The Farm Reform Bills- 2020

On September 27, 2020, the president of India Mr. Ram Nath Kovind gave his assent to the three farm reform bills –

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.

These bills are gone by the parliament within the recently concluded Monsoon season. Our Prime Minister Mr. Narendra Modi hailed the passage of those bills by saying “A watershed moment within the history of Indian agriculture!”

But the thing to stress about is that the farmers for whose betterment these Acts are made are on streets protesting these Acts. Farmers organizations like Bhartiya Kisan Union (BKU) and therefore the All India Kisan Sangharsh Coordination Committee (AIKSCC) are protesting the bills from September 2020 itself. they need to raise the slogan of ‘KISAN BACHAO MANDI BACHAO’ during this article we'll discuss the reforms brought by new Acts, why are farmers protesting, and the way forward.


India is and has been an agrarian economy. After India gained Independence in 1947, farmers wont to sell their products direct to the consumers. But thanks to the prevailing system of Zamindars or money lenders, farmers were trapped in perpetual debt. Farmers got to buy seeds, fertilizers, and other things required for growing a crop, for purchasing these belongings you need money so farmers took loans from Zamidars or money lenders who want to charge a high rate of interest on the principal amount. Farmers were unable to pay such a hefty amount and in such cases to urge their a refund money lenders or the Zamindars wont to buy the entire produce of the farmers but, they paid very less amount to farmers because farmers didn't have the bargaining power. Now to again sow their fields farmers required money so this cycle continued, and farmers were always in debt. This process was very exploitative so to assist the farmers and end this technique government of India introduced APMC (Agriculture Produce Market Committee) Act. it had been introduced in the 1960s at the exact same time when the revolution started in India many experts believe that within the major of revolution APMC Act played a serious role. APMCs found out Mandis or Markets across India where farmer’s produce was sold. There are around 7000 APMCs in India at the present. Now, the method of selling the produce is that after harvesting crops are delivered to the Mandis or Markets where they sell the produce through auctioning or price discovery. Who are the farmers selling the crops? to not the govt but the middlemen or Arhatiyas. Middlemen are people between the farmer and therefore the retailer or big traders. for instance, farmers sell their vegetables to the middlemen then the vegetable vendor buys vegetables from the middleman, vegetable vendor won't buy directly from the farmers. The government gives licenses to those Middlemen; shops,

storage facilities, etc. are provided to them in APMC markets. many of us add these APMCs, there's a storage of grains, so it requires laborers, accountants so overall it's a self-thriving ecosystem. One thing which should be noted here is these APMC markets are regulated by state governments, a tax is charged on each transaction so during a way government knows at price produce is being sold.

Now, what about the products that aren't bought by the middlemen in these markets? this is often being bought by the govt at MSP (Minimum Support Price). MSP is constant throughout the country. MSP also ensured that produce bought by the middlemen weren't below a particular price. When everything is so good are farmers happy? consistent with the National Crime Bureau report 2018, 1,34,560 suicides were reported in India out of which 10,350 were farmers remember this was the total number of reported cases. this technique was good seeing the 1960’s but with time we'd like to evolve similarly, not much was done to APMCs and a few problems popped up. Middlemen started exploiting farmers they formed cartels or an understanding among themselves and began buying the produce at MSP only and sold to traders at a high rate. for instance, MSP for onion is Rs.8.5 per kg (data as of February 06, 2019) but we buy onions at Rs 35 – 80 per kg counting on the state. In a way, we will say the Minimum Support Prize became the Maximum asking price. Voice arose from time to time to get rid of these defects and in response, the government brought the three Acts in 2020. These three farm Acts seek to exchange ordinances issued in June 2020.

These Acts consider bringing change in a number of the key aspects of the farm economy — trade agricultural commodities, price assurance, farm services including contracts, and stock limits for essential commodities. These Acts sought to bring much-needed reforms within the agricultural marketing system like removing restrictions of personal stock holding of agricultural produce or creating trading areas freed from middlemen and take the market to the farmer.

The Farmers’ Produce Trade and Commerce (Promotion and Facilitation) Bill 2020 or The Market Place Law

We have already discussed the method currently in situ well consistent with the new market place law, farmers can sell their produce anywhere not just within the APMC approved mandis or market places but literally anywhere i.e., they will sell inside the state, outside the state, or if they want they will also sell it online. which suggests consistent with union government this law is been brought in to offer freedom of option to farmers they're going to have a spread of marketplaces. the govt says this is often actually getting to benefit them because they will choose between several options.

The Farmers (Empowerment and Protection) Agreement on Price Assurance and Farm Services Bill 2020 or The Contract Farming Law

Farmers can enter into ‘written agreements’ with anyone, including a corporation, and sell them their produce for a group period of your time, as per the contract. In other words, companies can now have contracts with farmers for purchasing their produce. they will set the worth for the product, the standards, and qualities, and other legalities

are often mentioned beforehand. The Union government says this may protect and empower farmers to sell to anyone an entire seller, a retail giant, or an exporter. they're going to have written contracts which can protect the farmer just in case the customer tries to cheat them. and that they also can sell future produce today, consistent with the govt.

The Essential Commodities (Amendment) Bill 2020 or Essential Commodities Amendment

Essential Commodities Act was first brought in decades back in 1955. The Act basically controls the assembly, supply, and therefore the distribution of certain commodities that are known to be essential. So if an item comes under this Act as an example a food item or a crucial drug then companies and supermarkets cannot hoard these things when there's a shortage, they also cannot artificially increase the costs, etc. the list of essential commodities as per the first act includes Drugs (medicines); Fertilizers (inorganic, organic, mixed); Foodstuff (including edible oilseeds and oils); hank yarn made wholly from cotton; Petroleum and petroleum products; Raw jute and jute textiles; Seeds (food crops, fruits and vegetables, cattle fodder and jute seeds). The new amendment has removed foodstuff like Potato, Cereals, Pulses, edible oilseeds and oils, from the list of essential commodities which suggests unless there's a dire circumstances sort of war or famine or an unprecedented price rise these commodities won't be considered under the essential commodities list.

Further, the govt cannot impose a stock limit i.e. it cannot stop a supermarket chain or a retailer from hoarding unless there's a 100% (percent) increase in the price of perishable goods or 50% (percent) increase in the price of non-perishable goods. All items faraway from the essential commodities act are Rice, Wheat, Potatoes, Onions, and Oil.


Everything looks great on paper, on the other hand, where does the matter lie? Well, there's a difference between good legislation and good implementation of the Act, many critics have raised their concerns regarding this Act. The very first concern is that an Act that goes to be implemented within the whole country has neither been discussed with states which can be most suffering from the Act nor with the experts during this field accusing the govt of destroying cooperative federalism.

Court To government

We are witnessing a rustic wide protest, which is more intense in Punjab, Haryana, and Western Uttar Pradesh. the rationale is clear as this region has the foremost organized sort of APMCs. Although there's no provision of removing APMCs then why are farmers fearing and raising slogans of MANDI BACHAO? APMCs are under government and are maintained by taxes collected in the APMC market’s transaction. The government says privately markets, which may be found out now, no taxes are going to be charged within

the transactions of the personal market so this is able to save taxes, all companies and traders will buy farm produce from private markets which can slowly end in the top of APMC because the government will haven't any funds to take care of APMC. If this happens states will have tons of revenue loss and the union government has not mentioned any thanks to compensating them, especially in Punjab and Haryana.

Middlemen will become jobless and there's a priority that there's an opportunity of middleman privately sector also because our farmers aren't in a position to bargain with corporate houses. privately sector there'll be no control and exploitation by middlemen may multiply. (86% of farmers of our country are marginalized farmers i.e. they need but 2 acres of land.) With the top of APMCs, MSP also will practically end this is often the foremost important concern.

We are talking about ‘One nation One market’, ‘freedom of choice of the market’ any farmer can sell his farm produce anywhere, looks good on seeing but the bottom reality is that this already exists and a farmer can sell his produce anywhere he wishes in any a part of the country, it doesn't happen because our farmers don't have medium and money to move goods from one place to a different because the government itself says 86% of farmers are marginalized.

Contract farming is looked upon as privatization of farming, two major concerns here are that farmers will never be ready to negotiate with the company sector. The act doesn't prescribe or specify that the contract price of the crop should be a minimum of equivalent or above the MSP. It means the contractor/companies pay whatever price they need to the farmer.

Being big private companies, exporters, wholesalers, and processors, they're going to always have a foothold in disputes. A written contract isn't mandatory which suggests farmers will never be ready to prove a violation of the terms of the contract. Farmers have a legitimate point because they need to see privatization in markets of seeds and fertilizers where the government believed prices will go down due to competition but results are opposite, and farmers fear an equivalent during this case also.

Limits of hoarding are removed because things of ‘Extraordinary price rise’ is much too high to succeed in which simply means big private players can any time cause artificial price fluctuation. Not only farmers are going to be suffering from it, consumers also will be affected because the most goal or focus of a personal company is going to be to boost its profits.


Yes, there have been many flaws within the decades-old APMC Act, but critics believe that the necessity was to plug the loopholes rather than introducing a replacement system altogether. an identical system has already been introduced in America and a

few European countries where it's failed miserably, we will only hope this doesn't happen in India and the government won't repeat those mistakes.

From the attitude of the state, the stand of the state is extremely clear that it's not getting to change anything because already it's been termed as Masterstroke. Right now, it's just an Act both are results are possible; farmer's income becomes double as said by the govt, or their conditions worsen as feared by farmers. History is the best judge. While the intent of the state is laudable, we'll be ready to see the results of those new Acts after few years only. Right now, everything is simply speculation.


Tanmay Kumar Sharma