Govt mulls new farm law to facilitate sale of inter-State agriculture produce
- May 21, 2024
- Posted by: OptimizeIAS Team
- Category: DPN Topics
Govt mulls new farm law to facilitate sale of inter-State agriculture produce
Sub: Economy
Sec: Agri
The Indian government is considering the introduction of a new farm law to facilitate inter-State trading of agricultural produce, enabling farmers to sell their products online to distant markets beyond their State boundaries.
This initiative aims to establish an independent regulatory authority responsible for framing the rules and regulations, including the fees for inter-State trading. The law will not interfere with intra-State trading, which will remain under the control of local governments.
Key Provisions and Context
- Revival of a 2012 Plan:
- The current proposal revives a plan from 2012 that was shelved due to decision-making delays, despite having been approved by the Law Ministry at that time.
- Constitutional Basis:
- The proposed law is grounded in Article 307 of the Indian Constitution, which allows Parliament to appoint an authority for facilitating the freedom of trade and commerce across India (Articles 301-304).
- Independent Regulatory Authority:
- An independent body will be established to oversee inter-State agricultural trade, ensuring that appropriate rules and regulations are in place.
- Enhanced Trading Platforms:
- The law is expected to boost transactions on the government’s e-NAM platform, enhancing farmers’ ability to access better markets and prices for their produce.
- Learning from Past Experience:
- Given the backlash against the farm laws introduced during the COVID-19 pandemic, which were later repealed, the government plans to engage in wider consultations with stakeholders to avoid similar issues.
Potential Benefits
- Increased Market Access:
- Farmers will have the opportunity to sell their produce directly to buyers in other States, potentially securing better prices and reducing reliance on local Agricultural Produce Marketing Committee (APMC) yards.
- Economic Efficiency:
- By facilitating direct sales and inter-State trading, the law could lead to more competitive pricing and better income for farmers.
- Boost to e-NAM:
- The electronic National Agriculture Market (e-NAM) platform is likely to see increased usage, which could standardize trading practices and improve market transparency.
Challenges and Considerations
- Building Trust:
- The success of inter-State trading will depend on building trust among buyers regarding the quality of produce, which might necessitate third-party guarantees or quality certifications.
- Stakeholder Engagement:
- Given the mixed reception to previous farm laws, the government must engage in comprehensive consultations with farmers, State governments, and other stakeholders to address concerns and build consensus.
- Infrastructure and Logistics:
- Effective implementation will require robust logistics and infrastructure to handle the increased volume of inter-State agricultural trade.
Conclusion
The proposed farm law represents a significant step towards modernizing India’s agricultural market and improving economic opportunities for farmers. By leveraging constitutional provisions and modern trading platforms like e-NAM, the government aims to create a more efficient and fair market environment. However, the success of this initiative will largely depend on careful planning, inclusive stakeholder consultations, and the establishment of mechanisms to ensure quality and trust in inter-State agricultural transactions.
Overview of eNAM
- The National Agriculture Market (eNAM) is an online trading platform for agricultural commodities in India.
- Launched on April 14, 2016, and is completely funded by the Government of India.
- The Small Farmers Agribusiness Consortium (SFAC) acts as the lead agency for implementing eNAM under the Ministry of Agriculture and Farmer’s Welfare.
- Aims to create better marketing opportunities for farmers through a competitive and transparent price discovery system and online payment facilities for buyers.
- Networks existing Agriculture Produce Marketing Committee (APMC) market yards, sub-market yards, private markets, and other unregulated markets to create a central online platform for agricultural commodity price discovery.
Key Features of eNAM
- Online Trading and Price Discovery:
- Farmers can showcase their products through nearby markets.
- Traders from anywhere can quote prices.
- Provides single-window services for all APMC-related services and information:
- Commodity arrivals, quality, and prices.
- Buy-and-sell offers.
- E-payment settlements directly into farmers’ accounts.
- Licensing and Market Access:
- Licenses for traders, buyers, and commission agents can be obtained from state-level authorities without the need for physical presence or possession of a shop in the market yard.
- Quality Standards and Testing:
- Harmonization of quality standards for agricultural products.
- Infrastructure for quality testing available in every market.
- Provision of Soil Testing Laboratories in selected markets to facilitate farmers.
Benefits to Stakeholders
- Farmers:
- Access to a larger market with competitive pricing.
- Reduced dependence on local APMC markets.
- Direct payments to bank accounts ensuring prompt financial transactions.
- Traders and Buyers:
- Reduced transaction costs.
- Access to quality-certified produce.
- Simplified licensing processes.
- Farmer Producer Organizations (FPOs):
- Improved market reach.
- Enhanced ability to negotiate better prices for members.
- Market Infrastructure:
- Unified national market network.
- Improved transparency and efficiency in agricultural trade.
What is APMC?
- Agriculture Produce Marketing Committee (APMC) is a statutory market committee established by a State Government under the Agricultural Produce Market Committee Act.
- APMCs regulate wholesale marketing of agricultural produce in a defined area of operation.
- Provide a centralized marketplace where sellers, buyers, and agents can meet to conduct trade.
- APMCs ensure fair trade practices, provide price information, and maintain market infrastructure.