How to Ensure Fair Trading Environment in Agriculture Sector for farmers' welfare and to attract investments?

By: 

Vijay SARDANA

Advocate, Delhi High Court 

Techno-legal Expert on Agribusiness, 

Food and Consumer Products

Email: sardana.vijay@gnmail.com

The agriculture markets in India are neither benefiting farmers nor the user of the agro-commodity. The regulatory regime regulating these markets were framed in 1963. These outdated laws are only benefiting few cartels and their supporters and promoters in business and in the political system. State governments are only keen to do lip service. No political party at the state level is keen to reform the market because these markets are also the source of unaccountable funding. 

Most of the activities in the agriculture value chain are outside the taxation system, there is no transparency and no costing parameters for fair transactions. These markets are only generating black money in the country. These markets are also used as a  place for parking black money or money earned through unfair and corrupt means. If study crimes in remote and rural areas, you will find that majority of criminals and crimes are related to land deals, mining and Agriculture trade are the sources of funds for criminals activities and crimes.

The trust level is low between various participants and service providers. This is leading to a risk-averse attitude and promoting exploitative mindset. This mistrust is also leading to avoidable disputes. The fair trading environment is the only way forward to build the Indian rural economy. 

As a citizen, please keep asking why state governments and political party are not keen to do this? Why opposition never demand this from the ruling party? 

Why farmers leaders always demand higher MSP, but they don't protest to demand 50% shops for FPOs and Cooperatives in markets yards. Why? Are they hand in glove with traders lobby. The consumer always pays higher than MSP, but why it is not reaching them? Farmers should demand reforms for welfare, not MSP.  Like farmers, 70% of consumers in India are also poor. Don't tax poor consumers all the time.

Please keep asking all MPs and MLAs from all parties - Why their state governments are not reforming agriculture markets to help farmers? Build pressure on the political class to liberate rural India from their outdated laws and ensure reforms in agriculture marketing system for better India. 

High time to make agriculture trading system transparent and accountable: 

The drafting of the Code of Conduct is an attempt by the author to create a trustworthy trading environment so that Indian can benefit from changing global business environment. This will also attract investment in the rural economy and will create job opportunities in rural India. 

S.No.	Activity	Code for Farmer & Seller	Code for Buyer (Commercial & Non-commercial)	Regulatory Reference
1.	Harvesting	·   Mature and uniform quality ·   Adopt scientific methods	·   Must mention quality requirements clearly either as a specification or via photographs	·   Good Agriculture Practice
2.	Quality based Sorting & Grading	·   Ensure uniformity ·   As per buyers need	·   Explain the requirement clearly in advance	·   Good Trading Practice
3.	Sampling	·   Adopt and insist on scientific methods to minimize disputes	·   Adopt and insist on scientific methods to minimize disputes	·   BIS Guidelines ·   FSSAI Guidelines
4.	Assaying & Testing	·   Adopt and insist on scientific methods to minimize disputes	·   Adopt and insist on scientific methods to minimize disputes	·   FSSAI Act ·   Agmark Act ·   BIS standards
5.	Packing	·   To avoid damage to quality ·   For easy handling ·   For proper warehousing	·   Explain packaging requirement in advance ·   Explain packaging material to be used in advance	·   Agrmark Act ·   FSSAI Act ·   Packaged Commodity Act
6.	Labelling	·   Clearly mention quality, grade and weight	·   Clearly explain quality, grade and weight	·   Consumer Protection Act ·   Packaged Commodity Act ·   Legal Metrology Act
7.	Weighing	·   Must use standard weights ·   Calibrate weighing scale regularly ·   Re-celebrate, if buyer insist	·   Must use standard weights ·   Assure yourself about the weighing system used	·   Legal Metrology Act
8.	Warehousing / Storage	·   Follow Good warehousing practices ·   Minimize damages in warehousing ·   Ensure proper marking, traceability and record-keeping to avoid disputes	·   Encourage Good warehousing practices ·   Avoid damages in warehousing while sampling ·   Ensure proper marking, traceability and record-keeping to avoid disputes	·   WDRA Act ·   SEBI Guidelines ·   Good Handling Practices
9.	Price Discovery	·   Farmers and Sellers should check about the prevailing market price in nearby cities and also on derivatives markets for better negotiation ·   Terms of trade should be discussed in advance while negotiating with buyers ·   Learn risk management and better price realization by adopting different price points over time. The government announced MSP is also an important reference point for bargaining.	·   Buyers should ensure a fair price to farmers and sellers based on the prevailing market price in nearby cities and on derivatives markets. ·   Exploitative mind-set should be avoided to have a long term relationship in business and to minimize disputes ·   Terms of trade should be discussed in advance while negotiating with farmer or seller. ·   Learn risk management and better price realisation by adopting different price points over time.	·   Whole sale Market Price Data ·   Commodity Exchange prices ·   Retail Market price data
10.	Loading	·   Use proper tools for loading to minimize damages to product and packing ·   Stack properly to avoid transportation damages	·   Insist on the use of proper tools for loading to minimize damages to product and packing ·   Insist on proper Stacking to avoid transportation damages	·   Good Handling Practices
11.	Payment	·   Clearly mention cost break-ups of various components like material, labour, packing, assaying, taxes, commission, etc. in proper receipt ·   Prefer to settle payment on the spot to avoid disputes later on in the name of quality or damages ·   Avoid Cash payment for safety, recording and accountability ·   Use digital payment and negotiable instruments in place of cash ·   Terms of payment should be clearly defined in the advance example: interest of late payment, spot payment discounts, margin money, etc.	·   Insist on cost break-ups of various components like material, labour, packing, assaying, taxes, commission, etc. in proper receipt ·   Prefer to settle payment on the spot to avoid disputes later on in the name of quality or damages ·   Avoid Cash payment for safety, recording and accountability ·   Use digital payment and negotiable instruments in place of cash ·   Terms of payment should be clearly defined in the advance example: interest of late payment, spot payment discounts, margin money, etc.	·   Indian Contract Act ·   Negotiable Instruments Act ·   Warehousing Receipts
12.	Risk Management	·   Who will bear the price risk, quality risk and quantity damages, if any, in volatile and uncertain market ·   Insurance of stocks and type of insurance is required or not should be decided in advance	·   Who will bear the price risk, quality risk and quantity damages, if any, in volatile and uncertain market ·   Insurance of stocks and type of insurance is required or not should be decided in advance	·   Insurance laws ·   Commodity Derivatives laws
13.	Transportation	·   In the beginning itself, it should be clear who would arrange transportation.	·   In the beginning itself, it should be clear who would arrange transportation.	·   Good Transportation Practices
14.	Unloading	·   Use proper tools for unloading to minimize damages to product and packing ·   Stack properly to avoid damages ·   Avoid multiple handling to save cost and quality	·   Insist on the use of proper tools for unloading to minimize damages to product and packing ·   Insist on proper Stacking to avoid damages ·   Avoid multiple handling to save cost and quality	·   Good Handling Practices
15.	Dispute Resolution	·   As far as possible avoid expensive and time-consuming court processes ·   Insist on alternate dispute resolution like mediation, negotiation and arbitration	·   As far as possible avoid expensive and time-consuming court processes ·   Insist on alternate dispute resolution like mediation, negotiation and arbitration	·   Alternate Dispute Resolutions like Mediation, Negotiation and Arbitration

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