There have been varied responses to three ordinances passed by the central government – Essential Commodities amendment ordinance, Farmers’ Produce Trade and Commerce (Promotion and Facilitation) ordinance and the Farmers (empowerment and protection) agreement on price assurance and farm services ordinance 2020. Punjab and Haryana farmers have protested against these ordinances, with the primary focus being on the second ordinance related to the trade and commerce of farmers produce outside the APMC. The other two ordinances are primarily meant to do away with the removal of stockholding limits on various foodstuffs until and unless required by extraordinary circumstances which include war.

APMC or Agricultural Produce Market Committee is a state level market mechanism run by government to protect farmers from exploitation. APMC allows the farmers to sell their produce. In the Punjab’s APMC structure there are arhtiyas which are commissioning agents under the State Food and civil supply department which ensures the farmers fair price for their produce. The Farmers’ Produce Trade and Commerce (Promotion and Facilitation) ordinance 2020 takes the provision of trade of the farmers’ produce outside the APMC through additional marketing channel. Main concerns from the farmers are that the ordinance wants to do away with the minimum assurance of price to the farmers under the garb of promoting market efficiency. Another concern regarding the structural intent of the ordinance is that it wants to implement the recommendations of the High Level Committee on Restructuring of Food Corporation of India headed by Shanta kumar; especially the one which wants to remove the FCI responsibilities of food procurement.

In this context, Punjab CM Amarinder Singh had said that these ordinances are in violation of Federalism as enunciated in the constitution. These developments come in the context of removal of the licence requirement by the central ordinance as opposed to the Punjab state’s APMC act which requires that only a licence holder can trade in agricultural food stuffs. As per the recently passed central ordinance, anybody with PAN can trade in the state food grains’ market.

The perception of the Punjab state’s cotton spinning mill owners and ginners are somewhat different towards the new ordinances. They argue for the market induced efficiency in favour of the central Farmers’ Produce Trade and Commerce (Promotion and Facilitation) ordinance 2020. They stated that if the state government in Punjab does not allow implementing this ordinance, then it may lead to a loss for around Rs 300-400 per quintal of cotton. Cotton Corporation of India is a prominent buyer of Punjab’s cotton. Apart from it, there are many private players who separate the cotton from the seeds and the ginners who are the other prominent buyers of the raw cotton. The percentage of purchase by the CCI is not that much in the case of raw cotton of Punjab. One of the main arguments by the private buyers is centred on the 4.5 per cent tax which includes a 2 % mandi fee and a 2.5% Rural Development Fund. They argue that why would they pay these taxes if the farmers can sell their produce to anyone outside the mandis managed by the state. The impact of the taxes is transferred by the buyers to the cotton farmers through a lesser paid price. Hence, the private buyers asserted that if the cotton market is made more open in the state, then they need not pay the taxes. This means that the buyers can pay the farmers a bit more handsomely. It can be understood in the price mechanics of the medium staple and the long staple cotton. The minimum support prices for the medium and the long staple cotton are Rs 5515 and Rs 5825 respectively. If the farmers sell directly to the buyers, they will get the prices closer to the MSP but if they sell through the arhtiyas of Punjab state government, they will get a price of around Rs 5000 per quintal. This translates into a loss for the cotton farmers.

So the ordinances are going to have different impacts on different types of crops and varied responses from different parties involved.