Common use of Myth Clause in Contracts

Myth. The bill does not provide any price guarantee for farmers.The practice of procuring grains at minimum support price (MSP) by central agencies like FCI will end. Reality – Referring to the bill Chapter 2 Section 5, “The price to be paid for the purchase of a farming produce may be determined and mentioned in the farming agreement itself and in case, such price is subject to variation, then, such agreement shall explicitly provide for – a guaranteed price to be paid for such produce, a clear price reference for any additional amount over and above the guaranteed price”. Further, referring to the bill Chapter 3 Section 14 (2), “…where the sponsor fails to make payment of the amount due to the farmer, such penalty may extend to one and half times the amount due…” The bill ensures a price guarantee for farmers under the agreement and provision for a penalty in case of payment failure. There are multiple examples wherein farmers have benefited from the same. For example, seed potato farmers working with Technico Agri sciences limited (a subsidiary of ITC) across Punjab, Northern Haryana, and Western UP have benefited from a guaranteed 35% margin above cost at the time of sowing. The farmers working the sponsor are now earning a steady income of Rs. 22,000 per acre with provision for additional bonus based on market conditions. Further, MSP is an independent structure which will not be impacted by the bill and will continue in the future. Myth–Agriculture is not underthe central government’s domain and hence, the bill is illegal. The bill is not in the interest of farmers and rural economy, and will only benefit corporates. Reality – Referring to Seventh Schedule, Article 246, entry 33 in the Concurrent List, “Trade and commerce in, and the production, supply and distribution of – food stuffs, including edible oilseeds and oils”, the Union government can legislate in this domain. Further, Article 249 in The Constitution of India mentions aboutthe “Power of parliament to legislate with respect to a matter in the State List in the national interest”. Across various examples of farmer agreement in India, farmers under the agreement have multiple advantages including risk-free, guaranteed and higher income, access to technology, and training on best-in-class practices to increase productivity. For example, nearly 2,500 potato farmers across North Gujarat are earning Rs. 30,000 more per acre under agreement with HyFun Foods, a potato processing company. Farmers are provided quality seeds at subsidized rates with credit support, complete agronomy services,and technical knowledge. In addition to the direct benefit for farmers, the agreements in North Gujarat have given a strong boost to manufacturing and exports of frozen potato products and the region is now fast emerging as a manufacturing hub for all of Asia. From being an importer of frozen potato products until 2010, total potato processed for french fries has increased to 300,000 MT in India and the volume is increasing year on year. This has resulted in increased investment in the sector and provided multiple socio-economic benefits like assured incomes for farmers, new jobs, export earnings, etc. Hence, the bill has significant potential and is being introduced in the national interest. Myth – The bill invades on the rights of state Agriculture Produce Marketing Committee (APMCs) Reality – Referring to Chapter 1 Section 2(m), “trade area means any area or location, place of production, collection and aggregation including – farm gates, factory premises, warehouses, silos, cold storages, or any other structures of places from where trade of farmers’ produce may be undertaken in the territory of India but does not include the premises, enclosures and structures consisting – physical boundaries of principal market yards, sub-market yards, market sub-yards managed and run by the market committees formed under each State APMC Act in force in India…”. The bill does not intrude into premises under the APMC Act and the same may continue to operate in the state. But it allows foradditional trade outside the APMCpremises and the farmers will be able to sell their produce from the farm gate, home, and any place without paying any market fees under the State law. This will benefit the farmers and reduce multiple additional costs. Further, the bill will allow for private investment in new mandi infrastructure closer to farm gate improving market access (intra-state, inter-state, and export), availability of quality infrastructure including assaying, grading facilities, and reducing logistics costs for farmers.

Myth. The bill ▇▇▇▇ does not provide any price guarantee for farmers.The practice of procuring grains at minimum support price (MSP) by central agencies like FCI will end. Reality – Referring to the bill ▇▇▇▇ Chapter 2 Section 5, “The price to be paid for the purchase of a farming produce may be determined and mentioned in the farming agreement itself and in case, such price is subject to variation, then, such agreement shall explicitly provide for – a guaranteed price to be paid for such produce, a clear price reference for any additional amount over and above the guaranteed price”. Further, referring to the bill ▇▇▇▇ Chapter 3 Section 14 (2), “…where the sponsor fails to make payment of the amount due to the farmer▇▇▇▇▇▇, such penalty may extend to one and half times the amount due…” The bill ▇▇▇▇ ensures a price guarantee for farmers under the agreement and provision for a penalty in case of payment failure. There are multiple examples wherein farmers have benefited from the same. For example, seed potato farmers working with Technico Agri sciences limited (a subsidiary of ITC) across Punjab, Northern Haryana, and Western UP have benefited from a guaranteed 35% margin above cost at the time of sowing. The farmers working the sponsor are now earning a steady income of Rs. 22,000 per acre with provision for additional bonus based on market conditions. Further, MSP is an independent structure which will not be impacted by the bill ▇▇▇▇ and will continue in the future. Myth–Agriculture is not underthe central government’s domain and hence, the bill ▇▇▇▇ is illegal. The bill ▇▇▇▇ is not in the interest of farmers and rural economy, and will only benefit corporates. Reality – Referring to Seventh Schedule, Article 246, entry 33 in the Concurrent List, “Trade and commerce in, and the production, supply and distribution of – food stuffs, including edible oilseeds and oils”, the Union government can legislate in this domain. Further, Article 249 in The Constitution of India mentions aboutthe “Power of parliament to legislate with respect to a matter in the State List in the national interest”. Across various examples of farmer ▇▇▇▇▇▇ agreement in India, farmers under the agreement have multiple advantages including risk-free, guaranteed and higher income, access to technology, and training on best-in-class practices to increase productivity. For example, nearly 2,500 potato farmers across North Gujarat are earning Rs. 30,000 more per acre under agreement with HyFun Foods, a potato processing company. Farmers are provided quality seeds at subsidized rates with credit support, complete agronomy services,and technical knowledge. In addition to the direct benefit for farmers, the agreements in North Gujarat have given a strong boost to manufacturing and exports of frozen potato products and the region is now fast emerging as a manufacturing hub for all of Asia. From being an importer of frozen potato products until 2010, total potato processed for french fries has increased to 300,000 MT in India and the volume is increasing year on year. This has resulted in increased investment in the sector and provided multiple socio-economic benefits like assured incomes for farmers, new jobs, export earnings, etc. Hence, the bill ▇▇▇▇ has significant potential and is being introduced in the national interest. Myth – The bill ▇▇▇▇ invades on the rights of state Agriculture Produce Marketing Committee (APMCs) Reality – Referring to Chapter 1 Section 2(m), “trade area means any area or location, place of production, collection and aggregation including – farm gates, factory premises, warehouses, silos, cold storages, or any other structures of places from where trade of farmers’ produce may be undertaken in the territory of India but does not include the premises, enclosures and structures consisting – physical boundaries of principal market yards, sub-market yards, market sub-yards managed and run by the market committees formed under each State APMC Act in force in India…”. The bill ▇▇▇▇ does not intrude into premises under the APMC Act and the same may continue to operate in the state. But it allows foradditional trade outside the APMCpremises and the farmers will be able to sell their produce from the farm gate, home, and any place without paying any market fees under the State law. This will benefit the farmers and reduce multiple additional costs. Further, the bill ▇▇▇▇ will allow for private investment in new mandi infrastructure closer to farm gate improving market access (intra-state, inter-state, and export), availability of quality infrastructure including assaying, grading facilities, and reducing logistics costs for farmers.