Why Rajasthan Farm Act amendments may lack the teeth to help farmers

Topics farmers | rajasthan | Punjab

Sukhpal Singh, Professor, IIM, Ahmedabad.
The Congress-ruled states’ plan to nullify the three central laws on agricultural markets and provide for alternatives of their own for protection of famer interest, especially on prices for their produce has been executed with three states of Punjab, Chhattisgarh and Rajasthan passing the amendments to the central Acts in their assemblies. Punjab took the lead, 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. Chhattisgarh has acquired the power for the state government to declare or set up  any place as deemed mandi, including private wholesale markets for regulation of notified agricultural produce and empowers the market committee or the Board to order production of accounts of any buyer regarding purchase and sale of the notified agricultural produce  from any person and inspect godowns and vehicles and seize them. But, it has not made MSP mandatory for any purchase unlike Punjab or Rajasthan.    

Trade and commerce Act amendments

Rajasthan has amended The Farmers’ Produce Trade and Commerce (promotion and facilitation) Act, 2020 to restore what it calls ‘the safeguards for the farmers of the state’ as under the state’s APMC Act. It brings back the status quo in terms of the domain of the state APMC Act as it was before June 5, 2020. However, unlike Punjab’s MSP provision for two crops, the Rajasthan amendment, like Chhattisgarh, steers clear of the MSP issue and only makes the ‘harassment’ of the farmer by any buyer as punishable offence with not less than three years and up to seven years of imprisonment or fine upto not less than Rs five lakh or both. The harassment of the farmer is defined as ‘where the trader does not accept the delivery of the farm produce agreed upon or having accepted the delivery does not make the payment to the farmer in accordance with the terms of the agreement or within three days from the date of receipt of delivery of good whichever is earlier’. For this offence, all the directors or partners of the company would be guilty if they were serving the company at the time of commitment of such offence. 

But, like the Punjab provision of punishment for compelling or exerting pressure on the farmer to sell the produce at below MSP, the Rajasthan provision of ‘harassment of the farmer’ would be very difficult to establish on the ground. Also, can the state government afford to buy at MSP if the private players refuse to offer such a price and move to other places, given that central procurement in the state is not very high, unlike Punjab? 

Contract Farming Act amendments

However, like the Punjab amendments, in the contract farming Act amendment Bill, the MSP provision has been brought in which is applicable across all MSP crops. It is stated  ‘provided that no farming agreement for the sale or purchase of a crop shall be valid unless the price paid for such agricultural produce is equal to  or greater than the prevailing MSP as announced by the central government for that crop. This is better than Punjab’s amendment as it covers 23 crops, unlike the two (paddy and wheat) by the Punjab amendment. Any harassment of the farmer here is a punishable offence with not less than three years and upto seven years of imprisonment or fine of not less than Rs. five lakh or both. But, in this Act, harassment of the farmer is defined differently as ‘ if a person firm or company compels or exerts pressure on a farmer or any person associated with agriculture or agro produce to enter into a sale under contract of agricultural produce in his possession at a price below the MSP, and if a person, firm or company refuses 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 the produce being ready for delivery’.  This is an important provision to protect farmer interest in contract farming which Punjab failed to provide in its amendments but here too, this provision fails to recognise that horticultural produce which is highly perishable can’t wait for one week after intimation. This kind of poor provision shows that if all heads (central and state) were put together to frame such important legislations, the country would have designed a much better set of legislations. 

Of course, this is a bad proposal per se as contract price can’t be tied to any other price especially state declared prices as contract prices should be discovered by the two parties. This is so as contracting is also about benefits other than price which could be yield, cost or quality of crop. Haryana had made MSP as the minimum contract price for contracting agencies in 2005 under its APMC Act.

It also entitles the state government to enforce stock limits in respect of any agricultural produce (under contract agreement) where there is shortage of such agricultural produce in the state or the prices of such produce go beyond 25% of the maximum price which was prevailing in the market within two years immediately before the passing of the order by the state government. This is to undo the exemption given to contracting agencies under the central contract farming Act 2020. Punjab has not provided for this in its amendments to the central Act. It also brings back contract farming dispute resolution to the market committee. By another amendment to the ECA, 2020 it has also reinstated its powers to regulate or prohibit production, supply, and distribution, and also imposing stock limits for extra ordinary circumstances like famine, price rise, natural calamity or any other situation though, unlike the central ECA, 2020, it does not specify any triggers in terms of price rise for these regulations to come into play.  

However, the Rajasthan Act has a bad provision about contract farming where it includes sponsor undertaking farming deploying his/its manpower under the farming agreement. It says ‘sponsor shall be liable to remove his manpower from the agricultural farm/field from the next date of termination of the farming agreement and in the event of manpower of the sponsor continuing in the agricultural field /farm, the sponsor shall be liable to pay damages to the farmer to the tune of such amount as may be notified by the state government from time to time which shall not be less than one thousand rupees/bigha/day’. The market committee would decide such a dispute and would direct the sponsor to remove his/its manpower from the field/farm and for putting the farmer back to possession, it shall be entitled to take aid of the police. On such a request, the SP of the district would make the police help available within 24 hours on receipt of the request. This is an outright misperceived provision of the amended Act as a sponsor never cultivates farmer’s field under contract farming arrangement in which farmer as a producer is central to the very concept of contract farming. It is unfortunate that the state has confused contract farming with corporate farming which it is not.

Market fee and other levies

In both the amended Acts, like the Punjab amendments, the state government has created its  right to levy cess/cesses on notified or contract farmed agricultural produce bought, brought or sold by a corporate or trader and/or on the electronic platform, as the case may be, for trade and commerce in a trade area and this cess collection like in the case of Punjab would go into a fund to run the market committee and welfare of farmers or other purposes related to welfare and promotion of agriculture or agriculturists and development of market infrastructure.  Rajasthan has also, like Punjab, brought back the power of civil court to the disputes as existed under the APMC Act

In sum, the Rajasthan government has, with these Bills, asserted its federal rights like Punjab and tried to protect farmer interests more comprehensively than Punjab, but the amendments suffer from above mentioned lacunae which would make many provisions to protect farmer interest ineffective  even if they stand legal scrutiny by the courts. 

*Professor, IIM, Ahmedabad. The views are personal.

Dear Reader,

Business Standard has always strived hard to provide up-to-date information and commentary on developments that are of interest to you and have wider political and economic implications for the country and the world. Your encouragement and constant feedback on how to improve our offering have only made our resolve and commitment to these ideals stronger. Even during these difficult times arising out of Covid-19, we continue to remain committed to keeping you informed and updated with credible news, authoritative views and incisive commentary on topical issues of relevance.

We, however, have a request.

As we battle the economic impact of the pandemic, we need your support even more, so that we can continue to offer you more quality content. Our subscription model has seen an encouraging response from many of you, who have subscribed to our online content. More subscription to our online content can only help us achieve the goals of offering you even better and more relevant content. We believe in free, fair and credible journalism. Your support through more subscriptions can help us practise the journalism to which we are committed.

Support quality journalism and subscribe to Business Standard.

Digital Editor

Business Standard is now on Telegram.
For insightful reports and views on business, markets, politics and other issues, subscribe to our official Telegram channel