The Farmers Bill, 2020

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The three ordinances — The Farmers’ Produce Trade and Commerce (Promotion and Facilitation)Ordinance, 2020, The Farmers (Empowerment and Protection) Agreement on Price Assurance and Farm Services Ordinance, 2020 and The Essential Commodities (Amendment) Ordinance, 2020 were earlier introduced as ordinances by the Government in June.

The Rajya Sabha on 20th September 2020 passed the Farmer’s Produce Trade and Commerce (Promotion and Facilitation) Bill, 2020, Farmers (Empowerment and Protection) Agreement on Price Assurance and Farmers services Bill,2020 and the Essential Commodities (Amendment) Bill, 2020 amid the protest by the opposition MPs. The bill was passed amidst the voice vote in the Upper House. There was a lot of chaos in the Rajya Sabha as the bill was passed by a voice vote and not a division of votes, even though the Congress, Trinamool Congress and other parties made a demand to the deputy chairperson.

1. The Farmer’s Produce Trade and Commerce (Promotion and Facilitation)Act, 2020 permits intra-state and inter-state trade of farmers’ produce beyond the physical premises of the Agricultural Produce Market Committee(APMC) markets and other markets notified under the state APMC Acts.

2. The Farmers (Empowerment & Protection) Agreement of Price Assurance and Farm Services Bill: It draws a framework for contract farming agreement between farmers and buyer before sowing of a crop and for dispute settlement prescribes three-level mechanisms – the conciliation board, sub-divisional magistrate, and appellate authority.

3. The Essential Commodities Act (Amendment) Bill: It empowers the Central Government to regulate food items in extraordinary circumstances or impose stock limits if there is a steep price rise.

Even as farmers and opposition parties are protesting against the controversial farm bills, President Ram Nath Kovind on 28th September 2020, gave his assent for the three bills passed by the parliament.

What is APMC?

An Agriculture Produce Market Committee (APMC) is a marketing board established by a state government in India to ensure farmers are safeguarded from the exploitation by large retailers and lenders. This concept of agriculture produce market regulation program in India was formulated during the British period in 1965, as the farmers were exploited by moneylenders and were not given a fair price for their produce. According to this regulation the farmers are allowed to sell their agriculture produce only at the market yards(mandis) of APMC and the APMC regulates the licensing system in the mandis, but in recent years the Government has seen some flaws in the APMC system as they were given the power to provide licenses, it was difficult for some farmers to get license from the mandis which were managed by the Committee and even the buyers in the mandi used to form a cartel, which created a monopoly in the agricultural market and resulted in a loss of farmers and consumers.

So, the Government has come up with the new farmer’s bill,2020, which will allow the farmers to sell their produce beyond the physical premises of Agriculture Produce Market Committee (APMC) markets and it will create one nation, one market and will include no taxes if the farmers will sell the produce outside the APMC.

The three Farm Bills seek to: –

1. Break the monopoly of government-regulated mandis and allow farmers to sell directly to private buyers.

2. Provide a legal framework for farmers to enter into contracts with companies and produce for them.

3. Allow Agri-businesses to stock food articles and remove the Government’s ability to impose restrictions arbitrarily.


What are the benefits of the Farmers’ bill for the farmers?

1. According to the Government, the bills will transform the agriculture sector and raise the farmer’s income. It will ensure a fair price to the farmers for their produce and make them independent of the government-controlled markets.

2. It is a system in which farmers and traders can sell their produce outside the Mandis and will encourage interstate trade and will also reduce the cost of transportation.

3. The Bills will formulate a framework on agreements that enable farmers to engage with agri-business companies, exporters, and retailers for
services and sale of produce while giving the farmer access to modern technology.


Why are Indian farmers/ opposition protesting against new farm bills?

According to the opposition parties, the ordinances are “anti-farm” and even a death warrant for the farmers. The middlemen fear that they might lose their work. The regional parties and non-BJP parties are against these bills as Most of the state government’s revenue comes from these mandis, and if the Government will allow the farmers to sell their produce to the private sellers, then it would reduce their taxes. As the taxes from mandis itself ranges from 8.5% in Punjab to less than 1% in some states.

The farmers’ protests revolve around the need to protect MSPs or Minimum Support Prices which they feel are threatened by the new laws. The minimum support prices are the preset rates at which the central government purchases produce from farmers, regardless of the market rates and are declared for 23 crops at the beginning of each sowing season. The APMC was regulated by the Government and MSP is only valid in APMC while if the government imposes these laws there will be no MSP outside APMC which is a significant concern for the farmers. Even these laws will lead to agricultural corporatization, where big companies can dominate the farmers. The lack of bargaining power with big companies is also a valid concern. A farmer will have the freedom to choose where he wants to sell but may not know to negotiate the best terms with a private company. There is hardly any regulation outside the mandis and no grievance redressal mechanism yet.

So basically, the Indian Government is trying to make a distinction between Free Market VS Regulated Market and trying to develop a neoliberalism system, i.e., a modified form of liberalism tending to favor free-market equilibrium, followed in most developed countries and has failed miserably. So, the question is if the system has been such a big failure in developed countries, how can we think that this is going to work in India?