Agreement on Price Assurance and Farm Services Bill

The Indian government recently passed two bills related to agriculture: the Price Assurance and Farm Services Bill and the Farmers` Produce Trade and Commerce (Promotion and Facilitation) Bill. The two bills have sparked a nationwide debate, with many farmers protesting against them. In this article, we will focus on the Price Assurance and Farm Services Bill.

The Price Assurance and Farm Services Bill seeks to create a legal framework that will govern the contract farming system in India. Contract farming is an agreement between a farmer and a buyer, where the buyer agrees to buy a certain quantity of agricultural produce at a predetermined price. This system has been in practice for many years, but there is no legal framework to govern it. The new bill seeks to fill this gap.

One of the key features of the bill is that it provides for a price assurance mechanism. The bill states that the buyer and the farmer must agree on a price before the start of the farming season. This price must be based on a formula that takes into account the cost of production, market prices, and the yield of the crop. Once the price is agreed upon, the buyer must pay the farmer the agreed amount, regardless of the market price at the time of sale.

This price assurance mechanism has been introduced to address the problem of price volatility that farmers face. Farmers often get a lower price for their produce than what they had expected, due to market fluctuations. This can lead to financial distress and can even force farmers to abandon farming altogether. With the price assurance mechanism, farmers can be assured of a fixed price, which will provide them with financial stability.

Another feature of the bill is that it provides for dispute resolution mechanisms. If there is any dispute between the buyer and the farmer, both parties can approach the Agriculture Produce Market Committee (APMC) or the jurisdictional sub-divisional magistrate. The APMC will act as a mediator and try to resolve the dispute within 30 days. If the dispute cannot be resolved, the matter will be referred to a conciliation board, which will have the power to decide the matter.

The bill also seeks to promote investment in agriculture. It provides for the establishment of a state-level board, which will promote contract farming and provide technical assistance to farmers. This board will also be responsible for setting up a database of farmers who are interested in contract farming.

While the bill has been welcomed by some, others have criticized it. Some farmers` organizations have raised concerns about the power imbalance between the buyer and the farmer. They argue that buyers, who are usually large companies, will have more negotiating power than individual farmers. This could lead to the exploitation of farmers, who may be forced to accept lower prices than what they had agreed upon.

In conclusion, the Price Assurance and Farm Services Bill seeks to provide a legal framework for contract farming in India. It introduces a price assurance mechanism to provide farmers with financial stability and promotes investment in agriculture. While the bill has its supporters, it also has its critics. Only time will tell whether the bill will be successful in addressing the challenges facing Indian agriculture.