Indian Farm Bill 2020
By: Sachin Pathak
Tags: Agriculture, Indian Agriculture, Crops, Farm Bill

And What it holds for Indian Agriculture and Farmers in particular?

Photo by wilsan u on Unsplash

Indian agriculture is endowed with diversified agro-climatic zones and different soil types that support the production of a wide range of crops. This also makes India the world’s second-largest food producer and the number one producer of many food crops. Before delving into the Farm bill 2020, let us understand some key facts, challenges, and priority areas of Indian agriculture.

1.The total food grain and horticulture crop production of India was 295 Mn tonnes & 320 Mn tonnes respectively in FY20. India produced 208 Mn lit Milk during the same period.

2. Indian agriculture provides livelihood support to more than 60% of the population and contributes around 16% to GDP and 10% of total export earnings.

3. Average land holding of 86% of Indian farmers is less than 2 Hectares which results in subsistence agriculture in most parts of India.

4. Out of the total cultivated land, 37% have an irrigation facility, and the rest of the cultivated land is dependent on monsoon.

5. India is the largest producer of bananas, Mango, Milk, Pulses, and Spices and second-largest in Wheat, Rice, Cotton, Sugarcane, and egg production.

Key Challenges and Priorities -

1.Crop Productivity — Despite the significant increase in average production in the last three decades, still India ranks low in productivity. Precision farming, quality inputs, and judicious use of resources are key areas to focus on to increase productivity.

2. Mechanization, Water Resource Management & Infrastructure — Low landholding is key challenge in the adoption of mechanization, however, FPOs/FPCs and cooperatives farming can add significant value by increasing mechanization. As only one-third of cultivated land has an irrigation facility, efficient water resource management practices can play an important role. More investment is needed in irrigation and warehousing to build better infrastructure facilities that reduce post-harvest crop losses.

3. Credit availability and market linkage — Most of the farmers are still dependent on Arthiyas & local lenders to get timely credit and sell their crops to them at low prices. Though the Government of India has facilitated credit to farmers through the priority sector lending route, the benefit is still not reaching the farmers due to several reasons. Indian farmers also need better market access, market information, and direct market linkage to realize the better prices of their produce.

What is Farm Bill 2020 -

The Indian Farm reform 2020 comprises the following three agriculture bills passed by the parliament of India in Sep 2020.

Farmer Producer Trade & Commerce ( Promotion & facilitation) Act — This bill focuses on following key reforms

a) Expand the scope of trade area of farmers’ produce from selected area (APMC) to any place of production, collection, aggregation.

b) Allow electronic trading and e-commerce of scheduled farmers produce

c) Prohibit state government from levying any market fee, cess, or levy on farmers, traders, and electronic trading platform for the trade of farmer produce conducted in an outside trade area ‘APMC’.

2. Farmers ( Empowerment and Protection) Agreement on Price Assistance and Farm Service Act — This bill focuses on below mention reforms

a) Provide a legal framework for farmers to enter into prearrange contracts with buyers including mention of pricing

b) Defines a dispute resolution mechanism

3. Essential Commodities (Amendment ) Act —

a) Remove foodstuff such as cereals, pulses, potato, onion, edible oils from the list of essential commodities, removing stock holding limit on such items except under extraordinary circumstances.

b) Requires that imposition of any stock limit on agriculture produce be based on price rise.

Takeaway of Farm Bills 2020 -

Farmers will have an option to sell their produce either in APMC market or outside to any buyers. These reforms break the cartel of middle man/ Arthiyas in APMC market to keep prices artificially low and at the same time allow the middle man to get into a contract with the farmer to purchase farmer produce outside mandi at pre-agreed price. The farmer needs not pay any fee or cess, and will be able to realize better prices of their produce. Under contract farming, which is now available to the farmers across India, farmers will get assured prices for their harvest. As Government has targeted to create more than 10,000 FPC/FPOs, this will help the small farmer to bargain better deals to purchase inputs and to sell their produce. Reform will attract more private investment which will further strengthen agriculture infrastructure. Contract farming will act as a strong risk mitigant against market-linked price fluctuation and facilitate more credit facilities from the financial institutions. Crop insurance is anyway covering crop losses due to natural calamities therefore both farmers and financial institutions are protected. Reduction in intermediaries in the value chain will increase the export competitiveness of agricultural products.

Green Revolution in 1960 has played an important role in agriculture by improving food production and made India self-sufficient. Farm Bill 2020 will prove to be another agriculture revolution that will bring Indian agriculture to a very strong position globally.