Page 627 - ES 2020-21_Volume-1-2 [28-01-21]

254 Economic Survey 2020-21 Volume 2

The Essential Commodities (Amendment) Act, 2020

7.64 It seeks to remove commodities like cereals, pulses, oilseeds, edible oils, onion and
potatoes from the list of essential commodities. The reform ends the era of frequent imposition
of stock-holding limits except under extraordinary circumstances.
Benefits of the Farm Reforms

7.65 The farmers in India have suffered from various restrictions in marketing their produce.
There were restrictions for farmers in selling agri-produce outside the notified APMC market
yards. The farmers were also restricted to sell the produce only to registered licensees of
the state governments. Further, barriers existed in free flow of agriculture produce between
various States owing to the prevalence of various APMC legislations enacted by the state
governments.

7.66 APMC regulations have indeed resulted in a number of inefficiencies and consequent
loss to the farmers. The presence of multiple intermediaries between the farmers and the final
consumers has led to low realization by farmers. Further, a large range of taxes and cesses levied
by APMCs cuts into farmers’ price realization while only a small proportion is ploughed back
into the development of mandi infrastructure. Poor infrastructure at the mandis compounds the
problem of price realization for the farmers. Issues related to manual weighing, single window
systems and lack of modern grading and sorting processes create long delays and measurement
errors that tend to be biased against the seller. Long queues of farmers waiting, most often, in the
hot sun to sell their produce with limited ability to take their produce elsewhere even if the price
is higher in an other mandi is a characteristic feature of APMC mandis. The delays result in large
post-harvest losses to the tune of 4-6 per cent in cereals and pulses, 7-12 per cent in vegetables
and 6-18 per cent in fruits. Total post-harvest losses were estimated at ` 44,000 crores at 2009
wholesale prices .
2
7.67 Recognizing the above limitations of existing market regulations, various committees had
recommended several reforms in the marketing of agricultural commodities. Some illustration
of reports recommending agricultural market reforms is given in Box 3.

7.68 The Farmers (Empowerment and Protection) Agreement of Price Assurance and Farm
Services Act, 2020 will empower farmers in their engagement with processors, wholesalers,
aggregators, large retailers, exporters and will provide a level playing field. It will transfer the
risk of market unpredictability from the farmer to the sponsor and also enable the farmer to
access modern technology and better inputs. Farmers have been provided adequate protection as
sale, lease or mortgage of farmers’ land is totally prohibited and farmers’ land is also protected
against any recovery. The farmers will have full power in the contract to fix a sale price of
their choice for the produce. They will receive payment within a maximum of 3 days. As part
of this law, 10000 Farmer Producer Organizations are being formed throughout the country.
These FPOs will bring together small farmers and work to ensure remunerative pricing for farm

2 Final Report of the Committee of State Ministers in Charge of Agricultural Marketing Reforms, Ministry of
Agriculture, Government of India, 2013.