Can Cong States’ amended Acts help farmers?

The Congress ruled States’ plan to nullify or escape the two Central laws (trade area and contract farming) on agricultural markets have been executed with three States — Punjab, Chhattisgarh and Rajasthan — passing amendments to the Central Acts (Punjab and Rajasthan) or amending their APMC Act (Chhattisgarh) in their Assemblies recently.

Punjab sticks to wheat, paddy

Punjab took the lead with three amendment Bills but ended up mainly focussing on paddy and wheat prices by making MSP as the minimum purchase price for any buyer in any channel and penalising any violation of that, besides the State government protecting its own revenue.

Thus, farmers producing other crops like cotton or even maize for which there is an MSP provision cannot expect a protection under this Bill. This, when cotton and maize have been selling at below MSP in the State during the current season.

Even the contract farming Act amendment bars any agreement for wheat or paddy below the MSP announced by the Centre for that crop. But who expects any agency to undertake contract farming in these two crops in Punjab or anywhere in India? It is sad that the State government does not go beyond these two crops. The MSP is declared for 23 crops. This means that other crop farmers or those trying to diversify under contract farming would not have the MSP protection of the Bills.

Both the Bills make buying below MSP or forcing a seller for it an offence which shall be punishable with imprisonment for not less than three years and fine. But why would a buyer compel or exert pressure on seller farmer and how would that be established?

Chhattisgarh’s small attempt

The Chhattisgarh government has acquired the power to declare any place like cold storage warehouse, silos, e-trade platform, etc., as a deemed mandi , or set up a deemed market for regulation of notified agricultural produce including bought from other States in any market area.

It empowers the market committee/Board to order production of accounts of any buyer regarding purchase and sale of the notified agricultural produce from any person and enter and inspect their premises or vehicles and seize them to protect farmer-seller interest.

If records are found to be false or if information is refused or wilfully false information is given or stocks are more than that is recorded, a suit against such an entity can be filed by APMC and upon conviction, a punishment of maximum of three months or fine of maximum of ₹5,000 or both can be imposed.

These measures have been brought in with retrospective effect by amending the State APMC Act of 1972. But, it has not made MSP mandatory for any purchase unlike Punjab or Rajasthan. Thus, Chhattisgarh APMC amendments are very minor changes in the State Act and do not really affect the Central Acts as reportedly claimed by the State government itself.

Rajasthan’s marginal changes

Rajasthan has amended trade and commerce or APMC mandi bypass Act, 2020 to restore the status quo in terms of the domain of the state APMC Act as of before June 5, 2020.

However, the Rajasthan amendment, like Chhattisgarh, steers clear of the MSP issue and only makes the ‘harassment’ of the farmer in terms of the trader not accepting delivery of farm produce or not making payment as per agreement or within three days from date of receipt of delivery of goods whichever is earlier, by any buyer, a punishable offence with not less than three years and up to seven years of imprisonment or fine up to not less than ₹5 lakh or both.

The State has avoided making MSP the floor price for all buyers as very little of its farm produce across crops sells at MSP as Central procurement is very low unlike in Punjab. The State seems to have learnt its lesson from Punjab’s Acts.

But, like the Punjab’s punishable provision on forcing farmer to sell at below MSP, the Rajasthan provision of ‘harassment of the farmer’ would be very difficult to establish on the ground.

However, like the Punjab amendments, in the contract farming Act amendment Bill, the MSP provision has been made applicable across all MSP crops. Any harassment of the farmer here is also a punishable offence with same penalties as in trade and commerce amendment Act.

But in this Act harassment of the farmer is defined differently in terms of a sponsor compelling or exerting pressure on a farmer to enter into a sale under contract of agricultural produce in his possession at a price below the MSP (similar to Punjab), and a sponsor refusing to accept produce or take delivery of the goods under a farming agreement within a week from the date of intimation by the farmer.

Of course, this is a bad proposal per se as contract price should not be tied to any other price especially State declared prices. In both Punjab and Rajasthan, this can discourage contracting agencies.

The Rajasthan amendment also entitles the State government to enforce stock limits in respect of contract-farmed produce if there is a shortage or the prices go beyond 25 per cent of the maximum price prevailing within two years before the passing of the order. This is to undo the exemption given to contracting agencies under the central Act.

However, the Rajasthan Act has a bad provision about contract farming where it includes penalties of not less than ₹1,000 /bigha/day for the sponsor undertaking farming and not removing his manpower after the expiry of the agreement. This is an outright misperceived provision as a sponsor never cultivates a farmer’s field under contract farming arrangement. It is unfortunate that contract farming is confused with corporate farming which it is not.

Besides, both Punjab and Rajasthan amendments have created States’ right to levy cess/cesses on all notified agricultural produce in any market/channel and also brought back the power of civil court to the disputes and even APMCs (in Rajasthan).

In sum, Punjab’s Bills are bereft of any tangible benefits to the State’s farmers and do not do any service to the sustainability of its farm sector and farmers. The Rajasthan Bills try to protect farmer interests more comprehensively than Punjab or Chhattisgarh, but the amendments suffer from above mentioned lacunae which would make farmer interest protection ineffective on the ground, even if they stand legall scrutiny by the courts.

The writer is Professor, IIM Ahmedabad. The views expressed are personal.

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