The Farmers’ Produce Trade and Commerce (Promotion and Facilitation) Act, 2020

FOCUS

On September 14, 2020, three bills “aimed at transformation of agriculture in the country and raising farmers’ income” were introduced in the Lok Sabha – the Farmers’ Produce Trade and Commerce (Promotion and Facilitation) Bill, 2020; the Farmers (Empowerment and Protection) Agreement of Price Assurance and Farm Services Bill, 2020; and the Essential Commodities (Amendment) Bill, 2020.

The first of these listed here, the Farmers’ Produce Trade and Commerce (Promotion and Facilitation) Bill was introduced by Narendra Singh Tomar, Minister of Agriculture and Farmers Welfare, Rural Development, Panchayati Raj, and Food Processing Industries.

It became an Act on September 27, 2020.

This Act provides for the creation of an “ecosystem” where  farmers and traders have ‘freedom of choice’ in the sale and purchase of farmers’ produce “…which facilitates remunerative prices through competitive alternative trading channels.” The Act aims to promote ‘efficient, transparent and barrier-free’ inter-state and intra-state trade and commerce of farmers’ produce outside the physical premises of markets notified under various state legislations, and to provide a ‘facilitative framework’ for electronic trading and ‘for matters connected therewith’.

There have been nationwide protests by farmers – especially in Haryana, Punjab and western Uttar Pradesh – against the three bills, which, the government states, will open up the agricultural sector to private investors and global markets.

    FACTOIDS

  1. How does the Act define farmers and traders?

    Farmers refer to individuals engaged in the production of ‘farmers’ produce’, by themselves or with the help of hired labourers. It includes farmer producer organisations, which are associations or groups of farmers registered or promoted under a central or state government scheme or law.


    Farmers’ produce includes ‘foodstuffs’ intended for human consumption in their natural or processed form, such as wheat, rice or other coarse grains; pulses, edible oilseeds, oils, vegetables, fruits, nuts, spices and sugarcane; and products of poultry, piggery, ‘goatery’, fishery and dairy.  Such produce also includes raw cotton, cotton seeds, raw jute, and oilcakes and other cattle fodder.


    Traders refer to ‘persons’ who buy farmers’ produce through inter-state or intra-state trade, either for themselves or on behalf of one or more persons, for wholesale or retail trade, ‘value addition’, processing, manufacturing, export, consumption or other purposes. ‘Persons’ under this law, can mean individuals; partnership firms, companies, limited liability partnerships, societies, cooperative societies, or any body of persons incorporated or recognised as a group under central or state government programmes.

  2. What is a ‘trade area’?

    A trade area refers to any area or location, place of production, collection or ‘aggregation’ in India – including farm gates, factory premises, warehouses, silos, cold storages or any other structure or place – where the trade of farmers’ produce may be undertaken.


    Such areas do not include premises, enclosures and structures, the constitute the physical boundaries of market yards managed by committees formed under State APMC  (Agricultural Produce Market Committee) Acts; private market yards managed by persons holding licenses under APMC Acts; or warehouses, silos, cold storages or other structures notified as markets under any APMC Act. A ‘State APMC Act’ refers to any legislation in force in a state or union territory of India which regulates markets for agricultural produce in that state or territory.

  3. What are the Act’s provisions for the ‘promotion and facilitation’ of trade and commerce of farmers’ produce?

    Any farmer, trader or electronic trading and transaction platform shall have the freedom to carry on inter-state or intra-state trade and commerce in farmers’ produce in a trade area. Farmers, traders and electronic trading and transaction platforms shall not be charged any market fee or cess under any state government law for trade and commerce in ‘scheduled’ farmers’ produce (agricultural produce regulated under an APMC Act) in any trade area.


    Traders may engage in the inter-state or intra-state trade of farmers’ produce in a trade area, provided that they have a permanent account number (PAN) as per the Income-Tax Act, 1961, or any other document mentioned by the central government. This does not apply to farmer producer organisations or agricultural cooperative societies.


    The central government may – if it is of the opinion that it is necessary and expedient to do so in public interest – prescribe a system for the electronic registration of a trader, modalities for trade transactions, and modes of payment for scheduled farmers’ produce in a trade area.


    Traders shall make payments for the scheduled farmers’ produce on the same day or within a maximum of three working days, provided that the farmer is given a receipt mentioning the due payment amount on the day of the transaction. The central government may prescribe a different procedure of payment by farmer produce organisations or cooperative societies.

  4. What does the Act say about electronic trading and transaction platforms?

    Any person – other than individuals – with  a PAN allotted under the Income-Tax Act, 1961, or such other document required by the central government, may establish and operate an electronic trading and transaction platform for trading scheduled farmers’ produce in a trade area. This can be done  provided  the person establishing and operating such a platform shall prepare and implement the guidelines for ‘fair trade practices’ in the mode of trading, fees, logistical arrangements, timely payment, and such other matters. Farmer producer organisations and agricultural cooperative societies may also establish and operate such platforms.


    The central government may – if it thinks it is necessary in public interest – specify the procedure, norms, manner of registration, code of conduct and technical parameters, for facilitating ‘fair’ trade and commerce of scheduled farmers’ produce in a trade area.


    The central government may develop a Price Information and Market Intelligence System for farmers’ produce and “information relating thereto.” The government may require any person owning and operating an electronic trading and transaction platform to provide information regarding such transactions, as may be prescribed.

  5. What penalties does the Act list?

    Any person who contravenes the Act’s provisions on payments to farmers (Section 4), shall be liable to pay a penalty of at least Rs. 25,000; where the contravention is continuing, the person shall be liable to pay a fine of up to Rs. 500,000.


    If any person who owns, controls or operates electronic trading and transaction platforms, contravenes Section 5 (relating to the establishment and operation of such platforms), or Section 7 (relating to the central government’s Price Information and Market Intelligence System), they shall be liable to a penalty of Rs. 50,000; where the contravention is continuing, the person shall be liable to a fine of up to Rs. 1,000,000.

  6. What powers does this Act confer on the central government?

    The central government may – as it may deem necessary for carrying out the provisions of this Act – give instructions, directions or orders, to any state government, authority or officer appointed by the central or state government, trader or class of trader, or any electronic trading and transaction platform or owners of such platforms. The provisions of this Act shall have effect regardless of any provisions which may be inconsistent with any APMC Act or any other law.


    Focus and Factoids by Bharti Patel.

AUTHOR

Ministry of Law and Justice

COPYRIGHT

Government of India, New Delhi

PUBLICATION DATE

27 Sep, 2020

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