Most farmer-trader disputes may not go to the SDM level: Sanjay Agarwal

The ordinance empowers the central government to issue guidelines where such written agreements in local language shall be provided as well | Sanjay Agarwal, Agriculture Secretary
The Centre promulgated two ordinances on freeing inter-state trade in agricultural commodities and contract farming. In an interview to Business Standard, agriculture secretary Sanjay Agarwal explains some of the nuances of the legislations and its criticisms. Edited Excerpts

In the ordinances on freeing inter-state trade and contract farming, a lot of people are questioning the need for making the Sub Divisional Magistrate (SDM), the prime adjudicating authority as it could give him unlimited power. In addition, it is being said that it makes the process complicated.

In both the ordinances, there are stringent provisions of recovery and penalty on the traders if they are at a fault. Therefore, I believe that most of the disputes will be settled during the conciliation stage itself and might not even go the SDM level. Moreover, even today the SDM and Collector are the first resort for the farmers for their grievances. It is for this reason that we have entrusted them to settle disputes under the ordinances, rather than creating new agencies.

The ordinance on trade also does not mention Farmer Producer Organisations (FPOs) as buyers, which some experts believe is flawed as they do buy and aggregate. Why is it so?

The definition of persons includes companies or co-operative societies. The FPO is either a company, or a co-operative society depending on the act under which it is registered and thus FPO is a subset of the body corporates and included in the definition of a person. Thus, it can also be the trader for the purpose of the ordinance.

Why has the FPO been included in the definition of a farmer in the trade ordinance?

This is because the trade ordinance provides for the dispute resolution of farmers and traders and does not deal with disputes between a trader and another trader.

States like Punjab are complaining of revenue loss. Why can't a tax be levied on out of mandi transactions that could be shared with the states to compensate for their loss?

The tax, cess or levy, under State market regulation Act will continue to be levied in physical market places. Such fees are imposed in lieu of the service provided as transactions in the trade area do not entail any provision of service and therefore, no fees or cess is justified. I believe ensuring higher income for the farmers is the priority and the focus of all state governments as well.

On the farming agreement act, some people are asking why wasn’t it made mandatory to have all agriculture agreements in the written form so that no ambiguity remained? Why has the government kept it open-ended?

The ordinance empowers the central government to issue guidelines where such written agreements in local language shall be provided as well. It has been clearly specified in the ordinance that farming agreements need to be in writing. There is no ambiguity in that.

On the one hand, it is believed that mandis do not lead to proper price discovery, but then in a place where you ensure guaranteed price for volatile commodities, the act refers to APMC rates? What is the reasoning behind this?

In the farming agreements where the market price determination has to be benchmarked, APMC yard price is only the only available benchmark. In addition, the acts empower the government to develop a price information and market intelligence system for farmers.

Is there something on what happens when the contract is cancelled or what happens when the quality of the produce after harvest is not found up to the mark. Who bears the loss in that case? What happens when the delivery is late or delayed?

In case of the sponsor (someone who has entered into contract farming arrangement with the farmer) not accepting delivery or not making the payment in time, the recovery can be made against him for the due amount, together with the imposition of the penalty of upto 150 per cent of the due amount.

What happens to goods that move from one state to another under the new regime. Will they be taxed at the borders or anywhere else, say destination states?

In the National Trade Area without state boundaries, no market fee, cess, or levy, by whatever name called, under state acts or any other state law, shall be levied on any farmer, trader, or electronic trading. Therefore, there shall be no such mandi fee, cess or levy under state acts for the intra-state or interstate movement of specified produce.

Don't you think that the law could give rise to lot of disputes between farmers, companies and traders?

Both the ordinances are simple facilitative ordinances with a focus on conciliation as the primary mode of dispute resolution.

There is no room for the proliferation of disputes in such a legal framework for empowering the farmers and the protection of their interests.

Does the law make any provision that the order passed by the SDM will not be challenged in a court? If yes, won’t it be problematic?

The ordinances provides for appeal at the level of collector or nominated additional collector.

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