ISSN (Print) - 0012-9976 | ISSN (Online) - 2349-8846

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The FPTC Act, 2020

A Blinkered Vision

In the name of empowering farmers, the Farmers’ Produce Trade and Commerce (Promotion and Facilitation) Act, 2020 has displayed a blinkered vision of an integrated supply chain—by undermining the importance of Agricultural Produce Market Committee markets in a competitive and inclusive agri-food market system. By overlooking many important aspects, the law has taken a quantum leap in the wrong direction.

 

The author acknowledges the comments received from the reviewer which has helped improve the draft. Thanks are also due to Anamika Das for comments on the earlier version of the draft. The author, however, bears all responsibilities for errors and omissions, if any.
 

Amidst massive uproar both inside and outside Parliament, the union government passed the Farmers Produce Trade and Commerce (Promotion and Facilitation) Bill, 2020 (FPTC Act, 2020 henceforth) in September 2020 to overcome resistance from the states on agricultural marketing reforms, ostensibly to give farmers the freedom to sell their harvest. The bill, passed in conjunction with the Farmers (Empowerment and Protection) Agreement on Price Assurance and Farm Services Bill, 2020 has restricted the jurisdiction of Agricultural Produce Market Committee (APMC) markets to its premises only, allowing organised firms such as supermarkets and processing firms to resort to direct sourcing from farmers, preferably using contract farming. Complementing these two bills, the Essential Commodities Act was also amended through another bill to facilitate hassle-free movement of an expanded list of agricultural commodities. After securing approvals from the President, the bills became acts in the last week of September 2020. Together, these three acts are expected to encourage investment by organised firms in developing an integrated supply chain that would help smallholders with better price discovery in a one nation, one market (EPW 2020) economy.

The experts reactions to the new regulatory measures have been mixed, with some optimistic voices calling it agricultures 1991 moment (Gulati 2020), while cautious voices referring to the same as reform by stealth (Singh 2020). Against this backdrop, the present article contributes towards an informed debate on the implication of the FPTC Act, 2020 for a competitive and inclusive agricultural marketing structure by reviewing extant literature on procurement practices followed by organised firms. The article argues that by undermining APMC markets, the legislation reflected a flawed understanding of how agricultural markets work in India and take steps backward towards what is required to build an inclusive and sustainable agri-food value chain. The article first reviews APMC markets travails in the post-reform period, then focuses on procurement practices followed by organised firms, before concluding with a road map for an integrated approach to the agri-food value chain.

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Published On : 20th Jan, 2024

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