NEW DELHI: The Centre sees the new farm laws as much-needed reforms to make agriculture competitive, improve investments and provide options to farmers.

A paper by Niti Aayog member Ramesh Chand explains how the laws will help Indian agriculture become future-ready. Proposed amendments to farm laws are not part of Chand's paper.

Here are main points of his paper:

Limitations of APMC System

* Notified commodities cannot be sold outside the APMC mandis
* Multiple levies for sale and purchase
* No direct farmer to trader sale. Even if allowed, user charges/ cess levied
* Commissions, cess became revenue streams, FCI-Centre footed the bill

Mandi Fees-Commissions

* Of 25 states with APMC acts, 12 do not charge commission on notified crops
* In these 12 states, service charges vary from 0-1% in 9 and 2% in MP, Tripura. Level with private trade
* In 5 states, commission varies between 1-2%. Total charge in Karnataka is 3.5%. They can set mandi charge at 2% or less to protect APMC markets
* In 7 states total charges vary from 5-8%, highest in Punjab and Haryana
* If high charge states lower rates to be competitive, their infra will continue to attract farmers

Recent Changes In APMC And Other Regulations

* UPA in 2003 sought to move fruits, vegetables out of APMC, 16 states did so
* After 2014, NDA framed a model act, only Arunachal adopted
* APMC reforms remained partial for 18 years, Modi govt legislated three bills
* Attempts to change essential commodities act began in 2002, remained partial till now

Law Relating To Trade In Farm Produce

* More than half marketable surplus sold outside mandis, new law makes this legal, protection from fines and raids
* Allows direct purchase from farms, as in the case of milk
* Development of farm producer organisations will develop this system
* Old system involved six-seven transactions, this will be compressed

How MSP Is A Help And A Trap

*Modi govt has revised MSP benchmark upwards, expanded to more crops, Centre-state incentives for pulses
* Officially procured crop output is 11% or total CO and 7% of total agriculture output
* If legal status to MSP is way out, states can easily do so. But if demand does not support prices, this will fail. In 2018, Maharashtra approved jail, fine for violating MSP. Buyers withdrew, farmers suffered
* Is sugar states, when state prices did not match market, mills stopped crushing, leading to legal battles
* Moderate fees/commission encourage private trade to match MSP, offer farmers options
* States like Bihar, Kerala have procured paddy at MSP without APMC act
* Sectors like horticulture, fishery, milk outside MSP are growing at 4-10%, cereals since 2011 is just 1.1%.
* Private corporate investment is just 2% of total investment in agriculture, more needed urgently

Changes In Contract Farming

* Not to be confused with corporate farming, where production activity is undertaken by firms.
* No provision for leasing land to sponsor or firm
* No recovery of dues can be done against land
* Already, firms like Nestle, McCain, TATA and Mahindra have successful partnerships with farmers

Essential Commodities Act

* Setting 100% increase in retail price as trigger for stock limits make it predictable
* Previously use of ECA to cool prices ended up hurting producers
* Should increase investment in cold storage, warehouses

Amendments Proposed To Farmers During Talks

* Ready to make taxes equal for APMC mandis and private markets
* Registration of all traders with their verified details on portal
* Will allow higher court of appeal beyond SDM, collector for contract disputes