Reformist laws for trading in farm output are best enacted by states

News:  The Model Agriculture Produce and Livestock Marketing (Promotion and Facilitation) Act, 2017, or model APLM act is a better option compared to the central farm law.  It is also more comprehensive than the recently repealed farm laws.

A model APLM act for doing away with the APMC-controlled regime was drafted for states in 2017 by the Centre.

In December 2019, the 15th Finance Commission, in its interim report, incentivized states to enact legislation based on the 2017 template

The 2017 model is a very comprehensive and carefully-worded legal provision for protecting farmers’ interests.

How many states had already gone with the 2017 template by 2019?

The Union ministry of agriculture, at a conference of state agriculture ministers in July 2019, revealed that 22 states had provided freedom for farmers to sell their produce to private traders.

Further, Kerala and Manipur had never enacted an APMC law, and Bihar repealed its APMC law in 2005. That left, only three states of the present Indian total of 28 which did not give farmers the freedom to sell to private traders. (Haryana, Madhya Pradesh, and Tamil Nadu).

However, in the same July 2019 it was noted that, only four states have fully followed the 2017 template. So farmers are not completely free as per the 2017 model act. Thus, The issue remains struck in confusion.

Why the model act 2017 is said to be very comprehensive and effective?

The 2017 template has detailed procedures on rules: For instance, procedures for setting market fees and how the revenue should be used are provided. This leaves no room for modification by the states.

It is voluntary:  There was no compulsion on states to enact their own legislation based on the 2017 template. There are many successful instances of states having voluntarily followed a standard template on which to base their own legislation.  For instance, The Fiscal Responsibility and Budget Management (FRBM) acts, the model VAT law, etc.

Why 2017 model act is better than the recently repealed farm laws?

First, the central law of 2020 is much shorter than the 2017 model, because it does not go into the kind of painstaking detail as the 2017 template does in order to secure the rights of farmers.

Second, there are two significant issues in farm laws.

1. One was that it explicitly ruled out the levy of market fees. It is important because a lot of initial investment and maintenance are needed for agricultural market yards. If no market fees are levied, investment and maintenance have to be fully borne by either government or private traders.

2. The second was that the central law required all traders in farm produce, barring farmer organizations, to have a permanent account number (PAN) for income taxation. This requirement should have been in a finance bill rather than a farm bill.

Source: This post is based on the article “Reformist laws for trading in farm output are best enacted by states” published in Livemint on 7^th Jan 2022.