Government ordinances represent major change the way farmers interact with the wider agri-commodities market

June 27, 2020

Government ordinances represent major change the way farmers interact with the wider agri-commodities market – Sanjay Agarwal, Secretary-Agriculture, Government of India

Confederation of Indian Industry, in partnership with Ministry of Agriculture and Farmers’ Welfare, Government of India, organised the Virtual Conference & Exhibition on New Innovation and Digital Technologies for Smart, Safe & Sustainable Agriculture – IntelAgri.

Addressing the inaugural Session of the Conference Mr Sanjay Agarwal, Secretary-Agriculture, Government of India said that three ordinances introduced by Government of India represent a major change the way farmers interact with the wider agri-commodities market.

First, the government has amended the Essential Commodities Act of 1955 to remove restrictions on the amount of food that intermediaries in the supply chain are allowed to stockpile. Many stakeholders felt the law forced farmers to accept low prices for their produce, and discouraged commodity traders and others from making larger investments in the space.

Second, Farmers (Empowerment and Protection) Agreement on Price Assurance and Farm Services Ordinance — essentially creates a legal basis for contract farming, allowing large agribusiness corporates, food companies, and investors to sign deals with farmers and get them to grow the crops they need. But with little in the way of formal legal structures to govern these relationships, corporates and smallholders alike are often reluctant to enter into such contracts. The new ordinance is aimed at providing such a framework.

Third, online trading opens up Perhaps the biggest change for agritech entrepreneurs with the new Farmers’ Produce Trade and Commerce (Promotion and Facilitation) Ordinance. This effectively ends the monopoly that state-run or state-authorized mandis have on buying produce from farmers and selling it on downstream. It also removes barriers for interstate trading of agricultural produce by ending the requirement for buyers to be registered locally. Taken together, these reforms will give farmers more options for selling, giving them a better chance of getting a fair price for their produce.

The new law provides freedom to the farmer outside of the mandis, they can now sell to anybody. Suddenly the whole market opens up, and it creates an ecosystem where farmers and traders enjoy freedom of choice. Farmers’ income should increase and the rural economy overall will get a big push and the whole ecosystem will open up in villages and create wealth for them he added.

Highlighting the other step taken by the Government, he informed that the Ministry of Agriculture & Farmers Welfare has created a Department of Digital Agriculture headed by a Joint Secretary. PM Kisan has registered famers and will have 50 million farmers by July end and close to 100 million by December end. This data will be used as AgriStack which will be opened for the private industry to leverage and work towards the betterment of farmers in India. Use of Centralised Remote Sensing (CRS) to help farmers settle claims of Fasal Bima Yojana, stop straw burning, risk mitigation etc. 7 satellites are being put to use for the CRS. By 2023, these will also be used for Pre & Post Harvest analysis. He said that 100% Government funding for FP would benefit close to 10,000 FPOs through cluster approach and hand holding.

He also asked CII to enable Policy Intervention for technology up gradation in the agri value chain, creating SOPs and other norms which can leapfrog the use of digital platforms. He said CII shall work towards creating a System for Traceability through the involvement of Private Players by utilising the government initiatives of traceability.