Farm Bill 2020

Farm Bill 2020 and Circular Economy

The Farm Laws jointly refers to an amendment to the Essential Commodities Act, 1955,  The Farmers’ Produce Trade and Commerce (Promotion and Facilitation) Act, 2020, The Farmers (Empowerment and Protection) Agreement on Price Assurance and Farm Services Act, 2020 were recently passed by the Indian Parliament. While there are several elements to the Act and what it seeks to do for the farm produce sector in the country, I will try to briefly examine the Act from the perspective of whether it may contribute to greater circularity in our food system

Background

The agrarian economy is of critical importance to our country since more than 70% of the Indian population is employed in the sector and of course, the market outcomes in the sector impact our most essential need - food. Additionally, the output of farm and agrarian production is uncertain as it is reliant on multiple factors that are outside the producers’ control.  These factors combined, agriculture and allied activities are highly regulated in the country in line with the intent to protect farmers and agrarian professions as well as the interests of consumers.

The key changes relevant to our discussion that these laws together bring about may be summed up as below:-

(i) The amendment [1] to the Essential Commodities Act, 1955 removes the limit on stocking of farm and other agrarian produce unless it is specifically imposed by the government.

(ii) The Farmers’ Produce Trade and Commerce (Promotion and Facilitation) Act, 2020 [2], allows farmers to sell their harvest outside the notified Agricultural Produce Market Committee (APMC) mandis without paying any State taxes or fees. Farmers can choose to sell to any buyer, no requirement of going through the APMC, and no restriction on inter-state sale of agrarian produce.

(iii)The Farmers (Empowerment and Protection) Agreement on Price Assurance and Farm Services Act, 2020 [3], facilitates farming contracts and direct marketing of agrarian produce through sponsorship agreements where a buyer can agree to procure specified produce or seeds from a farmer/farmers prior to cropping. 

The Farm Laws create an entirely new category of actors in our food system, the farm sponsors, while these sponsors will control a significant part of our food generation process, there isn’t a mechanism to hold them accountable for the ‘how’ of the farm products that they commission

Things to think about 

The Farm Laws create an entirely new category of actors in our food system, the farm sponsors, while these sponsors will control a significant part of our food generation process, there isn’t a mechanism to hold them accountable for the ‘how’ of the farm products that they commission. The water, the soil, and other resources that this production will impact is not held as their property, yet the produce will be grown for them. How will liability for any adverse effect be attributed or in fact how are private players to ‘pay’ for the cost of consumption of these resources (land fertility, groundwater et. al? Further, we must ask ourselves, what will be the motivation for the sponsors to invest in the farmer and improved farm practices, considering that it’s a purely contractual relationship which can end at their convenience. While APMCs may not have enabled MSP collection by farmers, in the absence of regulated pricing, sponsors may not offer a fair remuneration to farmers.  Such critical pieces of the puzzle should be addressed before sponsorship agreements come to be.

That, while this law creates opportunities, stricter safeguards may still be required to ensure that agrarian producers remain fully aware of their options and can seek redressal against any form of exploitation. In this light, it is relevant to note that the contravention of the provisions of The Farmers’ Produce Trade and Commerce (Promotion and Facilitation) Act, 2020 only comes with a fine of up to INR 25,000. A stricter deterrent will perhaps be required to prevent malfeasance. In the case of sponsorship agreements, as such the recourse available to the farmer is only what is available within the contract, there can be no penal action against the private party under the laws as they exist. Furthermore, the law doesn’t even mandate a written contract, so in several cases, farmers will be acting on faith and the hope that the sponsor will honor their end of the bargain.

Conclusion

What stands out is that the Farm Acts are enabling legislation that creates several opportunities, without setting a laudable trajectory for these opportunities.  As a policy, aside from the intent of creating more agrarian produce marketing channels, no other direction comes through. It is disappointing that the goals of sustainable innovation, prevention of wastage or the promotion of better agricultural practices have not been stated anywhere in the objects clause or in any other part of the Acts as responsibilities of the actors involved in the industry. By ignoring to do so, it makes a critical mistake of remaining indifferent to a core factor that adds to the woes of the farmer in our country - climate change.  It might be legislation that brings about far-reaching reforms, however, an explicit spelling out of the responsibility on private players to promote sustainability and circularity would have truly made this legislation fit for the times we are living in.