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Farm Bills 2020: An Analysis

On September 27th, 2020 President Kovind assented to all the three farm bills namely;

  • The Farmers Produce Trade and Commerce (Promotion and Facilitation) Bill, 2020,
  • The Farmers (Empowerment and Protection) Agreement on Price Assurance and Farm Service Bill, 2020, and
  • The Essential Commodities (Amendment) Bill, 2020.

These bills were passed amidst huge outcry against them from the farmers and the opposition alike.

According to the government the objective behind passing these bills is to create a free market system in the agricultural sector. This is done by allowing the farmers to sell their produce directly to the private traders across states and hence broke the monopoly of the APMCs or the mandis. It gives them the power to negotiate the price on their own terms and not be depended on the MSP. Another thing which will come into play is the concept of contract farming. According to this, a farmer can enter into an agreement with agribusiness firms, processors, large retailers, et al. for the production of a farm product as per their demand, on a mutually pre agreed prices. Now with the passing of these bills, the big traders are allowed to stock the produce on their discretion and with little say of the government in that[1]. Essentially the bills are based on the free market ideology towards the path of development.

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Now, the opposition against these bills stems from the fact that the effect privatization would have on the agricultural sector would not be as rosy as depicted by the government. Doing away with the monopoly of APMCs would put the farmers in precarious situation because on one hand they won’t have any assured price and on the other hand they would be at the mercy of these stalwarts in the agri-business arena with no forum for dispute resolution. It’s bad also for the states as states used to receive some revenue from these APMCs which they would not receive now. It is contented that private firms and co-operates owe their liability only towards the shareholders and no one else, so they would do what is beneficial for them which might not necessarily mean it is beneficial for the farmers.

Contract farming is opposed because it gives the buyer entire leverage controlling what is produce, how it is produce and what price is being paid for it. They can agree on a certain price in the beginning but after the produce is handed, they can very well decrease the price as the produce has no local market ( for instance, vanilla) and there exists no real legal solution in the hands of the farmer[2].

The concept of stock piling that is the power with the big traders to hoard and earn from it when the market allows is extremely beneficial for such traders but is a direct knife attack on the earnings of the farmer. It is so because, the traders would buy all the onions which all the farmers have produced, hence decreasing the price rate. Then sit on those onions, wait for the shortage of onions to arrive in the market and then sell it at a higher price. All this while, the government cannot do anything as it has excluded itself from the entire process. The bill is also opposed by the states as a threat to the federal structure of the country. It is contented that the central government is barging into the legislative power of the states as agriculture is a list II subject.

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A reform in agricultural sector was undoubtedly much required and much awaited. But a reform etymologically, is getting back in shape or the previous healthy form and not destruction of the existing one. These bills instead of curing the problem which existed in the previous structure have added even more complications. A free market is a good progressive economic theory but it is not applicable in the Indian scenario wherein the farmers are still very much oppressed and the farming sector hugely depends on the mercy of rainfall. Ours is a society wherein still agriculture is practiced by a huge percentage of the population and being a welfare state it is the state’s duty to look after the needs of the farmers, ensure their upliftment and not leave them to the mercy of corporate or the private sector.


[1] Quixplained: What are the three farm laws, and why are farmers upset?, THE INDIAN EXPRESS (October 6, 2020), <https://indianexpress.com/article/explained/quixplained-what-are-farm-reform-bills-and-why-are-the-farmers-worried-6609378/> (Last visited on Oct 6, 2020).

[2] Mitali Mukherjee, Farm Bills Will Create a Vacuum That May Result in Utter Chaos: P. Sainath, THE WIRE (September 23, 2020), <https://thewire.in/rights/farm-bills-agrarian-crisis-p-sainath-mitali-mukherjee> (Last visited on Oct 6, 2020).


Cite this article (The Bluebook 20th ed.)-

Aditi Mehta, Farm Bills 2020: An Analysis, Ex Gratia Law Journal, (October 12, 2020), https://exgratialawjournal.in/blawg/constitutional-law/farm-bills-2020-an-analysis-by-aditi-mehta/.

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Author

Aditi Mehta
Student - Tamil Nadu National Law University