Farm Bills, 2020: An Overview

Agriculture sector has been the backbone of the Indian Economy as it is one of the major contributors to the GDP of the country. More than 70% of the Indian population depends primarily on agriculture as their source of income. Recently, the government of India passed 3 Farm Bills with an aim to increase the income of the farmers.

The 3 Farm Acts which have been passed are:

1. The Farmers (Empowerment and Protection) Agreement on Price Assurance and Farm Services Act, 2020[1]

2. The Farmers’ Produce Trade and Commerce (Promotion and Facilitation) Act, 2020[2]

3. The Essential Commodities (Amendment) Act, 2020[3]

The Farmers (Empowerment and Protection) Agreement on Price Assurance and Farm Services Act, 2020 and The Farmers’ Produce Trade and Commerce (Promotion and Facilitation) Act, 2020 were promulgated by Mr. Narendra Singh Tomer, Minister of Agriculture and Farmers Welfare. These bills were passed by Lok Sabha on 17th September, 2020 and then by Rajya Sabha on 20th September, 2020. The President Mr. Ram Nath Kovind gave the assent to these bills on 27th September, 2020.

The main aim of these acts was to provide multiple benefits to the farmer like freedom to sell their crop to anyone, anywhere of their choice, to bargain or negotiate, to enter into contracts with the private corporations and this will help in creating “One Nation, One Market”.

However, these acts are facing criticism by the farmers as they feel that these acts are not beneficial for them and they would be further suppressed by the private corporation/contractors. As a result, farmers from various states sat on the protest at the Delhi borders and they demanded repealing these acts.

Now, these 3 Farm Acts will be discussed in detail.

  • The Farmers (Empowerment and Protection) Agreement on Price Assurance and Farm Services Act, 2020[4]

This act talks about a Farming Agreement between the farmers and the private corporations to purchase the desired produce. It has been defined under section 3(1) of the act.                                                                                                 

Farming Agreement provides information relating to terms and conditions of supply, time of supply, quality, price and other important matters. It ensures that farmers get the best value for their crop. The price mentioned in the agreement would be final. It can’t be changed if the market price falls or rises.

This act also defines Dispute Resolution Mechanism. According to this mechanism, a conciliation board will be set up consisting representatives of both the parties. If the dispute is not solved by the conciliation board within 30 days from the date of filing, then the parties can approach sub-divisional authority.

According to this act, a sub-divisional magistrate is the sub-divisional authority. If the sub-divisional authority also fails to solve the dispute, then the parties can approach the appellate authority.

The appellate authority is headed by collector or additional collector (which is appointed by the collector). The parties should approach the appellate authority within 30 days from the passing of the order. The authority should dispose of the case within 30 days.

Sub-divisional magistrate or appellate authority can a impose fine on the party which is going against the contract. No action can be taken against the land of the farmer for the recovery of dues.

  • The Farmers’ Produce Trade and Commerce (Promotion and Facilitation) Act, 2020[5]

This act allows the farmers to sell their crops to anyone, anywhere of their choice beyond the premises of the APMC (Agriculture Produce Market Committee) without any restrictions. It prohibits the state government from imposing any market fee and taxes in intrastate trading.

APMC (Agriculture Produce Market Committee) is a regulating body/market which was made to protect farmers from middlemen. It is a market where the farmers could directly sell their crops at a fixed rate which was fixed by the market committee.

Any person with a PAN card can directly trade with the farmers.

It also allows electronic trading of scheduled farmer’s produce in the specified trade area. An electronic trading and transaction platform will be set up to facilitate online buying and selling of produce through internet and electronic devices.

  • The Essential Commodities (Amendment) Act, 2020[6]

The Essential Commodities Act, 1955[7] gives the power to the central government to designate certain commodities (for eg. food items, petroleum products etc.) as essential commodities. Before this amendment central government had the power to regulate or prohibit the production, supply, distribution etc. of essential commodities (for eg. oilseeds, onion, potatoes etc.).

But after the amendment the central government can regulate the supply of certain food items (for eg. potatoes. pulses, onions etc.) only under extraordinary circumstances. It includes war, famines, natural calamity of grave nature etc.

The amendment requires that imposition of any stock limit on agricultural produce must be based on price rise.

There are 2 conditions which are to be followed to implement stock limits:

(i) If there is a 100% increase in the retail price of horticulture produce.

(ii) If there is a 50% increase in the retail price of non-perishable agricultural food items.

The increased calculation will be prevailing immediately prior 12 months or average retail price from the last 5 years, whichever is lower.

  • Benefits of the Farm Acts:

The farm bills enable the farmers to sell their produce anywhere in the country which will help them to get the best price for their produce and they also don’t have to pay tax.

Farmers’ can enter into agreement with the private corporations. As a result, they will get a good price for their crops. When the farmers have a contract, after the harvest, the produce needs to be collected by the company which saves farmer’s transportation cost and time.

Contract Farming might also attract investment from private investors in the agriculture sector which will help in development of rural areas and can lead to modernization in farming.

  • Criticism of the Farm Acts:

Setting up of a Dispute Redressal System is not practical. As, the Sub-Divisional Magistrate already has a pile of dispute pending before him/her. As a result, there may be delay in solving the dispute of the farmers and there is a well-known saying “Justice delayed is Justice denied”.

These acts also prohibit the state from imposing any fees or taxes (i.e.) Mandi Tax. This will result in shutting down of many state run mandi (market). This decision will impact state governments as they earn large income through taxes.

In APMC market payments were made to the farmers on the same day. But these acts allow the traders 3 credit days. In APMC market traders or middlemen had the license to do trading with the farmers. But these acts allow any person with a PAN card to enter into trading with the farmer. Some people can misuse this and can give fake PAN cards to exploit farmers.

The biggest criticism of these acts is that there is no mention of MSP (Minimum Support Price). MSP is a minimum price guaranteed by the government to the farmers when they sell their crops to government agencies. There is no provision of MSP while dealing with private corporations and the farmers fear that they will be underpaid and will not get a good price for their crop.


Agriculture plays a very important role in the country to become “Atma Nirbhar”. These 3 acts have a lot of potential to transform the agriculture sector if the loopholes of these acts are addressed by the government. The government should establish a separate regulatory body other than Sub-Divisional Magistrate to look into the disputes of the farmers and private corporations and to solve them quickly and efficiently. Intermediary committees should be set up to look over the farming agreements to ensure that the farmers are not being exploited by the big corporations. Mandi system and MSP should remain and the government should take strict actions against the corrupt individual or authorities and the conditions of the mandis should be improved by maintenance of facilities of storage, weighing and sorting.  

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