Agri Business

Rules for payment, dispute resolution for trade outside mandi notified

Shishir Sinha New Delhi | Updated on July 21, 2020

Traders will have to pay farmers within three working days for produce purchased, norms relaxed for FPOs

Amidst protests by farmers in Punjab and Haryana, the Centre has notified rules for Farmers’ Produce Trade and Commerce (Promotion & Facilitation) Ordinance 2020 prescribing time limit for payment to farmers and dispute settlement mechanism.

These rules have come into effect from July 20.

“A trader who transacts with a farmer in farmers’ produce in the trade area shall make payment for traded scheduled farmers’ produce on the same day or within maximum three working days,” the rules said. Trade area means any area or location, place of production, collection and aggregation including farm gates, factory premises, warehouses, silos, cold storages or places where trade of farm produce may be undertaken.

However, in case of the buyer being farmer producer organisation (FPO) or agricultural cooperative society there will be a different mechanism.

Value addition

When such a body aggregates or buys farmers’ produce for primary value addition, packaging, labelling processing or export and thereafter sells at a better price, it will make payment to the farmer within 14 days from the date of aggregation or purchase.

The payment can be delayed provided the farmer and the FPO and the co-operative body agree in anticipation of more remunerative price. However, here too payment needs to be made within 21 days.

If an FPO or a co-operative aggregates or buys the farmers’ produce and sells such produce in raw form , it will be required to make the payment immediately after the sale, but not later than three days from the date of aggregation or purchase.

As a part of reforms in the agricultural sector for raising the income of the farmers under Aatmanirbhar Bharat Abhiyan, the President promulgated the ordinance on June 5.

According to the government, this ordinance aims to create an ecosystem where the farmers and traders enjoy the freedom of choice relating to sale and purchase of farm produce which facilitates remunerative prices through competitive alternative trading channels.

It intends to promote efficient, transparent and barrier-free inter–State and intra-State trade and commerce of farmers’ produce outside the physical premises of markets or deemed markets notified under various State agricultural produce market legislations. Besides, the Ordinance provides a facilitative framework for electronic trading.

Dispute resolution

To settle disputes arising between farmers and traders on issues such as quality, quantity, weighing, payment, packaging, rejection, etc, the rules prescribe a three-layered dispute resolution mechanism with specific time limits.

The first layer is for mutually acceptable solution through conciliation. It can be done through a conciliation board. Here the applicant needs to file application within 21 days of the dispute. Then within 14 days from the receipt of application, a conciliation board will be appointed by the Sub-Divisional Magistrate (SDM) of the area where transaction has taken place. A deadline of 30 days has been given for conciliation from the date of the constitution of the board.

The second layer will come into effect when conciliation board fails to resolve the dispute and then the matter can be referred to SDM within 14 days which can decide the issue in next 30 days.

The third layer is for appeal and here the adjudicating officer will be the Collector or the Additional Collector. The appeal can be filed within 30 days and here the authority will be required to pass an order within next 30 days. The appellate authority’s order will be final and binding on all parties.

Published on July 21, 2020

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