Pertinent Issues with the Farmers (Empowerment and Protection) Agreement on Price Assurance and Farm Services Act, 2020

 

In the earlier post, we discussed in brief the issues relating to the Farmers’ Produce Trade and Commerce (Promotion and Facilitation) Act, 2020. Today, we will talk about the pertinent issues in relation to the Farmers (Empowerment and Protection) Agreement on Price Assurance and Farm Services Act, 2020. Hereinbelow are some of my remarks on the Farmers (Empowerment and Protection) Agreement on Price Assurance and Farm Services Act, 2020: -

 

Provision of Law	What the Law Says?	Remarks
Section 2 (f)	“farmer producer organisation” means an association or group of farmers, by whatever name called, –– (i) registered under any law for the time being in force; or (ii) promoted under a scheme or programme sponsored by the Central or the State Government;”	Again, this provision of law fails to recognize farmer organizations that are not registered. Non-recognition of such Organizations may act to the detriment of farmers at a local level.
Section 3 (3)	“The minimum period of the farming agreement shall be for one crop season or one production cycle of livestock, as the case may be, and the maximum period shall be five years:”	This Act codifies the concept of Farming Agreement which is perfectly fine. However, imposing a minimum period of agreement on the farmers and leaving them with no option to withdraw from such Agreement seems unjustified and unreasonable, to say the least.
Section 5 (a)	“The price to be paid for the purchase of a farming produce may be determined and mentioned in the farming agreement itself, and in case, such price is subject to variation, then, such agreement shall explicitly provide for— (a) a guaranteed price to be paid for such produce;”	Though this provision talks about guaranteed price yet it fails to specify the same in concrete terms. What would be the minimum guaranteed price finds no mention and it may leave the farmer being underpaid.
Section 6 (2)	“The Sponsor may, before accepting the delivery of any farming produce, inspect the quality or any other feature of such produce as specified in the farming agreement, otherwise, he shall be deemed to have inspected the produce and shall have no right to retract from acceptance of such produce at the time of its delivery or thereafter.”	On first blush, this provision seems innocuous to the interests of the farmers, but a deeper scrutiny would reveal that the Sponsor/Buyer while accepting the delivery would inspect the quality and other aspects of the farm produce and if the Buyer/Sponsor does not  consider the farm produce to be of acceptable quality, then he would reject the same. This too seems to be justified that farm produce must be of acceptable quality. However, what is the minimum standard or level of quality, has not been specified in the Act and it is likely that situations would arise where the Buyer is not buying the farm produce or buys the best lot of the farm produce and leaves the rest. In such a situation, the produce of the farmer which is not being sold will be left to rot and the entire cost will have to be borne by the farmer.
Section 7 (1)	“Where a farming agreement has been entered into in respect of any farming produce under this Act, such produce shall be exempt from the application of any State Act, by whatever name called, established for the purpose of regulation of sale and purchase of such farming produce.”	This means that the farming agreement executed under this Act will not be bound by the State Laws and even if there is a beneficial law passed by any State for the farmers, the applicability of such a law shall be precluded. This is extremely problematic for the farmers as once they enter into an agreement under this Act, they will have no protection of the State Laws.
Section 11	“At any time after entering into a farming agreement, the parties to such agreement may, with mutual consent, alter or terminate such agreement for any reasonable cause.”	On part of the farmers, this is extremely problematic since a Sponsor may or may not grant consent to terminate the agreement. Further, “reasonable cause” mentioned in this provision seems ambiguous and has not been defined anywhere.
Section 12 (1)	“12. (1) A State Government may notify a Registration Authority to provide for electronic registry for that State that provides facilitative framework for registration of farming agreements.”	This provision provides discretion to the State Government to notify a Registration Authority to provide for electronic registry. The discretion is apparent from the word “may” used in the provision. Even if we assume that all the states frame the registration related laws, then also there is a good chance that the provisions and the standards of registration of farming agreement would differ. This could lead to disastrous consequences as an agreement executed in one state may not have applicability in other states due to difference in registration related provisions.
Section 13 (1)	“Every farming agreement shall explicitly provide for a conciliation process and formation of a conciliation board consisting of representatives of parties to the agreement.”	The word used in the provision is “shall.” This means that it will be mandatory to have a Conciliation Clause in the Farming Agreement. This seems problematic as the precious right of the farmers to approach judicial courts have been ousted and they will have to bear the exorbitant expenses that are incurred in arbitration and conciliation.
Section 14 (1)	“14. (1) Where, the farming agreement does not provide for conciliation process as required under sub-section (1) of section 13, or the parties to the farming agreement fail to settle their dispute under that section within a period of thirty days, then, any such party may approach the concerned Sub-Divisional Magistrate who shall be the Sub-Divisional Authority for deciding the disputes under farming agreements.”	On the one hand, Section 13 makes it mandatory to have a Conciliation Clause and on the other hand this provision states that if an agreement does not have a Conciliation Clause, then such person can approach the Sub-Divisional Magistrate. This is quite ludicrous. What is the point of having Section 13 at all and what is the point using the word “shall” in that provision if there are no consequences to its non-compliance? Further, again, the precious right of the farmers to approach judicial courts have been ousted and instead, they will have to approach the Sub-Divisional Magistrate who is an executive body and works directly for the Government.

 

Apart from the above, both the new Farm Laws have ample of legal issues that need to be looked into. Given above are just some of the pertinent ones. You can read my earlier post in relation to the Farmers’ Produce Trade and Commerce (Promotion and Facilitation) Act, 2020 by clicking here.