Decoding the three controversial Farm bills of 2020

With the farmers coming in from Punjab and Haryana, we have all seen and experienced how angry they are. We have observed how the new farm bills have rattled them. However, there is another section of farmers that have embraced these bills with open arms. Regardless of which side you are on regarding this issue, we bet that you don’t know the actual nature of the bills.

And we don’t blame you for it. In fact, we are here for you to decode the three controversial farm bills 2020 for you. Check them out before you make up your mind and decide to take your stand.

How it all began?

On September of 2020, three new farm bills, better known as the Indian Farms reform bill, were passed with a round of applause. These bills were:

1. Farmers trade produce and commerce Bill
2. Farmer’s Agreement of Price Assurance, Farm Services Bill, and
3. Essential Commodities bill. 

Just like anyone would expect, not all was applause when these bills were announced. A huge uproar could be heard from the opposition whose echo could be heard to this day. Not only the oppositions, many farmer groups have also shown their hatred for the new reforms. Some are saying it’s a way to bring in the corporations and make the farmers vulnerable to the cut-throat competition in the corporate world.

While others are saying that it unshackles the farmers, giving them free reign to sell to anyone and anywhere.

Let’s decode the three bills and see how much reality lies in both those claims.

Farmers Trade Produce And Commerce Bill

As per the points of this bill, farmers will now be able to trade in their products outside the physical markets that are notified under the various state laws related to Agricultural Produce Marketing Committee (APMC Acts). Also known as the APMC Bypass Bill, it can bypass the state level APC acts. The decoded provisions of this act are as follow:

1. It ensures that farmers are not restricted within their states to sell their produce. As per the act, farmers can now sell anywhere across India as per their desires.
2. It brings in farmers to take part in the digitized economy. Meaning that the farmers can now establish online websites and run it through their registered companies, LLPs and societies to sell their produce online.
3. Bypassing the APMC notified markets, farmers will now be able to sell their produce anywhere in India.
4.  As the farmers are exercising their rights to sell anywhere in India, the state governments and the Agricultural Produce Marketing Committee aren’t allowed to levy any fees, cess, tax or any other charge on them related to their produce.

Farmer’s Agreement of Price Assurance, Farm Services Bill

This bill claims to allow the farmers to enter into a contract with buyers and sell to them at pre-determined price. The decoded provisions of this bill are as follows:

1. Entities can enter into an agreement with a farmer to buy his produce. These entities, also known as sponsors can be any registered entity including proprietorships, societies, individuals, companies or partnership firms.
2. The bill provides an automated way to set that agreement. The state authority can create a registration body to create those agreements which farmers and sponsors can look over and sign. Additionally, the agreement would only be valid between two parties. But if there is a third party, it has to be mentioned in the agreement.
3. The agreement will entail terms and conditions that farmer and sponsor agree upon. These terms and conditions outline the:
   1. Supply
   2. Quality
   3. Price
   4. Standard
   5. Farm services like seed supply, feed supply, agro-chemical supply, and machinery supply.
4. The agreement should be valid for at least 1 cropping season or one production cycle. The move has been taken to deter the sponsor (and the farmer) from backing out of the agreement if things get inconvenient.
5. The maximum period that the agreement is allowed to be valid for is 5 years. If it extends that period, sponsor and farmer can decide the duration.
6. In addition to the terms and conditions, the method of determining the price can be included in the agreement. If the price can be floated, which means that prices can vary, the sponsor has to specify the minimum guaranteed price that he has to pay to the farmer.
7.  For seeds, the sponsor must pay at least two-thirds of the agreed amount when the farmer delivers them. As for the remaining amount, sponsor will pay it within 30 days after the seeds are certified.
8. It’s the sponsor’s responsibility to check the quality of the produce.
9. The agreement exempt the sponsor from adhering to the stock limit obligations as per the Essential Commodities Act, 1955.
10. In case of any dispute between the sponsor and the farmer, the bill provides a three level mechanism to settle that dispute.

Essential Commodities (Amendment) Bill

The entire theme of this bill is to limit the involvement the government when it comes to production supply and distribution of essential commodities that include farmer’s produce:

1. Cereal, pulses, oil seeds, onion, edible oils and potatoes are no longer part of the essential commodities.
2. Only under exceptional conditions, the government can impost and regulate prices of the above commodities.
3. The government won’t set the stock limit on the farmer’s produce anymore. But rather, the stock limited will be regulated by the rise in the price of the produce. Under that condition:
   1. Stock limit will be imposed on horticulture if the price increases to 100 percent.
   2. Stock limit will be imposed on  non perishable agricultural items if the price rises to fifty percent.
4. Private investors won’t have to fear the regulatory input of the government anymore.
5. As the farmers can now sell to anyone, the bill also aims to improve investment in India’s agriculture sector by private and foreign institutions.

What are the positives of the Farm Bills?

Many would agree that the farm bills have paved the way for the farmer to spread their wings and enter into a market where they can get the due price.

1. With the state restrictions gone, farmers can now sell anywhere in India. Now that the farmers would be able to sell anywhere in India, they won’t be suppressed by the state laws to sell in a particular area. The bills have given the farmers unprecedented access to clients they weren’t able to sell (legally) before.
2. Farmers can even enter into contract with the individuals or institutions to sell their products in bulk.
3. It has provided farmers choice of who to sell their produce to.

That being said, like anything, the bills have a flip side. You might have noticed that I have bolded some points. Those are the points that are the primary cause of pain for the farmers.

Why the farmers are against it?

Unless you’re still living under quarantine, you’d know about the recent farmer up heave that has been going on all across Delhi. Why is that? For all reasons, the farmer’s bill seem quite progressive. That said, following are their pain points that farmers have regarding the bills:

1. No mention of MSP: As per the 9th point Farmer’s Agreement of Price Assurance, Farm Services Bill, it’s the corporations that have to decide the minimum guaranteed price on the farmer’s produce. There is no mention of the MSP or Minimum Selling Price. It has caused farmers to fear that these sponsors would exploit the farmers – giving them lower prices. While the government has assured that MSP is still active, the rule being absent from the bill has caused a stir. Farmers have expressed that just verbal confirmation isn’t enough for guaranteed MSP.
2. No control over the stock limit: The government’s back step from the essential commodities has created a loophole where the sponsors don’t have to follow the stock limit obligations. As per those against the bill, this removes any fear from the sponsor who wishes to hoard the produce.

Conclusion

The Farm Bills of 2020, while have paved a way towards growth for the farmers, also comes with certain opposition. It’s important to understand how freedom it bestows upon the farmers, but it’s also important to understand why farmers are not ready to accept it in the current state. What do you think about these laws? Whatever your thoughts are, do share in the comments. Let us all know more. Because knowing more is the only way to develop understanding and getting all of us on the same page.

Author: Dushyant Sharma

Hey there, I'm Dushyant Sharma. With the extensive knowledge I've gained in past 8 years, I have been creating content on various subjects such as banking, insurance, telecom, and all the important registration and licensing processes for various companies. I'm here to help everyone with my expertise in these areas through my articles.