While Farm Bills Face Backlash In Parliament, Agritech Startups Hail the Move

The two bills were passed by voice vote in the Upper House during high drama and uproar on September 20
While Farm Bills Face Backlash In Parliament, Agritech Startups Hail the Move
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Amidst the ongoing ruckus, the central government was able to pass two of three contentious farm bills in the Rajya Sabha on Sunday. The two bills were passed by voice vote in the Upper House amid high drama and uproar. The bills now will need the President's assent to finally turn it into law. Passing of these laws even resulted in the resignation of Union minister of food and processing industries Harsimrat Kaur Badal.

What Are These Bills?

The two bills passed by the central government are the Farmers’ Produce Trade and Commerce (Promotion and Facilitation) Bill, Farmers (Empowerment and Protection) Agreement on Price Assurance and Farm Services Bill.  The third bill Essential Commodities (Amendment) Bill will be moved separately.

According to the government, the Farmers (Empowerment and Protection) Agreement or Price Assurance Bill will help to build a national framework on farming agreements that protects and empowers farmers to engage with agri-business firms, processors, wholesalers, exporters or large retailers for farm services. The bill is said to allow farmers to enter into a written contract for the product supply at an agreed price for a better remuneration.

The second bill, Farmers’s Produce Trade and Commerce Bill, will permit farmers to sell their product wherever they like. This means that they don’t have to sell it to a designated APMC mandis. Anyone can buy their produce even at their farm gates. The bill also provides a transparent and barrier free inner and inter state trade.

The third bill proposes to remove commodities such as pulses, oilseeds, onion, potatoes and edible oils from the essential lists, thus allowing hoarding. Stock-holding limitation that was earlier imposed on these commodities will only be in place under extraordinary circumstances.

Prime Minister Narendra Modi described the bill as the “watershed moment” in the history of Indian agriculture.

Why is the Opposition upset?

The Opposition parties along with some farmers groups such as the Bharatiya Kisan Union among others are protesting the passing of these bills. They believe the imposition of the above mentioned bills will provide a gateway to the government from guaranteeing a minimum selling price (MSP) to farmers. The ‘arhatiyas’ also known as the commissioning agents will be left in lurch without farmers selling their produce to the allotted mandis. States such as Punjab and Haryana are protesting more because they will not be able to collect the 'mandi tax'  as they used to before.

Indignant farmers also fear that these bills will give tremendous power to the big corporates. These bills have time and again been called as “anti-farmers”.

What Do The Agritech Players Think Of The Bill

The above mentioned bills will certainly provide a tailwind to the agritech startups and help them work closely with the farmers without being interrupted from the middlemen.

Avinash BR, chief executive officer and co- founder of Clover, said, “As a player in the ecosystem who’s trying to build an equitable balance between farmers and consumers, the changes intended in the bill are in the right direction. The choices that a farmer will have, in the long-run, can result in improvement of productivity and get the farmer to make more remunerative choices. However, just like any other reforms being brought in, we cannot expect overnight sea-changes. Stakeholders will have to let the implementation playout while being mindful to making required adjustments down the course.”

According to Shashank Kumar, founder and chief executive officer (CEO) of DeHaat, the new bills will be beneficial in the longer run as it will create an alternative channel for farmers to sell their products. 

“I believe these bills will bring people/corporates closer to farmgate. India incurs 40 per cent post harvest losses because of multiple layers present between farmers and businesses, which will effectively be truncated because of these bills,” he added.

He said India is among top three countries in terms of area of cultivation. However, when it comes to productivity, India is far behind. He believes that productivity can be increased by investment in technology at the farmgate, which these bills can provide.

Taking an example how these bills will benefit startups, he said that they started their operations in Bihar where APMC Act was not present. However when they tried to replicate the same model  in the neighbouring state of Uttar Pradesh, where APMC act is in place, they had to apply for a license to source from farmers. 

“I think for startups, these bills will help them to scale their business easier,” he added.

However, he concluded by saying that changes will not be visible overnight and an amendment is required to prevent any unethical practices. 

Tauseef Khan of Gramophone said that these bills are the first step towards free market trade. 

According to him these reforms will accelerate agricultural growth through private sector investment in building agricultural infrastructure and supply chains for  Indian farm produce in national and global markets. Farmers will  be able to engage in direct marketing thereby eliminating intermediaries resulting in full realization of price. “This will reduce the cost of marketing and improve the income of farmers.

“This will empower farmers and give price assurance to farmers even before sowing of crops. It will reduce the risk of market unpredictability from the farmer to the sponsor. Due to the prior price determination, farmers will be shielded from the rise and fall of market prices,” he said.

According to him, there should be consistent policies and reforms that need to be in place to support the benefits of these farm bills.

Arya Collateral’s Prasanna Rao, said, "The ordinances are a step in the right direction. Increasing options for farmers would only benefit them and all other Value chain stakeholders in the long run. These initiatives, coupled with the AIF and technology innovations in agriculture would address the challenges around value realization for farmers."

“The Farm Bills 2020 are long overdue reforms, and the Modi government deserves tremendous credit for finally making them a reality. At Omnivore, we believe the Bills will help catalyze a transformation of rural India, accelerating the modernization of Indian agriculture, while rebalancing economic power towards farmers and away from traders,” said Mark Kahn, Managing Partner at Omnivore.

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