Agriculture Ordinances, 2020: Highlights and Analysis

Agricultural Markets in India

• APMCs (Agriculture Produce Marketing Committee) were set up to ensure fair trade between buyers and sellers for effective price discovery of farmers' produce.
• APMCs can regulate trade, levy market fees, and provide necessary infrastructure within their markets to facilitate trade.

Issues with APMCs

• Most APMCs have a limited number of traders operating, leading to cartelization and reducing competition.
• Undue deductions in the form of commission charges and market fees.
• Restrictive in promoting multiple channels of marketing and competition in the system.

Reforms Suggested

• The central government released model APMC and contract farming Acts in 2017-18 to allow restriction-free trade and promote competition.
• The Standing Committee on Agriculture (2018-19) recommended that the central government constitute a Committee of Agriculture Ministers of all states to arrive at a consensus and design a legal framework for agricultural marketing.

Ordinances 2020

• Three Ordinances were promulgated: Farmers' Produce Trade and Commerce (Promotion and Facilitation) Ordinance, Farmers (Empowerment and Protection) Agreement on Price Assurance and Farm Services Ordinance, and Essential Commodities (Amendment) Ordinance.
• The Ordinances aim to facilitate barrier-free trade, define a framework for contract farming, and impose stock limits on agricultural produce only if there is a sharp increase in retail prices.

Key Issues and Analysis

• The Ordinances provide buyers the freedom to buy farmers' produce outside APMC markets without licenses or fees.
• The Contract Farming Ordinance provides a framework for buyers and farmers to enter into contracts guaranteeing minimum prices and assured supply.
• The Essential Commodities (Amendment) Ordinance amends the Essential Commodities Act to impose stock limits only when retail prices increase sharply.

Concerns and Recommendations

• Complete deregulation of markets may not attract private investment and may lead to lack of marketing infrastructure.
• There is a need for an appropriate legal and institutional structure with developmental regulation to ensure orderly functioning of markets.
• The Standing Committee on Agriculture (2018-19) recommended creating marketing infrastructure in states without APMC markets.

Gramin Agriculture Markets

• The Standing Committee noted that availability of a transparent, easily accessible, and efficient marketing platform is a pre-requisite to ensure remunerative prices for farmers.
• Most farmers lack access to government procurement facilities and APMC markets.
• Gramin Haats can emerge as a viable alternative for agricultural marketing if provided with adequate infrastructure facilities.
• The central government has proposed development of basic infrastructure in Gramin Haats through the National Rural Employment Guarantee Scheme and of marketing infrastructure through the Agri-Market Infrastructure Fund.

This quiz covers the key issues and analysis of the Agriculture Ordinances, 2020, which replaces the Essential Commodities (Amendment) Ordinance, 2020. It focuses on the regulation of agricultural markets in India and the role of APMC laws.