Agriculture Reform 2020: A Step in the Right Direction?
The parliament has passed three bills related to agricultural reform replacing the ordinances issued on these subjects earlier. These are: The Farmers' Produce Trade and Commerce (Promotion and Facilitation) Bill, 2020 allows freedom of trade of farmers’ produce beyond the physical premises of APMC (agricultural produce market committee) markets. The Farmers (Empowerment and Protection) Agreement on Price Assurance and Farm Services Bill, 2020 creates a framework for contract farming before actual even plantation stage. The Essential Commodities (Amendment) Bill, 2020 limits the supply regulation under the act only during extraordinary circumstances (such as war and famine) or steep price rise.
 
PRS (PRS Legislative Research, commonly referred to as PRS) India has highlights of all three bills here You may read it here
 
Risk Management Is the Main Problem in Agriculture
 
Agriculture has become a lot more complex over the past two centuries. To use industrial terms, agricultural operations depended on local conditions and sales were confined within the community. With advent of high-tech shipping, the operations remain local, but sales have become global (at least for non- or semi-perishable products). Farm incomes are as much affected by yields and product quality as by international demand and supply mismatches. For instance, if Brazil produces a bumper sugar crop, we can expect Indian sugar prices to remain low. Even in highly differentiated products identified by region (e.g., French wines, Japanese rice, etc.) the changes in global trends, tastes and fads rapidly alter the prices and therefore realisations. Thus, risk management has become critical for farmers. 
 
Risks can be reduced by improving information availability. This information includes price information, technical information (technically referred to as agricultural extension), risk mitigation strategies and fail-safe institutional designs. The present institutional structure comprising APMC Acts and Essential Commodities act was in fact outdated.
 
APMC Act became a Burden
 
APMC works best if the producing centres and consuming centres are in the vicinity of the APMC. With modern technology, improvement in packaging and transportation technology, that is no longer the case. 
 
However, vested interest took over the APMC system and repurposed it to keep the advantages of a national and international market out of reach of farmers. It would not shield the farmers from international shocks. That burden fell on the government through the use of MSP (minimum support price) design. APMCs create a privately tolled access to markets without providing any sort of advantage.
 
This is nothing short of transfer of wealth from poor farmers and the government to the middlemen (who, at times, are also large farmers).
 
What started as an initiative to create market infrastructure at local levels turned into millstone around the necks of those who could ill afford it. What we need is to allow our farmers to sell their produce to the largest market they can access at lowest cost. 
 
Essential Commodities Act Was Also a Hinderance
 
The Essential Commodities Act was a result of the psychological scars of various Bengal famines, the last of them in 1943 claimed three million lives due to starvation while ships loaded with rice remained anchored in Calcutta port.
 
It was created in era of shortage – but that era has since passed with Indian agricultural production exceeding domestic consumption requirements for past few decades even across monsoon cycles. Further, the Act did not deter hoarding.
 
It merely sent it underground. The value of these food stocks only accrued to the hoarders who amplified price fluctuations harming farmers and consumers.
 
Holding back stocks in times of starvation and shortage was and should remain illegal. However, holding well-disclosed stocks in times of abundance creates advantages. It allows price smoothening and improves crop selection by farmers. 
 
Reform Intends To Improve Realisation for Farmers
 
Without a risk management framework, there was no way that government could achieve the doubling of farm incomes. The aim of the three legislations passed by parliament is to reduce the farm-to-fork distance for farmers by enhancing their realisation per tonne. Contract farming should allow price certainty thereby reducing risks. The amendment to the Essential Commodities Act will allow lawful stocking of commodities thereby smoothening prices for consumers. In effect, the intent of the Act is to increase farm prices while reducing the fork prices. To this end, the Bills are, indeed, a reform.
 
But More Steps are Required…
 
The challenge of having self-sustainable agricultural sector has not been solved anywhere in the world.  The rich countries have mitigated it by creating stronger economic opportunities elsewhere and by subsiding agriculture. While agriculture remains a smaller contributor to economic growth, food security itself is invaluable. A self-sustaining agricultural sector will be a force multiplier for India.
 
To make it so, we need to bring agriculture to the 21st century in a way even developed countries haven’t. We have no choice; we do not have the economic surplus to subsidise farmers to become a middle-income category.
 
Therefore, we must be creative, innovative and open to experimentation. In 2017 in this magazine, I proposed a solution to this problem by way of Smart Agriculture Management System or SAMS. Let us hope government listens this time.
 
NOTE: 
 
I have described challenges in Agriculture and proposed my solution in my paper titled, “A Solution To Farmer Suicides & Loan Waivers” available at http://bit.ly/RDagriculture.
 
(Rahul Prakash Deodhar is an Advocate, Bombay High Court. He can be reached at [email protected], on twitter at @rahuldeodhar or at his website www.rahuldeodhar.com.)
 
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    COMMENTS

    Meenal Mamdani

    1 month ago

    Thank you for an explanation of what the Bills do in non-technical terms.

    One would hope that the "babus" if not the ministers themselves would be interested in getting in touch with experts like yourself. The babus stand to gain a lot with your input and have nothing to lose as you and experts like yourself provide information without asking for something in return and are not likely to encroach on their turf in the administration.

    Why is it then that expert advice is not sought for by the concerned ministries? We know that the polls are influenced by the rich farmers through money for elections and thus pols are susceptible to their influence. But what about the babus? Are they too bribed by these farmers' lobbies?

    What Are the Farm Bills and Why Is There Opposition to It?
    The Parliament on Sunday passed two Bills aimed at transforming agriculture in the country and raising farmers’ incomes. The Farmers' Produce Trade and Commerce (Promotion and Facilitation) Bill and The Farmers (Empowerment and Protection) Agreement of Price Assurance and Farm Services Bill, which were passed by Lok Sabha on 17th September, and were passed by the Rajya Sabha on Sunday amidst major ruckus and allegations from opposition leaders.
     
    On Sunday, the House witnessed unruly scenes with opposition members rushing to the Well of the House to shout slogans and register their protest.
     
    Vice-president M Venkaiah Naidu, who is also chairman of the upper house, suspended eight lawmakers, including Mr O'Brien, who were accused of trying to snatch a mine and tear a rule book—a charge that he has vehemently denied.  
     
    The controversy is over the two Bills as well as the Essential Commodities (Amendment) Ordinance, 2020. Though PM Modi and Bharatiya Janata Party (BJP) president JP Nadda have clarified that the minimum support price (MSP) will stay in place, farmers' unions believe the Bills will phase out the MSP and the traditional grain market system, leaving them vulnerable to price pressure from private interests. They also claim the Bills are against the small farmers, something the Centre dismisses.
     
    "It will root out the middlemen," the prime minister had recently said in a virtual address. He also said that it also allows farmers to sell produce anywhere in the country without barriers. 
     
    However, tempers ran high and even allies of the National Democratic Alliance are not united. After Shiromani Akali Dal (SAD) leader Harsimrat Kaur resigned from the Union cabinet, Ram Karan Kala, a member of legislation assembly (MLA) and leader of Jannayak Janta Party, an ally of the BJP in Haryana, was spotted at a protest site. 
     
    In Haryana, farmers are out on the streets protesting the bills. National Highway 344, which is better known as Ambala-Roorkee national highway has been blocked by protestors. In Kaithal, farmers blocked the Ambala-Hisar highway. The story is not very different in Kurukshetra where local farmers blocked key roads to Kurukshetra and Shahabad.
     
    There are many commission agents or middlemen that the Centre says will be rooted out, particularly in Punjab; more importantly the Punjab government earns a 5% mandi tax when the government procures grain from mandis at the minimum support price. So there is also a vested interest among states like Punjab that see high grain procurement by the government and stand to lose tax revenue. A study also says that there are roughly 28,000 registered commission agents, who too are concerned of going jobless and would be interested in encourage farmer protests.
     
    Three ordinances were promulgated on 2 June 2020 with the claim of giving a historic boost to rural India, benefiting farmers and transforming the agriculture sector. These ordinances were: The Farming Produce Trade and Commerce (Promotion and Facilitation) Ordinance, 2020 to promote barrier-free inter-state and intra-state trade in agriculture produce; The Farmers (Empowerment and Protection) Agreement on Price Assurance and Farm Services Ordinance, 2020 to engage with processors, aggregators, wholesalers, large retailers, exporters; and Amendment to the Essential Commodities Act to liberalise regulatory environment for farmers.
     
    The first two were passed as Bills in both Houses of the Parliament.
     
    The one over MSP has been of greatest concern to farmers, who are clearly not convinced by the many assurances from the government. Farmers fear that they will either cease to have the security of a minimum support price or private players may exploit them.
     
    The long-term solution of farmer distress is to improve the supply chain, establish agro-processing zone and create a better agri-logistic platform and improve market based solutions and insurance. The higher MSP offered by governments ought to be a short-term solution to alleviate agriculture distress.
     
    However, the worry is that support prices are being withdrawn without adequate work on agro processing or the supply chain required to help farmers sell nationally.
     
    Narendra Singh Tomar, Union minister of agriculture & farmers’ welfare, rural development & panchayati raj, is emphatic that full protection has been ensured to farmers in these legislations. He clarified that the procurement at MSP will continue as assurance for this has been given by prime minister himself, and MSP for coming Rabi season will be announced in coming week.
     
    Here are the main provisions in the two Bills, doubts raised by farmers and clarification given by the Union government...
     
    The Farmers' Produce Trade and Commerce (Promotion and Facilitation) Bill, 2020
     
    Main Provisions: 
     
    The new legislation will create an ecosystem where the farmers and traders will enjoy freedom of choice of sale and purchase of agri-produce.
     
    It will also promote barrier-free inter-state and intra-state trade and commerce outside the physical premises of markets notified under state agricultural produce marketing legislations.
     
    The farmers will not be charged any cess or levy for sale of their produce and will not have to bear transport costs.
     
    The Bill also proposes an electronic trading in transaction platform for ensuring a seamless trade electronically.
     
    In addition to mandis, freedom to do trading at farmgate, cold storage, warehouse, processing units etc.
     
    Farmers will be able to engage in direct marketing thereby eliminating intermediaries resulting in full realization of price.
     
    Doubts
     
    • Procurement at minimum support price-MSP will stop
    • If farm produce is sold outside agricultural produce marketing committee (APMC) mandis, these will stop functioning.
    • What will be the future of government electronic trading portal like National Agriculture Market (e-NAM)?
     
    Clarification 
     
    • Procurement at Minimum Support Price will continue, farmers can sell their produce at MSP rates, the MSP for Rabi season will be announced next week
    • Mandis will not stop functioning, trading will continue here as before. Under the new system, farmers will have the option to sell their produce at other places in addition to the mandis
    • The e-NAM trading system will also continue in the mandis
    • Trading in farm produce will increase on electronic platforms. It will result in greater transparency and time saving
     
    The Farmers (Empowerment and Protection) Agreement of Price Assurance and Farm Services Bill, 2020
     
    Main Provisions 
     
    The new legislation will empower farmers for engaging with processors, wholesalers, aggregators, wholesalers, large retailers, exporters etc., on a level playing field. Price assurance to farmers even before sowing of crops. In case of higher market price, farmers will be entitled to this price over and above the minimum price.
     
    It will transfer the risk of market unpredictability from the farmer to the sponsor. Due to prior price determination, farmers will be shielded from the rise and fall of market prices.
     
    It will also enable the farmer to access modern technology, better seed and other inputs.
     
    It will reduce cost of marketing and improve income of farmers.
     
    Effective dispute resolution mechanism has been provided for with clear time lines for redressal.
     
    Impetus to research and new technology in agriculture sector.
     
    Doubts 
    • Under contract farming, farmers will be under pressure and they will not be able to determine prices
    • How will small farmers be able to practice contract farming, sponsors will shy away from them
    • The new system will be a problem for farmers
    • In case of dispute, big companies will be at an advantage
     
    Clarification 
    • The farmer will have full power in the contract to fix a sale price of his choice for the produce. They will receive payment within maximum three days.
    • Ten thousand farmer producer organisations (FPOs) are being formed throughout the country. These FPOs will bring together small farmers and work to ensure remunerative pricing for farm produce.
    • After signing contract, farmer will not have sought out traders. The purchasing consumer will pick up the produce directly from the farm.
    • In case of dispute, there will be no need to go to court repeatedly. There will be local dispute redressal mechanism.
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    COMMENTS

    nampally.mukund

    3 weeks ago

    Another comment: being a paid member this is what I expect: what is mandi system currently in place, mandi tax systems across different states in India, shortcomings of the proposed bills, the implementation plan of the Govt., what to look for in future, what are the benefits to every day consumer, farmer and what does the Farm Bills try to achieve in real sense by de cluttering all the political non nense

    nampally.mukund

    3 weeks ago

    I am not impressed with this Article. I would encourage the editors to please remove the non sense political rhetoric and explain the complex Bills in simple terms.

    yerramr

    1 month ago

    These Bills are progressive and work in favour of the farmers. Implementation agenda should have proper regulations for the aggregators who will provide scope for proper price discovery. Farmers are pawns in the hands of the politicians whether in the shape of cooperatives or Agricultural Market Yards. There are still around 50-60 produce control orders that need to be scrapped simultaneously with the enactment of these Bills. These Bill free the farmers from the strangle hold of money lenders and politicians if the implementation is transparent. What needs to be confirmed is this last aspect.

    Meenal Mamdani

    1 month ago

    Many politicians who have strong rural connections are heavily supported by the middlemen in APMCs and these middlemen are the ones who are instigating the agitation as they stand to lose a lot.
    I would support the Bills except that Modi govt is well known for poorly thought out programs. Apart from demonetization which was a debacle, even GST implementation was done inexpertly causing a lot of distress.
    This bill if poorly managed will hurt the farmers who are even more handicapped than urban folk.

    COVID-19: How Some Hospitals Continue to Loot Insured Patients Too
    The coronavirus (COVID-19) pandemic continues to expose the naked greed displayed by certain opportunistic businesses which, tragically, include some private hospitals. Healthcare workers around the world are putting their own lives at risk to save their patients, but a few private hospitals are giving the business a bad name by taking advantage of helpless people in a lock-down to inflate bills and make a fast buck.
     
    Even those patients with health insurance policies are not spared from the loot involved in hospitalisation costs. Shockingly, despite very clear directions from the insurance regulator, several hospitals and third-party agents (TPAs) are not entertaining cashless treatment for COVID-19 patients. But more about it later.
     
    Moneylife has exposed several hospitals that have fleeced patients by overcharging for personal protective equipment (PPE) kits, consumables and even miscellaneous costs. For patients with health insurance, it is turning out to be a double whammy. They are paying a fairly high insurance premium because they expect the entire hospitalisation cost to be borne by the insurer.
     
    However, with inflated bills running into lakhs of rupees, insurers are not paying for several items by claiming they are not part of the treatment. In fact, insurers are only paying for the room rent and treatment costs and asking insured persons to bear the cost of consumables, which are hugely inflated. 
     
    And if the health insurance policy has conditions like co-pay, waiting period for pre-existing illnesses or even a low sum insured, then the burden of medical bills payable from the insured’s own pocket increases further.
     
    In addition, hospitals charge different rates for doctor’s visit, investigations, operation theatre and other charges depending on the type of hospitalisation facility opted for by the patient. For example, the visit charges of the doctor or even operation charges and some treatments would be higher for a private room than a shared room or in general ward. If the room rent is more than what the policy will pay for, the insurer will only reimburse or pay that much and also pro rate the all the other additional charges or reject them.
     
    Coming back to the cashless hospitalisation, the Insurance Regulatory and Development Authority of India (IRDAI), in a notification on 14 July 2020 , had clarified that policyholders are entitled to cashless facility at all network providers or hospitals with whom the insurance company or the TPA has entered into an agreement in accordance with the norms of service level agreements (SLA). 
     
    However, in many cases, patients are denied cashless hospitalisation. Take for example, the case of Vasudevan K (name changed), who incidentally is from Hyderabad where IRDAI has its head office, and was admitted in Virinchi Hospitals for COVID-19 treatment in July. 
     
    Mr Vasudeven, was not only denied cashless treatment for COVID-19, but was also overcharged by the hospital. "In my case two hospitals refused to accept the cashless process. IRDAI mentions on its website that they cannot refuse. When I submitted my claim for reimbursement, the TPA raised the query as to why I did not opt for cashless when the hospital is in the network?”.  He asks, “Are there any remedies at the point of admission? What happens until the time the insurance company gets back with cashless approval - wait or get admitted?" 
     
    He was overcharged under the pretext of room rent as well. He says, "At the time of admission it was agreed that room rent was Rs4,000 per day. Accordingly, these were billed under 'accommodation charges' at Rs28,000- for seven days. But in addition to this, the hospital unilaterally and arbitrarily charged an additional amount of Rs28,000 under 'non-insurance services - special deluxe ac room and other amenities'." 
     
      
    Out of his total bill, around 40% cost was for PPE kits and related charges. Mr Vasudevan says, "On a daily basis, PPE (full set) charges for one nurse-in-charge, three nurses (one per shift) and five doctors, DMO and registrar are billed in full to me - totalling Rs50,400 for seven days. In addition to this amount, I have been billed cumulatively for seven days an amount of Rs2,19,679 towards other PPE related charges, which is clearly excessive."
     
     
    Mr Vasudevan was charged for Rs6.15 lakh by Virinchi Hospitals from Hyderabad. It is one of the hospitals that were banned from accepting COVID-19 patients by the Telangana state government over allegations of excessive charges. 
     
    Sharing one more example of overcharging, he says, "My bill had a listing of eight pages with a list of charges. Here there were line items with services and medicines not provided. For example, oxygen charges were billed for eight days whereas I was admitted only for seven days. There were some other trivial items also that were not consumed by me. Insurance companies assume that these charges are correct and pay. I needed to be more diligent."
     
    Here are Mr Vasudevan's tips for patients...
     
    a) Make sure your name is correctly mentioned on the discharge summary and all proper documents with your name are attached with it. “I was given the discharge summary in my name with contents (reports and other documents) belonging to some other patient. I got it corrected - I have multiple version copies with me.”
     
    b) Be vigilant about the test reports and what is being conveyed to the senior doctors. They made mistakes, but “my vigilance saved me from an additional day stay at hospital, where average cost per day was about Rs89,000.”
     
    c) Sunday Wows: 
     
    1. I was discharged on a Sunday, and told to collect bills later. There was no sanctity to billing line item heads. Running bill, provisional bill and final bill only have final amounts tallied. Being a Sunday - no senior was there to respond to queries—or so the hospital claimed. 
     
    2. Maybe not a good idea to get admitted on a Sunday as well, as no real treatment commences without senior doctors. Even when I had requested for an oxygen mask, it was provided to me five hours after admission.
     
    On 5th August, the Telangana government withdrew permission of Virinchi Hospital to treat COVID-19 patients. As per a report from Deccan Chronicle ,
    "The health department in its orders said the hospital was 'charging exorbitant rates', indulging in 'improper and surplus billing and not adhering to the ceiling guidelines'. Several complaints have been received against Virinchi Hospitals."
     
    Virinchi Hospitals filed a petition in the Telangana High Court however, it was dismissed. A bench of chief justice Raghvendra Singh Chauhan and justice B Vijaysen Reddy called the bluff of the hospital and said it should have adhered to the fee capping as told by the government, says a report from Times of India
     
    The examples shared by Mr Vasudeven only show that not only patients without any health insurance policy, but also those with insurance (or their family) need to be vigilant during hospitalisation. 
     
    You may also wish to read…
     
     
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    sheoratan

    1 month ago

    I Admire The Courage of Moneylife to Expose even Most Powerfuls...

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