• Author Name: Kanika Tak
  • Details:  Entrepreneur, Research Associate, M.Sc. Microbiology (Gold Medalist)

India is a country of agriculture and farming forms a great section towards building the economy of the country.

Recently the country witnessed a lot of protests in Punjab, Haryana and UP against the farm reform bills, which were proposed at the Parliament. Let us have an understanding of these three bills-


  1. The Farmers (Empowerment and Protection) Agreement on Price Assurance and Farm Services Bill 2020

This comes with an idea to have “contract farming'' wherein a farmer will be in a legal agreement with small businesses or a buyer. It aims to protect the interests of farmers by implementing a dispute settlement mechanism, which will exist between the farmer and a buyer by an established authority. It can transform Indian agriculture as the private investors will advise the farmers in context to land preparation, supply inputs, transportation, production, etc. and the farmers will be given a mutually agreed remuneration for their farm products based on a legal framework. Hence, the farmers will be prevented from any kind of exploitation and also, the quality standards and grade of farm services plus delivered products will be maintained too.


  1. The Farming Produce Trade and Commerce (Promotion and Facilitation) Bill, 2020

This aims to dismantle the monopoly of APMC (Agricultural produce marketing committees), which are run by state governments. Since ages, farmers are selling their products only through APMC or mandis for which they have a license and often end up selling their products at an MSP (minimum selling price of a commodity) and hardly gain any profit. The impact of this bill will be that the farmers will no longer be restricted to state level bureaucracies and the license power of local APMCs, which eventually impedes farmer's growth. Rather, the farmers will have a liberty to choose “with whom to market or sell their products”. The freedom of choice with an alternative to sell outside mandis, barrier free inter or intra-state trade will have a positive impact on farmers' income.


  1. The Essential Commodities (Amendment) Bill, 2020

The central government made an amendment in the existing bill, which empowers the government to pull out any item or include it later in the list, to regulate the cost of that item so that it is readily available to the masses in ''right quality and right price''. This aims to rule out the flaws of hoarding and blackmarketing, which creates an artificial demand to increase the price of any item. Articles like cereals, pulses, oils, onion, potato, edible oilseeds are removed from the essential commodities list. 

If the retail price of non-perishable items gets more than 50% and the price of perishable item gets more than 100% then the government will bring them back to the essential commodities list to regulate its price.


The important question-

Additionally, there have been oppositions as to whether the centre has power to make laws in matters related to agriculture or not. 


The Seventh Schedule of the Constitution contains three lists that distribute power between the Centre and states. There first is Union List, which has 97 items on which only Parliament has power to legislate (Article 246); the State List has 66 items on which states alone can legislate; the Concurrent List has 47 subjects on which both the Centre and states can legislate, but in case of a conflict, the law made by Parliament prevails (Article 254).


The state list has an Entry 14, which deals with agriculture hence only the state should have the power to make laws in the same and an Entry 33 of concurrent list deals that in agricultural matters state can make laws. So, as per strict division, the centre shouldn't have power in framing laws but if we look at Article 248, which talks about Residual Powers and Article 249 that mentions Power of Legislation (National interest); hence considering this entire scenario in the interest of nation, centre has taken an upperhand to pass laws on contract farming and intra- and inter-state trade, and prohibit states from imposing fees/cesses outside APMC areas!


Farmers fear on few aspects-

The farmers have a concern, which is genuine because if private investors dominate, farmers fear that they can be exploited with liability clauses in case of signed contracts.

Selling outside mandis can be beneficial to big farmers but the small won't even opt for travelling far to sell their products due to transportation and logistic costs. They also fear if sale is outside mandis, they won't even get the benefit of MSP nor would the government provide any subsidy or procurement. Also, the private sectors will play smart by buying at a lower price and selling at a higher to gain profit.


Elaborating the benefits-

In nutshell, the new ecosystem is a positive move by enhancing direct buying from farmers, an open market to sell, alternates to sell outside mandis, eliminate intermediaries or middlemen, no licensing bottleneck at mandis/apmc, promote large corporates to agritech startups to invest in this sector, benefit post-harvest services or digital farmer platforms, tech intervention in agriculture will be more formalized with a boost in online agriculture trading, farm advisory and consulting. Privatisation of agriculture warehousing can solve storage problems. Modernization and digitization  through farm bills allow free trade to co-exist with mandis.

It will empower local entrepreneurs, mushrooming startups; an opportunity for corporates to get closer to farmers but it is utmost important to first educate the farmers on bills benefits to understand the bigger picture:bigger welfare! 


Reference: The Indian Express (indianexpress.com)