Last week, Lok Sabha passed three bills to reform and liberalize the production, trade, and pricing of agriculture produce in the country. These are heavy pieces of legislature but let’s under what they are in nutshell –
- Farmers’ Produce Trade and Commerce (Promotion and Facilitation) Bill, 2020 – Farmers are now free to sell their produce outside the regulated Mandi (APMC). The bill gives freedom of choice to farmers in sale and purchase of agri-produce.
- Farmers (Empowerment and Protection) Agreement on Price Assurance and Farm Services Bill, 2020 – The bill provides a framework for farmers to enter supply contract with larger buyers. The target is to provide farmers with remunerative prices for their produce in fair and transparent manner.
- Essential Commodities (Amendment) Bill 2020 – The bill allows large business consumers to maintain stock of agriculture commodities (list of commodities finalised given by the law).
These reforms are aimed at creating an ecosystem for farmers which is not restricted to yards of their respective APMCs and commissioning agents and allows free trade of agri-produce between buyers and sellers. This will encourage private businesses and farmers to collaborate and lead to significant acceleration in development of farm sector in India, and aid sustainable and faster overall economic growth of the country.
We are hearing a lot of protest against this bill however if we see history, reforms like this always creates a positive impact in longer term however have some challenges during implementation. Let’s see the other side, states like Punjab has already reduced Mandi tax which is levied on transaction. Few more states now follow this move in coming days which will result into saving of procurement cost. Further, there are many agri products which are out of the purview of this Bill like Basmati rice, however the overall reduction of mandi tax will help companies like KRBL & LT Foods to improve their margins.
We at Care PMS, strongly believe that, the Bills which are passed has an impact on largest sector i.e. agriculture where more than 50% of population is employed. This reforms will lead to a long term sustainable demand for various product/services which is so far restricted to urban population.
We are continuously evaluating businesses/companies which will be benefited and are adding in our portfolio.