What is Agriculture Ordinance 2020? ( B.19) PART 1

Farmers in India are termed the backbone of our country. But despite this fact, the agriculture sector of our country is still facing a lot of struggle.  A new Agriculture ordinance is brought by our Government which is consulted by the Cabinet ministers and is passed by the Lower house of the parliament "Lokshabha".  

However, the opposition is against this bill, and this time even the supporting party of the government Akali Dal voted against this bill. Cabinet minister Harsimrat Kaur Badal resigned in order to protest against the government. In addition, many farmers are protesting in India and the government has stated its stance that in any condition this bill will not be withdrawn. To understand this situation, we first have to understand two things:

1. What this ordinance contains? 

2. Decoding the farmer's protest in India and false rumours. 

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What does the act consist of?

1. ECA of 1955 (Essential commodity act of 1955):  This act was brought into existence due to scarcity of crops after independence. India was dependent on the US for fulfilling its requirements. There were drought and famine all over the country, moreover, during the 1960s India was in a state of war with Pakistan and China.

 This created a shortage of agricultural commodities in our country. Now let's understand when this act comes into effect?- 

• when there is a serious shortage of crops and there is a rise in inflation, the government can implement this act in order to tackle the problem of inflation and overstocking. 
• The government can set a limit on the storage of crops. In this case, no one can store above the specified limit and has to release the excess quantity. In this way prices in the market were controlled. 

But now, India is the biggest exporter of Rice and the second-largest producer of wheat and rice after China. We are producing a good amount of crops and our granaries are overflowing. The root cause of this problem is we don't have a sufficient amount of storage facilities, this ultimately results in wastage of crops because the crops which are not stored properly gets ruined. 

This leads us to the second problem, 

Let's understand this problem with help of an example:

Mr Ram is a builder. He is building a big warehouse in Bhopal. The warehouse will have the capacity to store up to 25 tons of crops. He has taken a loan of 25 lakh rupees from the bank in order to construct this warehouse which is to be repaid in 15 months. 

He has contacted 2 farmers of tomatoes who have agreed to pay ten thousand per ton for 3 months. But there is an inflation in the price of tomatoes and in order to tackle this problem government has implemented the Essential commodities act. They have issued the guidelines that no warehouse owner can store more than 15tons of tomatoes. 

The capacity of the warehouse which was owned by Mr. ram was 25tons and as this act is implemented, he is forced to keep only 15 tons regardless of the fact that he has enough space to keep the crop safe. This might lead Mr Ram to face bankruptcy, and on the other hand, the government does not have a sufficient amount of storage facility, thus, resulting in the wastage of crops and ultimately the whole agricultural ecosystem will be adversely affected. In return, this will only increase prices of crops plus the farmer will not be paid the deserving amount. 

Now to eliminate this problem, the government has decided to release many commodities like  (cereals, Pulses, Edible Oil, and many more)  from this act. This will lead to the following: 

• More storage facilities 
• Crops will be preserved which in turn results in high earning for farmers. 
• The private sector and warehouse owner will also get the benefit that will boost the infrastructure of India.  

2.  Contract Farming: Earlier the farmer was not allowed to sell his crop to any sector, other than the government. The government used to decide the MSP (the minimum support price) according to the demand and supply. The farmer had no other choice but to sell the crops at the predetermined MSP. 

Now, this act specifies that if a farmer is able to sell his crops on a higher MSP offered by the private sector, he is permissible and allowed to do so. In this case, the farmers will get be offered higher prices. 

Moreover, the farmer had to harvest the crop, clean them, and then they were supposed to bear travelling charges for making their crops available in the market, and then the selling price was determined. No matter how much additional expenses were incurred by the farmer he had to adjust and compromise with the market price. 

Then, what changed?

• Now with the introduction of this bill, the Private sector will reach the farmer directly on their farms. All the rates will be decided by the farmer and the purchaser. Only the MSP will be determined by the government so that a minimum price is determined. This will also reduce the cost of cleaning and transportation.
•  One very valid question is raised by the farmers, how the private sector will make payment to the farmer? This bill states that 2/3 payment is to be made on the spot and the remaining 1/3 within three days.   

Don't worry! I will not make it lengthy and difficult for you to understand. The upcoming blog will cover the remaining 2 points

The key focus of the next blog-  Understanding the reasons behind the farmer's protest in India

I hope you all have got a little clarity about this ordinance. If you like my content do like, share and subscribe. Stay connected for the upcoming blogs.

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