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Legislations, The Law

The Farmers’ Produce Trade and Commerce (Promotion and Facilitation) Ordinance, 2020.

On 5th June 2020, the President of India promulgated ‘The Farmers’ Produce Trade and Commerce (Promotion and Facilitation) Ordinance, 2020’ which has been passed by both the Houses of the Parliament during the ongoing monsoon session.

By: Hanoon Vahab, BBA L.LB 3rd year, Geeta Institute of law

Objectives of the ordinance:

1. To provide freedom of choice to farmers and traders concerning the sale and purchase of farmers’ produce.

2. To promote efficient, transparent, and barrier-free inter-state and intra-state trade & commerce.

3. To provide a facilitative framework for electronic trading.

Key points of the ordinance:

1. Trade of Farmers’ Produce : 

The ordinance allows intra-state and inter-state trade of farmers’ produce outside by providing:

  1. The market committee formed under the state APMC acts runs the physical premises of the market.
  2.  Trade can be conducted in other markets notified under the state APMC act such as: 
  • (i) Farm gates
  • (ii) Factory premises
  • (iii) Warehouses
  • (iv) Silos
  • (v) Cold storage

2. Electronic Trading

The ordinance permits the electronic trading of scheduled farmers’ produce in the specified areas in the following manner:

  1. E-platform is set up to facilitate the direct and online purchase and selling of scheduled farmers’ products through electronic devices.
  2. E-platforms of scheduled farmers’ product can be established and operated by:
  • (i) Companies
  • (ii) Partnership firms
  • (iii) Registered societies
  • (iv) Any other trader having permanent account numbers under the Income Tax Act, 1961, or any other document notified by the central government.
  • (v) A farmer producer organization.

3. Market Fee Abolished :

The ordinance prohibits the state government from levying any market fee, cess, or levy on farmers, traders, and electronic trading platforms for trade and commerce in scheduled farmers’ produce in a trade area.

What is Farmer’s Produce?

The definition of farmers’ produce under section 2 (a) of The Farmers’ Produce Trade and Commerce (Promotion and Facilitation) Ordinance, 2020 states that:

(a) Farmers’ produce means –

  1. Foodstuff including cereals like wheat, rice, or other coarse grains, pulses, edible oilseed, 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.
  2. Cattle fodder including oil cakes and other concentrates; and
  3. Raw cotton whether ginned or unginned, cotton seeds, and raw jute.

Trade and Commerce of Farmers’ produce 

  • The ordinance ensures freedom to conduct trade (inter-state or intra-state) and Commerce in a trade area. 
  • Any trader may engage in the inter-state or intra-state trade of scheduled farmers’ produce with farmer or trader in a trade area.
  • The definition of Scheduled Farmers’ Produce under section 2 (J) of The Farmers’ Produce Trade and Commerce (Promotion and Facilitation) Ordinance, 2020 states that Scheduled farmers’ produce means the agricultural produce specified under any state APMC act or regulation.

Trade and commerce in lieu of public interest:

In such a case, the central government may prescribe a system for electronic registration for traders, modalities for trade transaction, and mode of payment of the scheduled farmers’ produce in a trade area,

wherein the payment has to be made either on the same day or maximum within the 3 working days.

Who are competent to E-trade?

  1. Any person (other than an individual) having a permanent account number allotted under the Income Tax Act 1961 or other documents as notified by the central government.
  2. Any farmer producer organization 
  3. Agricultural cooperative society 
  • The ordinance restricts State Government from levying market fees under state APMC or any other state law in the trade area.

The ordinance provides the authority to Central Government to develop a Price Information and Market Intelligence System and appoint any person owning and operating E-trade to provide such information.

Dispute Resolution between the farmer and a trader

  • Composition of the Board of Conciliation
  1. It shall consist of a chairperson; who shall be an officer serving under the supervision and control of the Sub-Divisional Magistrate.
  2. Members shall not be less than 2 and not more than 4; who shall be appointed in equal numbers to represent the parties to the dispute on the recommendation of such parties, as the Sub-Divisional Magistrate may deem fit.
  • Procedure to resolve the dispute

1. Parties to the dispute, through conciliation, can file an application to the Sub-Divisional Magistrate who will further refer the matter to a Conciliation Board regarding the same.

2. During Conciliation Proceedings, a Memorandum of Settlement signed by the parties to the dispute shall be drawn and it should be binding upon them.

3. If such parties are unable to resolve the dispute within 30 days, they may approach the Sub-Divisional Magistrate to resolve the same.

4. The Sub-Divisional Authority, on its motion or in a petition or on the reference from any government agencies, can take action in that regard within 30 days from the date of its filing by giving the parties an opportunity of being heard.

5. Any party aggrieved by the order of the Sub-Divisional Authority can prefer an appeal before the Appellate Authority within 30 days of such an order.

6. The manner and procedure for filing a petition or an appeal before the Sub-Divisional Authority and Appellate Authority respectively shall be such as may be prescribed.

  • The ordinance also provides for the provisions concerning the Suspension or Cancellation of the right to operate in electronic trading and transaction platform along with the Right to Appeal against the same.
  • It contains the provisions regarding Penalties for Contravention of Ordinance and Rules.
  • The ordinance provides for the Protection of action taken in good faith.
  • The ordinance gives power to the Central Government to make rules under sections 4(2),m4(3),8(10),9(2),10(2),10(3), and any other matter which is to be or may be prescribed.
  • The ordinance provides for Laying of Rules and Powers to remove difficulties by the Central Government by notifying in the official gazette and after the approval of both Houses of the Parliament.

An exception to the ordinance:

The ordinance shall not apply to the Stock Exchanges and Clearing Corporations recognized under the Securities Contracts (Regulations) Act, 1956.

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