery.

Issues with Farmers (Empowerment and Protection) Agreement on Price Assurance and Farm Services Bill, 2020:

  • No mechanism for price fixation: The bill provides protection to farmers against price exploitation, but does not prescribe the mechanism for price fixation. There are concerns that the free hand given to the private sector could lead to corpotirization of agriculture and farmer exploitation.
  • Unorganised nature of the farm sector: Given the unorganised nature of the farm sector and farmers’ lack of resources for a legal battle with private corporate entities, there are concerns that formal contractual obligations will eventually be detrimental for poor farmers in the country.
  • Lack of assurance about MSP: The bill doesn’t provide any assurance about Minimum Support Price (MSP) in the contract-farming. Critics have opined that there will be no declaration of MSP for all crops, determined by Swaminathan formula of C2 costs plus 50 per cent.
  • Fear of intermediaries: Though the bill seeks to eliminate middlemen from the supply chain, the critics have raised concerns that middlemen will operate in the form of sponsors or farm service provider for contract-farming.
  • Deprivation of farmers from their land: The legislation provides for “farming agreements” “with insurance or credit instrument”. This will entail credit linkage with mortgaging of farmer’s land. There are concerns that in case the contract suffers a financial loss, a farmer might have to pay debt through their land.
  • Subjecting food security to world markets: There are concerns that MNC food giants and their Indian collaborators will integrate Indian agricultural production with world markets. This will reduce the freedom of farmers and undermine food security.
  • Threat to India’s food and political sovereignty: There are concerns that companies will promote banned and dangerous GM seeds, terminator seed technology. This will erode India’s seed sovereignty and threaten food and political sovereignty.
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