Farmers’ Produce Trade and Commerce (Promotion and Facilitation) Bill, 2020

The bill to enact The Farmers’ Produce Trade and Commerce (Promotion and Facilitation) Act, 2020 (hereinafter referred to as the “proposed act”) was passed in the Lok Sabha on 14thSeptember 2020 and was passed in the Rajya Sabha on 20th September 2020. This Bill replaced the Farmers’ Produce Trade and Commerce (Promotion and Facilitation) Ordinance, 2020. However, assent of the President is still pending. After receiving assent of the President, the proposed act shall be deemed to have come into force on 05/06/2020.

Objectives of the Farmers’ Produce Trade and Commerce (Promotion and Facilitation) Bill, 2020.

  1. Agriculture provides most of the world’s food and fabrics. Keeping in view the importance of agriculture, the States have enacted the Agricultural Produce Market Committee (APMC) Acts to develop market-yard as market place and to provide regulation on marketing practices of notified agricultural produce. However, the regulatory provisions hindered the freedom of choice-based marketing and also the inflow of investment in development of alternative markets and marketing infrastructure.
  2. The Government of India had circulated the Model APMC Act, 2003 and the Model Agricultural Produce and Livestock Marketing (Promotion and Facilitating) Act, 2017 to the States to reform their APMC Acts with a view to increase competitiveness in agriculture supply chain, provide freedom to farmers to sell their produce through alternative marketing channels to get the fair prices through the market framework under the State legislations. However, the States have not embraced the reforms in a uniform manner, and the lack of homogeneity in the laws has been obstructing a competitive pricing environment for the farmers and is becoming an impediment to the evolution of a modern trading system.
  3. Agriculture not only meets the food security requirements of the country, but also provides raw material to the agro-industry which culminates into job creation and earning of foreign exchange through export. Directly linking the agro-industry with the farmers shortens the supply chain, reduces the marketing cost and post-harvest losses and most importantly enhances farmers’ income.
  4. To keep pace with the dynamically changing agri-economy, e-commerce and agri-exports and also to meet the rising expectations of farmers and consumers, the country needs an accessible and competitive trading system outside the physical space of the notified market-yards under the State APMC Acts.
  5. In the light of above circumstances, it has become necessary to enact a Central Legislation to provide a more competitive and hassle free eco-system where farmers and traders have the choice to sell their produce in an efficient, transparent and competitive environment to realise remunerative prices. However, as Parliament was not in session and an urgent legislation was required to be made, the President promulgated the Farmers’ Produce Trade and Commerce (Promotion and Facilitation) Ordinance, 2020 (Ord. 10 of 2020) under clause (1) of article 123 of the Constitution on the 5th day of June, 2020. The Bill seeks to replace the aforesaid Ordinance.

A Bill to provide for the creation of an ecosystem where the farmers and traders enjoy the freedom of choice relating to sale and purchase of farmers’ produce which facilitates remunerative prices through competitive alternative trading channels; to promote efficient, transparent and barrier-free inter-State and intra-State trade and commerce of farmers’ produce outside the physical premises of markets or deemed markets notified under various State agricultural produce market legislations; to provide a facilitative framework for electronic trading and for matters connected therewith or incidental thereto.

Definitions under the proposed act

Electronic trading and transaction platform – It has been defined as a platform set up to

  • facilitate
  • direct and
  • online

buying and selling for conduct of trade and commerce of farmers’ produce through a network of electronic devices and internet applications, where each such transaction results in physical delivery of farmers’ produce.

Farmer has been defined as an engaged in the production of farmers’ produce

  • by self or
  • by hired labour or
  • otherwise,

and includes the farmer producer organisation.

Farmers’ produce has been defined as

  • foodstuffs including cereals like wheat, rice or other coarse grains, pulses, edible oilseeds, oils, vegetables, fruits, nuts, spices, sugarcane and products of poultry, piggery, goatery, fishery and dairy intended for human consumption in its natural or processed form;
  • cattle fodder including oilcakes and other concentrates; and
  • raw cotton whether ginned or unginned, cotton seeds and raw jute;

Farmer producer organisation has been defined as an association or group of farmers, by whatever name called,––

  • registered under any law for the time being in force; or
  • promoted under a scheme or programme sponsored by the Central or the State Government;

Inter-State Trade has been defined as the act of buying or selling of farmers’ produce, wherein a trader of one State buys the farmers’ produce from the farmer or a trader of another State and such farmers’ produce is transported to a State other than the State in which the trader purchased such farmers’ produce or where such farmers’ produce originated.

Intra-State Trade has been defined as the act of buying or selling of farmers’ produce, wherein a trader of one State buys the farmers’ produce from a farmer or a trader of the same State in which the trader purchased such farmers’ produce or where such farmers’ produce originated

Notification has been defined as a notification published by the Central Government or the State Governments in the Official Gazette and the expressions “notify” and “notified” shall be construed accordingly.

Person has been defined as

  • an individual;
  • a partnership firm;
  • a company;
  • a limited liability partnership;
  • a co-operative society;
  • society; or
  • any association or body of persons duly incorporated or recognised as a group under any ongoing programmes of the Central Government or the State Government

Prescribed has been defined as prescribed by the rules made by the Central Government under this Act.

Scheduled farmers’ produce has been defined as the agricultural produce specified under any State APMC Act for regulation.

State word has been defined as being inclusive of union territory.

State APMC Act has been defined as any State legislation or Union territory legislation in force in India, by whatever name called, which regulates markets for agricultural produce in that State.

Trade Area has been defined as any area or location, place of production, collection and aggregation including

  • farm gates;
  • factory premises;
  • warehouses;
  • silos;
  • cold storages; or
  • any other structures or places,

from where trade of farmers’ produce may be undertaken in the territory of India but does not include the premises, enclosures and structures constituting –

(i) physical boundaries of principal market yards, sub-market yards and market sub-yards managed and run by the market committees formed under each State APMC Act in force in India; and

(ii) private market yards, private market sub-yards, direct marketing collection centres, and private farmer-consumer market yards managed by persons holding licenses or any warehouses, silos, cold storages or other structures notified as markets or deemed markets under each State APMC Act in force in India;

Trader has been defined as a person who buys farmers’ produce by way of inter-State trade or intra-State trade or a combination thereof, either for self or on behalf of one or more persons for the purpose of wholesale trade, retail, end-use, value addition, processing, manufacturing, export, consumption or for such other purpose.

Provisions relating to promotion and facilitation of trade and commerce of farmers’ produce in the proposed act

It has been provided that any farmer or trader or electronic trading and transaction platform shall have the freedom to carry on the inter-State or intra-State trade and commerce in farmers’ produce in a trade area. However, this will be subject to the provisions of this act. [i]

As far as scheduled farmer’s produce is concerned, any trader can engage in the inter-State trade or intra-State trade of scheduled farmers’ produce with a farmer or another trader in a trade area. However, in order to engage in trade of such produce, no trader, except the farmer producer organisations or agricultural cooperative 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. The Central Government may, in public interest, prescribe a system for electronic registration for a trader, modalities of trade transaction and mode of payment of the scheduled farmers’ produce in a trade area. It has also been provided that every trader who transacts with farmers shall make payment for the traded scheduled farmers’ produce on the same day or within the maximum three working days if procedurally so required subject to the condition that the receipt of delivery mentioning the due payment amount shall be given to the farmer on the same day. However, as far as payment by farmer produce organization or agriculture co-operative society, by whatever name called, is concerned, the Central government may prescribe a different procedure.[ii]

Any

  1. Partnership firm which has a PAN number or such other document as may be notified by the Central Government ;
  2. Company which has a PAN number or such other document as may be notified by the Central Government;
  3. LLP (limited liability partnership) which has a PAN number or such other document as may be notified by the Central Government ;
  4. Co-operative society which has a PAN number or such other document as may be notified by the Central Government ;
  5. Society which has a PAN number or such other document as may be notified by the Central Government ; or
  6. Association or body of persons duly incorporated or recognised as a group under any ongoing programmes of the Central Government or the State Government which has a PAN number or such other document as may be notified by the Central Government
  7. Farmer producer organisation
  8. Agricultural cooperative society

may establish and operate an electronic trading and transaction platform for facilitating inter- State or intra-State trade and commerce of scheduled farmers’ produce in a trade area. No individual person can establish and operate an electronic trading and transaction platform for facilitating inter- State or intra-State trade and commerce of scheduled farmers’ produce in a trade area. It has also been provided that the person establishing and operating an electronic trading and transaction platform shall prepare and implement the guidelines for fair trade practices such as mode of trading, fees, technical parameters including inter-operability with other platforms, logistics arrangements, quality assessment, timely payment, dissemination of guidelines in local language of the place of operation of the platform and such other matters. However, if the Central Government is of the opinion that it is in public interest to do so, it may make rules for electronic trading platforms specifying the procedure, norms, manner of registration; and the code of conduct, technical parameters including inter-operability with other platform and modalities of trade transaction including logistics arrangements and quality assessment of scheduled farmers’ produce and mode of payment for facilitating fair inter-State and intra-State trade and commerce of scheduled farmers’ produce in a trade area. [iii]

It has also been provided 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.[iv]

It has also been provided that the Central Government may, through any Central Government Organisation (including any sub-ordinate or attached office, Government owned or promoted company or society), develop  a Price Information and Market Intelligence System for farmers’ produce and a framework for dissemination of information relating thereto. For this purpose, the Central Government may require any owner owning and operating an electronic trading and transaction platform to provide information regarding such transactions as may be prescribed.[v] 

Disputes Resolution System

In case of any dispute arising out of a transaction between the farmer and a trader regarding the trade of scheduled farmers’ produce in a trade area, the he parties may seek a mutually acceptable solution through conciliation by filing an application to the Sub-Divisional Magistrate who shall refer such dispute to a Conciliation Board to be appointed by him for facilitating the binding settlement of the dispute. Every Board of Conciliation appointed by the Sub-Divisional Magistrate shall consist of a chairperson and such members not less than two and not more than four, as the Sub-Divisional Magistrate may deem fit. The chairperson shall be an officer serving under the supervision and control of the Sub-Divisional Magistrate and the other members shall be persons appointed in equal numbers to represent the parties to the dispute and any person appointed to represent a party shall be appointed on the recommendation of that party. However, if any party fails to make such recommendation within seven days, the Sub-Divisional Magistrate shall appoint such persons as he thinks fit to represent that party. Where, in respect of any dispute, a settlement is arrived at during the course of conciliation proceedings, a memorandum of settlement shall be drawn accordingly and signed by the parties to such dispute which shall be binding upon the parties. If the parties to the transaction are unable to resolve the dispute within thirty days , they may approach the Sub-Divisional Magistrate concerned who shall be the “Sub-Divisional Authority” for settlement of such dispute. The Sub-Divisional Authority on its own motion or on a petition or on the reference from any Government agency take cognizance of any contravention of the provisions of section 4 or rules made thereunder and take action. The Sub-Divisional Authority shall decide the dispute or contravention in a summary manner within thirty days from the date of its filing and after giving the parties an opportunity of being heard, he may order for recovery of the amount under dispute or impose a prescribed penalty or pass an order for restraining the trader in dispute from undertaking any trade and commerce of scheduled farmers’ produce, directly or indirectly for such period as it may deem fit. Any party aggrieved by the order of the Sub-Divisional Authority may prefer an appeal before the Appellate Authority (Collector or Additional Collector nominated by the Collector) within thirty days of such order who shall dispose of the appeal within thirty days from the date of filing of such appeal. Every order of the Sub-Divisional Authority or Appellant 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.[vi]

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 by the Central Government in consultation with the respective State Government may, on its own motion or on a petition or on the reference from any Government Agency, take cognizance of any breach of the procedures, norms, manner of registration and code of conduct or any breach of the guidelines for fair trade practices by the electronic trading and transaction platform or contravenes the provisions of section 7 and, by an order within sixty days from the date of receipt and for the reasons to be recorded, he may –

(a) pass an order for the recovery of the amount payable to the farmers and traders;

(b) impose a prescribed penalty; or

(c) suspend for such period as he deems fit or cancel the right to operate as an electronic trading and transaction platform

However, no order for recovery of amount, imposition of penalty or suspension or cancellation of the right to operate shall be passed without giving the operator of such electronic trading and transaction platform an opportunity of being heard. Every order made shall have force of the decree of a civil court and shall be enforceable as such and the decretal amount shall be recovered as arrears of land revenue. [vii]Any person aggrieved by such order may, prefer an appeal within sixty days from the date of such order, to an officer not below the rank of Joint Secretary to the Government of India to be nominated by the Central Government for this purpose. However, an appeal may be admitted even after the expiry of the said period of sixty days, but not beyond a total period of ninety days, if the appellant satisfies the appellate authority, that he had sufficient cause for not preferring the appeal within the said period. Every appeal made shall be made in such form and manner, and shall be accompanied by a copy of the order appealed against and by such fees as may be prescribed. After giving the appellant an opportunity of being heard, such an appeal shall be heard and disposed of within a period of ninety days from the date of its filing.

Penalties

Whoever contravenes the provisions of section 4 or the rules made thereunder shall be liable to pay a penalty which shall not be less than twenty-five thousand rupees but which may extend up to five lakh rupees, and where the contravention is a continuing one, further penalty not exceeding five thousand rupees for each day after the first day during which the contravention continues. If any person, who owns, controls or operates an electronic trading and transaction platform, contravenes the provisions of sections 5 and 7 or the rules made thereunder shall be liable to pay a penalty which shall not be less than fifty thousand rupees but which may extend up to ten lakh rupees, and where the contravention is a continuing one, further penalty not exceeding ten thousand rupees for each day after the first day during which the contravention continues.[viii]

Power of Central Government to issue instructions, directions, orders or guidelines

The Central Government may, for carrying out the provisions of this Act, give such instructions, directions, orders or issue guidelines as it may deem necessary to any authority or officer subordinate to the Central Government, any State Government or any authority or officer subordinate to a State Government, an electronic trading and transaction platform or to any person or persons owning or operating an electronic trading and transaction platform, or a trader or class of traders.[ix]  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.[x]

Overriding effect

The provisions of this Act shall have effect, notwithstanding anything inconsistent therewith contained in any State APMC Act or any other law for time being in force or in any instrument having effect by virtue of any law for the time being in force.[xi]

Application of Act to Stock Exchanges and Clearing Corporations recognised under the Securities Contracts (Regulation) Act, 1956

Nothing contained in this Act, shall be applicable to the Stock Exchanges and Clearing Corporations recognised under the Securities Contracts (Regulation) Act, 1956 and the transactions made thereunder.[xii]

Rule laying procedure

Every rule made by the Central Government under this Act shall be laid, as soon as may be after it is made, before each House of Parliament, while it is in session, for a total period of thirty days which may be comprised in one session or in two or more successive sessions, and if, before the expiry of the session immediately following the session or the successive sessions aforesaid, both Houses agree in making any modification in the rule or both Houses agree that the rule should not be made, the rule shall thereafter have effect only in such modified form or be of no effect, as the case may be; so, however, that any such modification or annulment shall be without prejudice to the validity of anything previously done under that rule.[xiii]

Bar of jurisdiction of civil court

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.[xiv]

-Adv. Tushar Kaushik

[i] Section 3

[ii] Section 4

[iii] Section 5

[iv] Section 6

[v] Section 7

[vi] Section 8

[vii] Section 9

[viii] Section 11

[ix] Section 12

[x] Section 13

[xi] Section 14

[xii] Section 16

[xiii] Section 18

[xiv] Section 15

Copy of notification: Farmers’ Produce Trade and Commerce (Promotion and Facilitation) Bill, 2020

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