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Farm Bill 2020-A Critical Analysis

The Indian Agriculture Acts of 2020, often referred to as the Farm Bill 2020 are three acts initiated by the Parliament of India in September 2020 i.e -The Farmers’ Produce Trade And Commerce (Promotion And Facilitation) Bill 2020 ; The Farmers (Empowerment and Protection) Agreement on Price Assurance and Farm Services Bill 2020, and The Essential Commodities (Amendment) Bill 2020.The Lok Sabha approved the bills on 17 September 2020 and the Rajya Sabha on 20 September 2020. The President of India, Ram Nath Kovind gave his assent on 27 September 2020.

Ever since the Farm Bill 2020 has been raised in the Loksabha, Farmers across the Country has been protesting and specifically since the President has assented it on 27September 2020, the Protest has been widespread and aggravated in resulting to various eventualities across the Country. Addressing the deluge of petitions against the New Farm Bill, On 12 January 2021 the Supreme Court stayed the implementation of the farm laws and appointed a committee Agricultural Produce Market Committees (APMC) to look into farmer grievances related to the farm laws and matter is still pending under the jurisdiction of Hon’ble apex Court.

Since the beginning of the Farmers protest the debate and discussions around the merits and de merits of the newly introduced Farm bill has also simultaneously occupied a wide attention across the Country and indeed it’s relevant to assess it accordingly. Unfortunately, majority of such discussions are being arbitrarily adjudged as either Pro Government stance or Anti Government stance. Indeed, matter is beyond any stance towards government, but its truly upon development and empathy over the farmers and Agrarian sector of a Country who is accommodating 60% of its population as farmers and Agricultural with allied sector being the largest source of Income for the 70% of its rural Household, being the aggrieved party to this newly introduced act.

A Glimpse through the “Farm Bill 2020”

The Farmers’ Produce Trade and Commerce (Promotion and Facilitation) Bill, 2020 , Also known as the APMC Bypass Act, this Act, through Clause 14, has an overriding power over the inconsistent provisions of the State APMC Acts. Clauses 3 & 4 give farmers the freedom to engage in intrastate or inter-state trade of their agricultural produce from sources that are not restricted to the physical markets created under various state Agricultural Produce Marketing Committee laws (APMC Acts).It seeks to eliminate restrictions that many states have imposed through different laws to mandate agricultural trade only through APMCs with the aim of protecting farmers from exploitation and to ensure fair prices for the produces Any licence-holder trader can buy the produce from the farmers at mutually agreed prices. This trade of farm produces will be free of mandi tax imposed by the state governments.

The Farmers (Empowerment and Protection) Agreement on Price and Assurance and Farm Services Act, 2020 provides a National framework on Contract farming and empowering famers to engage with agri-business firms, food processors, exporters and other large retailers accommodating farm trade and services of agricultural produces at a mutually accorded ‘remunerative price’. Farming agreements can cover mutually accepting terms between farmers and sponsors including the supply of various resources for farming, method of farming, and the quantity of produce.The Bill mandates a ‘registration authority’ to facilitate e-registry and for registration of farming agreements. It additionally makes room for an alternate dispute resolution mechanism through conciliation for agreement-related issues. The jurisdiction of civil courts over such disputes have been barred, and they are to be resolved through the resolution mechanism provided by the Bill.

The Essential Commodities (Amendment) Act is an amendment to the existing Essential Commodities Act. The Bill necessitates that the burden of any Stock limits on farming produce to be based on a price rise in the market. They may be imposed only if there is (i) a 100 per cent increase in the retail price of horticultural produce, (ii) a 50 per cent increase in the retail price of non-perishable agricultural food items. Moreover, the increase is to have calculation over the price prevailing during the preceding twelve months. Or the average retail price over the last five years, whichever is lower. Also, the Bill states that the powers of ECA to regulate the supply of certain food items can be exercised only under uncommon conditions like war, famine, unprecedented price rise or any natural disaster of great severity.

From Definitions to deep descriptions the acts are clearly reflecting the intent of Government who expecting to bring revolutionary changes to agrarian sector by implementing path breaking reforms through these acts which opens the agrarian sector to private commercial market sector and potentially expecting basic farm sector infrastructure development through greater private investments akin to the 1991-opening of the Indian economy linking it with the globalised markets.

Reading through Positive Aspects

The terrible crumbling of Indian agrarian sector despite occupying the livelihood to vast majority of its population over the years. It is being argued that the root cause of the crisis is that agriculture is no more a profitable economic activity as compared to other enterprises present in the Country. Moreover the present agrarian infrastructure and the market ecosystem running behind the global market system and standards could be the prime reason for the ongoing plight.

Despite the presence of the Agriculture Produce Marketing Committee (APMC) a marketing board set up by State governments in India to safeguard the rights of the farmers and to make certain that they are protected from abuse and oppression of huge retailers, the result was never achieved as desired to protect farmers from financial distress .In fact, the APMC- Mandi system has been always been dictated by the commission agents and market brokers aggrieving the misery of the farmers to numerous suicides across the country.

The newly implemented laws are clearly opening up the trade channels for the farmers to sell their produces beyond physical boundaries of Mandis are nothing less than an additional unrestricted trade channel. In the existing APMC system, it is mandatory for farmers to go through a trader (via Mandis) to sell their products to consumers and companies and they receive Minimum Selling Prices for their produce. It was this very framework that had impacted the ascent to a cartel driven by traders and uncompetitive market sectors because of which the sons of the soil are paid MSP (an extremely low cost) for their produces. The new system aims to eliminate this practice and intends brings in a competitive market system which would benefit the farmers and fetch them fair remuneration.

The increase in competition can potentially work to increase prices for farmers who are currently at the mercy of middlemen. In addition to these benefits, the availability of contract farming provides farmers with a price assurance instead of subjecting them to market uncertainty. There is also the possibility of firms providing farmers with input material as a part of contracts, thereby reducing input costs.

It is evident that aforesaid farm acts have the potential to create a similar impact as the Market Reforms 1991 revamped the slumbering Indian economy into a significant player globally. This, however, is dependent on several independent actors and their motives.

Hounding Loopholes

The numerous loopholes present within these acts which are capable of aggravating the ongoing misery of farmers is the prime reason to the widespread criticism and ongoing protests by the farmers across the country.

Missing MSP :- MSP system was implemented to ensure price assurance for farm produces. The Farmers’ Produce Trade and Commerce (Promotion and Facilitation) Bill does not give any statutory backing to MSP (Minimum Support Price). Without any assured support prices the entry of farmers into the open market with competitive private players would be nothing less than suicidal. Without any such assurances as such provided by MSP would tend the private companies in the open market to manipulate the demand by hoarding and other tactics eventually weakens the bargaining power of the farmers and will end up selling their produce to much less prices than existing MSPs.

Alternative or Parallel to APMC ? :- Despite the fact that the revamping of the existing system is the need of the hour, the farmers are apprehending that the entry of private players in the market would suddenly destroy the existing Mandi system with which they are being entrusted over the years. A sudden vacuum in the entire farm produce market system adding more misery will be the result if such apprehensions turns to reality.

Small Holding Farmers and Big Corporations: - India’s small-holder farmers (those owning less than 2.0 ha of farmland) comprise 78 percent of the country’s farmers, but own only 33 percent of the total cultivated land; they nonetheless produce 41 percent of the country’s food-grains. Their productivity is somewhat higher than that of medium- and large-size farms. However, the sudden upsurge of big private corporations to an unregulated market and if APMC mandi system disappears simultaneously will be a death blow to the existence of small holding farming in the country.

Way Forward

It’s clear that the newly implementing farm laws are nothing but a ray of hope indicating a path breaking divert from the age old agrarian trade ecosystem which always restrains the freedom of choice of farmers to sell their produce, into a freer and flexible trade ecosystem. However the loopholes pertaining within the Acts itself are humongous and also capable to inflict more harm than already suffering agrarian sector. Considering the following key areas would suffice to ensure a trust and confidence among the aggrieved farmers who must be ultimate the beneficiaries of these laws.

  • A statutory recognition to MSP system ensuring support prices for farm produces and it must cover the majority of farm produces.

  • The opening of market to private corporations should be carefully curated and regulated to ensure equal bargaining power on the produces hand.

  • The APMC mandi system must be allowed to exist in par with the new players in the market.

  • Strict regulations must be ensured against any kind of corporate exploitation over the small holders farmers.

  • Jurisdiction for the grievance mechanism under new acts must be extended beyond mere conciliation board, sub-divisional magistrate and appellate authority (sub-divisional authority) to Civil Courts and higher authorities.

  • Infrastructural Development focussing to reduce the rural urban trade channel gap

Considering the vast population of the country dependent on farming, the policy of reforming the farm law has always been a sensitive issue. As the Indian agriculture is led by smallholders. We need a unique model for the country, a model that would work for India needs to focus on strengthening collective enterprises and small- and medium-scale local enterprises that can flourish and operate without the often-self-destructive pressure of serving investors or without having to consolidate to survive. Where private players drive the sector, it is crucial to have a regulatory framework to safeguard farmer interests with appropriate checks and balances. It is also imperative to strengthen state support to complement private participation. The role of the state is in fact more important than ever before. The bills therefore need to be discussed in the context of the larger question of state intervention in agricultural marketing, including price-based intervention, procurement and food grain distribution, on the one hand, and public investments in infrastructure and institutions, including the existing APMC system, on the other. Bypassing the states in passing these laws has already triggered a race to the bottom, where some states have begun reducing mandi charges to assuage the traders and middlemen, leaving less revenue for investments in strengthening public infrastructure. The three bills on reforming agricultural markets mean little to the farmers without a coherent vision and blueprint for Indian agriculture that provides the right context. To suggest that protesting farmers are misled or confused is to evade these crucial issues. The way forward for the government is to revisit and rethink the newly enacted legislation and provide clarity on the vision it has for Indian agriculture. It must do so not by bypassing the states and its farmers but by including them.

The slumbering growth and debt ridden Indian agrarian economy requires a total revamp in its all points and the relevance of such breakthrough laws opening the restricted farm produce market would be crucial in reviving the economy and rejuvenating the farmers. However there is a crucial need in reforming the existing laws to overcome its haunting flaws in a manner ensuring an equitable agrarian policy actions which protects the farmers from any sort of abuse and dictation by the private corporations who are possible entrants by the new reforms.











Muhammed Ijaz V

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