FARM BILL 2020,DOES IT REALLY HELPFUL FOR FARMERS?

ABSTRACT:

The Indian parliament on 23 September passed three agricultural bills, Farmers’ Produce

Trade and Commerce (Promotion and Facilitation) Bill, 2020, Farmers (Empowerment and

Protection) Agreement of Price Assurance, Farm Services Bill, 2020, and the Essential

Commodities (Amendment) Bill, 2020. But passing these bills in the parliament resulted in

protest throughout the country. Not only farmers, many Political parties, common public even

ministers were protesting against this bill.

What is the reason behind this protest?

Constitutional validity of farm bill 2020

Does this Farm bill 2020 is really helpful for farmers?

In this article we are going to discuss about the Farm bill 2020 its pros and cons and the above

mentioned issues.

INTRODUCTION:

Agricultural market reform in India has historically been a biggest issue. “Agriculture”,

“markets and fairs” and “trade and commerce within the state” are all state subjects in the

Constitution.

SEVENTH SCHEDULE, List II-STATE LIST

ENTRY 14: Agriculture, including agricultural education and research, protection against

pests and prevention of plant disease.

ENTRY 26: Trade and commerce within the State subject to the provisions of Entry 33 of

List III.

SEVENTH SCHEDULE LISTIII-CONCURRENT LIST

ENTRY 33: Trade and commerce in, and the production, supply and distribution of,-

(a) The Products Of Any Industry Where The Control Of Such Industry By The

Union Is Declared By Parliament By Law To Be Expedient In The Public Interest,

And Imported Goods Of The Same Kind As Such Products

(B)Food Stuffs, Including Edible Oilseeds And Oils

(C) Cattle Fodder, Including Oilcakes And Other Concentrates

(D) Raw Cotton, Whether Ginned Or Not Ginned, And Cotton Seeds; And

(E) Raw Jute.

ENTRY 28: Market and fairs

Agricultural markets have therefore been the responsibility of the states. At the same time,

the centre has an overarching responsibility via Article 301 to ensure that there is free trade

within the country: of ensuring “freedom of trade, commerce and intercourse”.

State-specific laws under the Agricultural Produce Marketing Committee (APMC) Acts thus

regulate agricultural trade within states.

Now let’s have a look about the three bills passed by the parliament and all the above

mentioned issues.

THREE FARM BILLS PASSED BY THE PARLIAMENT:

The Indian Parliament passed three agriculture bills

 Farmers’ Produce Trade and Commerce (Promotion and Facilitation) Bill, 2020,

 Farmers (Empowerment and Protection) Agreement of Price Assurance, Farm

Services Bill, 2020, and the

 Essential Commodities (Amendment) Bill, 2020

Farmers’ Produce Trade and Commerce (Promotion and Facilitation) Bill,

2020,

This bill allows farmers to engage in trade of their agricultural produce outside the physical

markets notified under various state Agricultural Produce Marketing Committee laws (APMC

acts). Also known as the ‘APMC Bypass Bill’, it will override all the state-level APMC acts.

That is this law allows farmers to sell anywhere within the country under the ‘One Nation-

One Market’ concept. The ECA initially restricted farmers from selling anywhere other than

government-approved mandi’s. These government-approved mandis’ are called ‘Agriculture

Product Market committees’ [APMC].

What is mean by APMC?

Agricultural Produce Market Committees (APMC) is the marketing boards established by the

state governments in order to eliminate the exploitation of the farmers by the intermediaries,

where the farmers are forced to sell their produce at extremely low prices.

All the food produce must be brought to the market and sales are made through auction. The

market place that is Mandi is set up in various places within the states. These markets

geographically divide the state. Licenses are issued to the traders to operate within a market.

The mall owners, wholesalers, retailers are not permitted to purchase the produce directly

from the farmers.

Some states had earlier criminalized farmers selling their produce anywhere other than these

mandis’. Earlier law had criminalized farmers selling their produce anywhere other than these

mandis’. These APMCs were initially set up to protect farmers from big retailers and ensure

that prices do not get too high.

APMC’s also provide farmers with information regarding prices. This is done through

MSP’s. MSP (Minimum Support Price) is the minimum price that farmers can be sold. The

MSP’s are set by the government. This ensures that farmers do not receive rates that are too

low. But unfortunately for farmers, the prices in APMC’s although above MSP, are

controlled by the middlemen cartels. These cartels come into an agreement over the price set

beforehand.

Now what is the new farm bill stating?

The new bill passed

(i) Limits the operation of APMC laws by states to the market yards;

(ii) Allows private parties to set up online trading platforms for trading in agricultural

commodities

(iii) Sets up a dispute-resolution mechanism for buyers and farmers to be operated by a sub-

divisional magistrate.

The new bill however does not do away with APMC’s. If the farmers still want to sell their

produce at APMC’s, they can go ahead and avail the MSP support. But they have the

freedom to sell elsewhere and receive higher prices but are at the risk of not having MSP’s.

Farmers (Empowerment and Protection) Agreement of Price Assurance,

Farm Services Bill, 2020:

The Farmers (Empowerment and Protection) Agreement on Price Assurance and Farm

Services Act, 2020 facilitates creating a national framework for contract farming through an

agreement between a farmer and a buyer before the production or rearing of any farm

produce.

What is contract farming?

Contract farming involves agricultural production being carried out on the basis of an

agreement between the buyer and farm producers. Sometimes it involves the buyer specifying

the quality required and the price, with the farmer agreeing to deliver at a future date. More

commonly,  contracts outline conditions for the production of farm products and for their

delivery to the buyer's premises. The farmer undertakes to supply agreed quantities of a crop

or livestock product, based on the quality standards and delivery requirements of the

purchaser. In return, the buyer, usually a company, agrees to buy the product, often at a price

that is established in advance. The company often also agrees to support the farmer through,

e.g., supplying inputs, assisting with land preparation, providing production advice and

transporting produce to its premises Contract farming has been used for agricultural

production for decades but its popularity appears to have been increasing in recent years. The

use of contracts has become attractive to many farmers because the arrangement can offer

both an assured market and access to production support. 

The scope of contract farming is huge as MNC’s regularly get into contracts with farmers in

order to ensure they receive specified types of produce. For eg., Lay’s brand they use only a

specified kind of potato for their chips and gets them grown accordingly. Similarly, other

chains too require specified produce and would prefer to be directly in touch with farmers

rather than traders to ensure that they are organic and fresh.

Essential Commodities (Amendment) Bill, 2020:

The Essential Commodities (Amendment) Bill 2020 with provisions to remove commodities

like cereals, pulses, oilseeds, edible oils, onion and potatoes from the list of essential

commodities. The EC (Amendment) Bill 2020 aims to remove fears of private investors of

excessive regulatory interference in their business operations. The freedom to produce, hold,

move, distribute and supply will lead to harnessing of economies of scale and attract private

sector/foreign direct investment into agriculture sector. It will help drive up investment in

cold storages and modernization of food supply chain.

What was the situation before this amendment?

Farmers have been unable to get better prices due to lack of investment in cold storage,

warehouses, processing and export as the entrepreneurial spirit gets dampened due to

Essential Commodities Act. Farmers suffer huge losses when there are bumper harvests,

especially of perishable commodities.

After this Essential Commodities (Amendment) Bill 2020 it prevent wastage of agri-produce

due to lack of storage facilities, it will create a positive environment not only for farmers but

also for consumers and investors and will definitely make our country self-reliant, it will also

help to achieve the government’s promise to double the farmer’s income by promoting

investment in this sector and promote ease of doing business.

WHAT IS THE REASON BEHIND THIS PROTEST?

One of the main reason for this protest throughout the country was the unconstitutional

way in which the laws were passed as it is the state governments that regulate

these aspects. The government should have included the opposition and also

taken into account the voice of farmers in order to plug the loopholes in the

bills.

The opposition Congress party has called the bills “black law” and “pro-corporate”. Its top

leader Rahul Gandhi accused Modi of “making farmers ‘slaves’ of the capitalists.

But Modi said . “For decades, the Indian farmer was bound by various constraints and bullied

by middlemen. The bills passed by Parliament liberate the farmers from such adversities,” he

said in a Twitter post

The protests have been most intense in northern states of Punjab and Haryana, dubbed India’s

grain bowls, where mandis are the main centres of farm trade.

The Indian Farmers Union, a farmers' organisation, believes:

“Due to these laws, farmers are in danger of becoming captive to companies. Law control,

free marketing, storage, import-export, is not in the interest of farmers. The farmers of this

country are also suffering because of the policies of World Trade Organisation. During the

drought in Bengal, in 1943-44, 40 lakh people died of hunger due to hoarding of food

grains by the East India Company.”   

According to a report in The Indian Expresss, there are two main reasons why farmers are

protesting against this bill:

The first reason is that farmers who depend on APMC's monopoly are angry with these

ordinances. According to the IE report, after the introduction of this new system, the

process of procurement by government at MSP will end.

However, there has been no mention, either directly or indirectly, in the ordinance that

after this new system, MSP-based government procurement will be abolished.

Further, farmer leaders believe that the intention behind bringing in this ordinance is for

the recommendations of Shanta Kumar’s High Level Committee be implemented.

The committee submitted its report in 2015 and said that the Food Corporation of India

(FCI) should give the responsibility of food preservation to the governments of Punjab,

Haryana, Madhya Pradesh, Odisha and Andhra Pradesh. It is being said that the Centre is

trying to wash its hands off purchase and storage.

Indian farmers have held huge rallies across the country in the past few years to protest

against the government's "neglect" of the agriculture sector amid increasing privatization.

Agriculture experts say that millions of India's small-scale farmers have lost their incomes

due to falling prices of their crops and rising transportation and storage costs.

More than half of India's farmers are reportedly in debt, with 20,638 committing suicide in

2018 and 2019, according to India's National Crime Records Bureau.

After Modi came to power in 2014, he promised to double farmers' income by 2022,

however, the situation hasn't improved. The government is under pressure to bring private

investments to the agriculture sector that has stagnated over the past decades.

These are all the main reasons behind the protest

CONSTITITIONAL VALIDITY OF FARM BILL 2020

Many States have questioned the constitutional validity of the Farm Acts and are reportedly

exploring legal options. Does the Union government have the authority to legislate on what

are rightfully the affairs of States?

Agriculture is a State subject in the Constitution, listed as Entry 14 in the State List (List II).

This apart, Entry 26 in List II refers to “trade and commerce within the State”; Entry 27 refers

to “production, supply and distribution of goods”; and Entry 28 refers to “markets and fairs”.

Parliament’s passage of the Farm Bills was an extraordinary step. For this purpose, the

central government invoked Entry 33 in the Concurrent List (List III). Entry 26 and 27 in List

II are listed as “subject to the provisions of Entry 33 of List III”. Entry 33 in List III is the

following: 33. Trade and commerce in, and the production, supply and distribution of, — (a)

the products of any industry where the control of such industry by the Union is declared by

Parliament by law to be expedient in the public interest, and imported goods of the same kind

as such products; (b) foodstuffs, including edible oilseeds and oils; (c) cattle fodder,

including oilcakes and other concentrates; (d) raw cotton, whether ginned or unginned, and

cotton seed; and (e) raw jute.

What the judiciary said

In many of its judgments after 1954, the Supreme Court of India has upheld the legislative

powers of States in intra-State agricultural marketing. Most notable was the ruling of the five-

judge Constitution Bench in I.T.C. Limited vs. Agricultural Produce Market Committee

(APMC) and Others, 2002. The Tobacco Board Act, 1975 had brought the development of

the tobacco industry under the Centre. However, Bihar’s APMC Act continued to list tobacco

as an agricultural produce. In this case, the question was if the APMC in Monghyr could

charge a levy on ITC for the purchase of unprocessed tobacco leaves from growers. An

earlier judgment had held that the State APMC Act will be repugnant to the Central Act, and

hence was ultra vires.

But the Constitution Bench upheld the validity of the State APMC Act, and ruled that (a)

market fees can be charged from ITC under the State APMC Act; (b) State laws become

repugnant only if the State and Centre enact laws on the same subject matter under an Entry

in List III; and (c) in those cases outside List III, one has to first examine if the subject matter

was an exclusive entry under List I or List II, and only after determining this can one decide

on the dominant legislation that would prevail. In the case of the Farm Acts of 2020, the

applicable points are (a) and (c). With regard to (a), States could continue to charge mandi

taxes from private markets anywhere in the notified area regardless of the Central Act. With

regard to (c), the State legislation should prevail as agriculture is an exclusive subject matter

— Entry 14 – in List II.

In summary, first, it was unwise on the part of the Centre to use Entry 33 in List III to push

the Farm Bills. Such adventurism weakens the spirit of federal cooperation that India needs in

this hour of crisis. Second, agriculture is exclusively a State subject. Everything that is

ancillary or subsidiary to an exclusive subject in List II should also fall under the exclusive

legislative purview of States. Most importantly, Entry 28 in List II — i.e., “markets and fairs”

— is not subject to Entry 33 in List III. In short, there appears to be a strong case to

reasonably argue that the Farm Acts have poor legal validity, if not being outrightly

unconstitutional.

R. Ramakumar is Professor, Tata Institute of Social Sciences, Mumbai.

Federalism, like constitutionalism and separation of powers, is not mentioned in the

Constitution. But it is the very essence of our constitutional scheme.

PROS AND CONS OF FARM BILL 2020:

Let’s discuss the pros and cons of farm bill 2020

FARMERS’ PRODUCE TRADE AND COMMERCE (PROMOTION AND

FACILITATION) BILL, 2020

PROS:

 To create an ecosystem where farmers and traders enjoy the freedom to sell and

purchase farm produce outide registered 'mandis' under states' APMCs.

 To promote barrier-free inter-state and intra-state trade of farmers produce.

 To reduce marketing/transportation costs and help farmers in getting better prices

 To provide a facilitative framework for electronic trading

CONS:

 States will lose revenue as they won't be able to collect 'mandi fees' if farmers sell

their produce outside registered APMC markets.

 What happens to 'commission agents' in states if entire farm trade moves out of

mandis?

 It may eventually end the MSP-based procurement system.

 Electronic trading like in e-NAM uses physical 'mandi' structure. What will happen to

e-NAM if 'mandis' are destroyed in absence of trading?

FARMERS (EMPOWERMENT AND PROTECTION) AGREEMENT OF

PRICE ASSURANCE, FARM SERVICES BILL, 2020:

PROS:

 Farmers can enter into a contract with agribusiness firms, processors, wholesalers,

exporters or large retailers for sale of future farming produce at a pre-agreed price

 Marginal and small farmers, with land less than five hectares, to gain via aggregation

and contract (Marginal and small farmers account for 86% of total farmers in India)

 To transfer the risk of market unpredictability from farmers to sponsors

 To enable farmers to access modern tech and get better inputs

 To reduce cost of marketing and boost farmer's income.

 Farmers can engage in direct marketing by eliminating intermediaries for full price

realisation

 Effective dispute resolution mechanism with redressal timelines

CONS:

 Farmers in contract farming arrangements will be the weaker players in terms of their

ability to negotiate what they need

 The sponsors may not like to deal with a multitude of small and marginal farmers

 Being big private companies, exporters, wholesalers and processors, the sponsors will

have an edge in disputes.

ESSENTIAL COMMODITIES (AMENDMENT) BILL, 2020:

PROS:

 To remove commodities like cereals, pulses, oilseeds, onion and potatoes from the list

of essential commodities. It will do away with the imposition of stockholding limits

on such items except under "extraordinary circumstances" like war

 This provision will attract private sector/FDI into farm sector as it will remove fears

of private investors of excessive regulatory interference in business operations.

 To bring investment for farm infrastructure like cold storages, and modernising food

supply chain.

 To help both farmers and consumers by bringing in price stability.

 To create competitive market environment and cut wastage of farm produce.

CONS:

 Price limits for "extraordinary circumstances" are so high that they are likely to be

never triggered.

 Big companies will have the freedom to stock commodities- it means they will dictate

terms to farmers which may lead to less prices for the cultivators.

 Recent decision on export ban on onion creates doubt on its implementation.

DOES FARM BILL 2020 IS REALLY HELPFUL FOR FARMERS?

You can’t say yes or no, because this bill lacks transparency, lack of regulation, lack of

regulatory oversight and reporting. The justification for these Bills at this point of time is

primarily, I think, to facilitate bigger private players into the farm sector What might happen

as a result of the facilitation of big players into the farm sector is that some farmers will get

better choices and big farmers will actually start selling to the private players. There is a

possibility that the importance of the APMC and the procurement system will actually wither

away over time. There is a high chance where the farmers can become slaves in the future

period because of this bill. Recent decision on export ban on onion creates doubt on its

implementation.

CONCLUSION:

Farm bill 2020 though it have some positive side there are a lot things against the farmers and

also the economy. So my suggestion is the government should hear the opinions of farmers

and they should reform it again. When these law exist not only farmers even common public

will affect. It will take us back to the zamindari system were farmers treated as slaves. So the

government should consider it again and it should hear the voice of farmers and common

public.

REFERENCE:

https://www.theindiaforum.in

https://www.thehindu.com

https://tradebrains.in

https://byjus.com

https://frontlinesmedia.in

https://en.wikipedia.org

https://pib.gov.in

credit: jothika venugopal

clg name: the Tamil Nadu Dr.Ambedkar law university