THE FARMERS’ PRODUCE TRADE AND COMMERCE (PROMOTION AND FACILITATION) ACT, 2020

Author: Himanshu Ranjan

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The document starts with an introductory paragraph about “creating an ecosystem” and giving “freedom of choice” to farmers and traders. It talks about creating an alternative and a competitive trading channel so as to promote efficiency. It facilitates barrier-free inter-state and intra-state trade of farmers’ produce. It aims to provide a facilitative framework for electronic trading. It is specifically mentioned that the goal is to enable such trade outside the premises of markets that are notified by the state governments. 

Then, the act defines the meaning of the following:

  • electronic trading and transaction platform
  • farmer
  • farmers’ produce
  • inter-state trade
  • intra-state trade 
  • person
  • State APMC Act
  • trade area
  • trader

These have their usual meanings. Farmers’ produce includes cereals, coarse grains, oils, fruits and vegetables, spices, cotton, jute, fishery, dairy, and so on. Also, the person can be an individual, a partnership firm, a company, a limited liability partnership, a co-operative society, a society, and so on. Trade areas can be farm gates, factory premises, warehouses, silos, cold storages, any other structures. Basically, it means almost all of the farmers’ produce can be traded with almost anyone, anywhere. 

At one point it says:

Provided that no trader, except the farmer producer organisations or agricultural co-operative society, shall trade in any scheduled farmers’ produce unless such a trader has a permanent account number allotted under the Income-tax Act, 1961 or such other document as may be notified by the Central Government.” 

It means that along with farmer producer organisations or agricultural co-operative societies, even an individual trader with a PAN card can trade with the farmers. 

In order to facilitate transparency, there is a provision of electronic registration of the traders. There is another provision that the trader should pay the farmer on the same day with proof of the delivery receipt of the trade or within three days if required. 

The trader needs to implement the guidelines of fair trade practices among which are:

  • Mode of trading
  • Fees
  • Technical parameters
  • Logistics arrangement
  • Quality assessment 
  • Timely payment 
  • dissemination of guidelines in the local language of the place

At another point, it states that 

No market fee or cess or levy, by whatever name called, under any State APMC Act or any other State law, shall be levied on any farmer or trader or electronic trading and transaction platform for trade and commerce in scheduled farmers’ produce in a trade area.

Thus, the trade has been made free of any cess or state tax.

It also talks of developing a “Price Information and Market Intelligence System for farmers’ produce” and a framework for information dissemination. 

Coming to the aspect of dispute resolution the document states that the Sub-Divisional Magistrate shall first refer the dispute to a Conciliation Board. The Conciliation Board shall consist of 2-4 members appointed by the SDM. If the dispute is resolved a memorandum of settlement is signed by the parties. If within thirty days, it is not resolved, the SDM should be approached. If within thirty days, it is not resolved, the Collector shall be approached. 

Here, shouldn’t the process be automatically referred to the higher authorities rather than aggrieved parties approaching them? 

The document states that 

Every order of the Sub-Divisional Authority or Appellate Authority under this section shall have force of the decree of a civil court and shall be enforceable as such, and decretal amount shall be recovered as arrears of land revenue.”

Now, such provision could be made in order to reduce the burden on our civil courts, but what if the matter is still not resolved or there is injustice. Shouldn’t the parties then approach the civil courts or higher courts for that matter? Approaching courts for justice is one of our fundamental rights and needs to be explicitly stated. 

Another point to take note of is about the meaning of ‘decretal amount shall be recovered as arrears of land revenue’. Decretal amount means the whole amount including interest, Arrears mean an overdue payment. Arrears of land revenue according to the Revenue Recovery Act of 1890 means the land can’t be sold unless the overdue payment is made or it could be sold otherwise to pay the overdue payment. Whose land are we talking about? It looks a bit confusing because if the farmers are the recipients of the overdue amount then the purchaser of farmers’ produce – are they putting up land or any other such property mortgaged in the contract? 

Moving ahead, The Agriculture Marketing Adviser, Directorate of Marketing and Inspection, Government of India, or an officer of the State Government to whom such powers are delegated can take adequate action on their own or if approached when they find there are irregularities in electronic trading. If the party feels such an action was not just they can approach the Joint Secretary. 

Again, a word of caution that if such a Joint Secretary is nominated through lateral entry – would they be impartial? 

Further in the document – There is a provision of a penalty of about INR 25,000 to INR 500, 000 for the defaulting traders and of about INR 50,000 to INR 1,000,000 for the defaulting e-trading operators. 

Let’s have a look at another point in the document: 

No suit, prosecution or other legal proceedings shall lie against the Central Government or the State Government, or any officer of the Central Government or the State Government or any other person in respect of anything which is in good faith done or intended to be done under this Act or of any rules or orders made thereunder.” 

The question is who decides ‘good faith’ – the courts? Then, one must approach the courts to see the decision was in ‘good faith’

But then the document states 

No civil court shall have jurisdiction to entertain any suit or proceedings in respect of any matter, the cognizance of which can be taken and disposed of by any authority empowered by or under this Act or the rules made thereunder

So civil courts can’t be approached for any decision done in ‘bad faith’. But then one is free to approach higher courts. But the question is whether a small farmer has the same accessibility to higher courts? 

Further, the Act claims to have an overriding effect on State APMC Acts. The central government can remove any difficulties as far it is not inconsistent with the act. 

The question is what if there is any recommendation or solution that is inconsistent with the act? 

In summary

The Act provides a cess free alternate market to farmers and traders outside the APMCs enabling fast payment. It is inclusive as anyone with a PAN card can also trade. It facilitates trade with anyone, anywhere without state tax. 

Possible improvements: The issue should automatically escalate to higher authorities if not resolved within the time period rather than the parties approaching them every time. Civil courts should be left open for small farmers as they are more accessible and near to them than the higher courts. The statement ‘decretal amount shall be recovered as arrears of land revenue’ in the Act needs to be better phrased for the understanding of the common farmer. Lateral entrants to the post of Joint Secretaries should not have any vested interest. It should be explicitly stated that higher courts can question the issue of ‘bad faith’ by the authorities. Also, any possible improvements that are inconsistent with the act need to be accommodated as any document always has a possibility for further improvement and amendment. 

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