The farming produce trade and commerce(Promotion and facilitation) act,2020

Question 1

What law describes?

Answer 1

Describes trading of farme goods outside the physical premises of Mandi or APMC yard.
{TRADING OUTSIDE APMC}

Earlier agricultural trade used to happen only in APMC yards,warehouses or Mandi’s.

-farmers can sell the produce anywhere within the state or outside the state
{CAN SELL ANYWHERE}

Question 2

Impacts of this acts?

Answer 2

-Agriculture is under state list
-States like punjab,haryana might loose big chunk of state revenue
-Mandis are spread across nation,they are contolled by state governments through APMC.
{APMC MANDIS GIVE REVENUE TO STATE->THAT WILL DECREASE}

-There are restrictions on farmers if they sell their produce outside the mandis,becoz products that have minimum support price need to be compulsorily go through APMC.Otherwise small farmers can sell directly to consumers.But big farmer who wants its own produce to be protected by the government they will have to notify APMC or trade with only APMC licensed trader
[IF ONE WANTS MSP WILL HAVE TO SELL IN APMC,OR IT’S AUTHORISED BUYER]

-Bill will allow barrier free trade in agriculture produce outside the notified APMC mandis
[SELL ANYWHERE]

-With the help of this bill state governmentwill notimpose taxes on sell and purchase of farm produce of the mandis and will give farmers to sell their produce at good price.
[STATE’S WONT IMPOSE THE MANDI TAX-> AS FARMERS SELL OUTSIDE -> MORE PROFIT FOR FARMERS]

Question 3

advantages ;disadvantages

Answer 3

-Advantages to big farmers ,because they will have more priices and they can start selling to the private players.
[BIG FARMERS->CAN SELL PRIVATES -> POSSIBILITY OF PROFIT]

-Will hardly make any difference for the small farmers ,they are anyways selling outside the mandis,and due to transportation & logistics cost,small farmers don’t have any incentive to go long distance or interstate to sell the goods.
[SMALL FARMERS CAN’T TRAVEL FAR-> NO CHANGE]

-Downside:
e freedom to sell outside mandis already
exists in many States. Already, 18
States have allowed the establishment of private markets outside the APMC; 19 States have allowed the direct purchase of agricultural produce from farmers; and 13 States have allowed the establishment of farmer’s markets outside the APMC. Despite such legislative changes, no significant private investment has flowed in to establish private markets in these States.

[SIMILAR PROVISIONS ALREADY EXIST IN 18-19 STATES-> NO HISTORY OF PRIVATE INVESTMENT]

Question 4

What will

happen to the role of government?

Answer 4

• Farmers will be able to sell anyone & earn more -> but it will depend upon market demand.
• If low demand & high investment happen together ->farmers will suffer ->In this situation government will not intervene by giving any type of subsidy to farmers

Question 5

What is the important assumption behind

the FPTC Act in relation with mandis?

Answer 5

That mandis are the sole purchaser of a grains.But the data is as follows

-official data show that even for
paddy and wheat, respectively,
only 29% and 44% of the harvest is
sold in a mandi, while 49% and
36% is sold to either a local private
trader or an input dealer. In other
words, de facto, a large proportion
of Indian harvest is not directly
sold in a mandi.

Question 6

Why Farmers are forced to sell outside the mandis?

Answer 6

1. there are not enough mandis

2.most small and marginal farmers, given
their small marketable surplus, do
not find it economical to bear the
transport costs to take their harvests to mandis.

Thus, they end up selling their harvest to a village trader even if at a lower price.
Even if private markets replace mandis, small and marginal farmers will continue to sell to traders in the village itself. The situation will change only if economies of
scale rise substantially at the farm-level.

Question 7

What will happen if mandis are taken out of picture?

Answer 7

-much of the tax collected by mandi are reinvested by APMCs to improve market infrastructure. A fall in mandi taxes
would reduce the surplus available
with APMCs for such investment.

• in States such as Punjab, the government charges a market committee fee and a rural development fee. The Punjab
  Mandi Board uses these revenues
  to construct rural roads, run medical and veterinary dispensaries, supply drinking water, improve sanitation, expand rural electrification and provide relief to farmers during calamities. Such rural investments will also be adversely affected if mandis are weakened.