Last updated: September 10th, 2021 1:59 PM

Explained: Farmers’ Produce Trade and Commerce (Promotion and Facilitation) Ordinance, 2020

The Ministry of Agriculture and Farmer’s welfare promulgated the Farmers’ Produce Trade and Commerce (Promotion and Facilitation) Ordinance, 2020. The ordinance attempts to provide barrier-free trade of farmers’ produce outside the markets notified under the different state agricultural produce market laws. The Ordinance will prevail over state Agricultural Produce Market Committee (APMC) Acts.

The objective of the Farmers’ Produce Trade and Commerce (Promotion and Facilitation) Ordinance

The key objective of introducing the Farmers’ Produce Trade and Commerce (Promotion and Facilitation) Ordinance is as follows:

• To create an ecosystem where the farmers and traders enjoy the freedom of choice relating to the sale and purchase of farmers’ produce
• To facilitates remuneration prices through competitive alternative trading channels
• To promote efficient, transparent, and barrier-free, interstate and intra-state trade and commerce of farmers produce outside the physical premises of markets notified under the different state agricultural produce market legislation
• To facilitative framework for electronic trading

Trade of Farmers’ Produce

As stated above, the Farmers’ Produce Trade and Commerce (Promotion and Facilitation) Ordinance allows intra-state and inter-state trade of farmers’ produce which includes; Such trade can be conducted in any place of production, collection, and aggregation of farmers’ produce including the following trade areas:

• Farm gates
• Factory premises
• Warehouses
• Silos
• Cold storages

Inter-State Trade

Interstate trade means the act of buying or selling of farmer’s produce, wherein a trader of one state buys the farmer’s produce from the farmer or trader of another state and such farmer’s producer is transported to a State other than the State in which the trader purchased such farmer’s produce and where such farmer’s produce originated.

Intra –State Trade

Intra –State trade means that the act of buying or selling of farmer’s produce wherein a trader of one state buys the farmer’s produce from the farmer or trader of the same state in which the trader purchased such farmer’s produce and where such farmer’s produce originated

Applicable Farmers’ Produce 

The Farmers’ Produce Trade and Commerce (Promotion and Facilitation) Ordinance covers the following products:

• Wheat, Rice, and other coarse grains
• Pulses, Edible seeds, and Oils
• Vegetables, Fruits, Nuts, Spices, and sugarcane
• Products of poultry, Piggery, Goatery, and fishery
• Diary Products

Eligibility for Trade

The Farmers’ Produce Trade and Commerce (Promotion and Facilitation) Ordinance allows farmers, farm producer organizations as well as anyone who buys farmers’ produce to engage in such intra-state or inter-state trade. The following types of trade are eligible for this: Wholesale Trade, retail, end-use, value addition, processing, manufacturing, export, consumption.A farmer is defined as a person engaged in the production of farmers’ produce by self or by hired labour.

Farmer producer organization

A farmer producer organization means an association or group of farmers which is: Registered under the law, Promoted under a scheme of the central or state government.

Scheduled farmers’ produce

To trade in scheduled farmers’ produce (agricultural produce specified and regulated under state Agricultural Produce Market Committee  Acts), an entity must be either:

• A farmer producer organization or agricultural cooperative society,
• A person having permanent account number under the Income Tax Act or any other document notified by the central government

Electronic Trading

The Farmers’ Produce Trade and Commerce (Promotion and Facilitation) Ordinance permits the electronic trading of farmers’ produce in the specified trade area. As part of the ordinance, an electronic trading and transaction platform will be set up to facilitate the direct and online buying and selling of farmers’ produce through electronic devices and the internet for the physical delivery of the farmers’ product.

Applicable entities to establish Electronic Trading platforms

The following entities will establish and operate Electronic Trading platforms:

• An Individual
• Companies
• Partnership firms
• Limited Liability partnership firm
• Farmer producer organization
• Agricultural cooperative society
• Registered societies, having permanent account number under the Income Tax Act

The Government of India will prescribe the modalities for Electronic Trading platforms including the following:

• Procedure, norms, and manner of registration
• Code of conduct, quality assessments, and modes of payment

If a platform contravenes the modalities prescribed by the government or engages in unfair trade practices, its right to operate the platform may be suspended or cancelled. For contravening the provisions regarding the electronic trading platforms, a person operating the platform will be subject to a penalty between Rs.50000 and Rs.10 lakh. In the case of continuous contravention, a further penalty of up to Rs 10,000 per day may be imposed.

Payment to Farmers

The person transacting with the farmer will be required to make payments to the farmer on the same day, or within three working days in certain conditions, for the transaction of scheduled farmers’ produce.

No fees to be levied by states

The Farmers’ Produce Trade and Commerce (Promotion and Facilitation) Ordinance prohibits state governments from levying any market fee or cess on farmers, traders, and electronic trading platforms for any trade.

Dispute Resolution Mechanism for Framers

The parties involved in the trade-related dispute can apply to the Sub-Divisional Magistrate for relief through conciliation. The Magistrate will be appointed a Conciliation Board and refer the dispute to the Board. If the dispute remains unresolved after one month, the parties may approach the Magistrate for settlement of the dispute. The traders will have a right to appeal against the decisions of the Magistrate before an Appellate Authority (Collector or Additional Collector nominated by the Collector).

Penalty for Contravention of Ordinance and Rules

A person in contravention of the provisions regarding the trade of scheduled farmers’ produce will be subject to a penalty between Rs 25,000 and Rs.5 lakh rupees. In case of continuous contravention of rules, such person may be subject to a further penalty of up to Rs 5,000 per day. Please click on the official link on the guidelines of the Farmers’ Produce Trade and Commerce (Promotion and Facilitation) Ordinance, 2020