Farm Laws 2020: Everything you need to know about the new agriculture reforms in India

Date:12-08-2020

On 27 September 2020, President Ram Nath Kovind gave his assent to the three 'Agriculture Bills' that were earlier passed by the Indian Parliament. These Farm Acts are as follows:

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

Citation: Act No. 20 of 2020

Territorial extent: India

Lok Sabha: The Bill was introduced in Lok Sabha on 14 September 2020, passed in Lok Sabha on 17 September 2020. 

Rajya Sabha: It was passed in Rajya Sabha on 20 September 2020. 

Presidential Assent: The Bill received Presidential Assent on 27 September 2020. 

Introduced by: Minister of Agriculture and Farmers Welfare, Narendra Singh Tomar

1- Background: On 5 June 2020, The Farmers (Empowerment and Protection) Agreement on Price Assurance and Farm Services Ordinance, 2020 was promulgated by the Union Cabinet. 

2- Act: It creates a national framework for contract farming through an agreement between a farmer and a buyer before the production or rearing of any farm produces.

3- Provisions:

(a) Farming Agreement: The Act provides for a farming agreement between a farmer and a buyer prior to the production or rearing of any farm produce.

(b) Minimum Period of Farming Agreement: The minimum period of the farming agreement shall be for one crop season or one production cycle of livestock.

(c) Maximum Period of Farming Agreement: The maximum period of the farming agreement shall be five years. It also states that if the production cycle of any farming produce is longer and may go beyond five years, the maximum period of farming agreement may be mutually decided by the farmer and the buyer and explicitly mentioned in the farming agreement.

(d) Pricing of Farming Produce: The pricing of farming produce and the process of price determination should be mentioned in the agreement. For prices subjected to variation, a guaranteed price for the produce and a clear reference for any additional amount above the guaranteed price must be specified in the agreement. 

(e) Settlement of Dispute: The Act provides for a three-level dispute settlement mechanism-- Conciliation Board, Sub-Divisional Magistrate and Appellate Authority.

2. Farmers' Produce Trade and Commerce (Promotion and Facilitation) Act, 2020

Citation: Act No. 21 of 2020

Territorial extent: India

Lok Sabha: The Bill was introduced in Lok Sabha on 14 September 2020, passed in Lok Sabha on 17 September 2020. 

Rajya Sabha: It was passed in Rajya Sabha on 20 September 2020. 

Presidential Assent: The Bill received Presidential Assent on 27 September 2020. 

Introduced by: Minister of Agriculture and Farmers Welfare, Narendra Singh Tomar

1- Background: On 5 June 2020, the Farmers' Produce Trade and Commerce (Promotion and Facilitation) Ordinance, 2020 was promulgated by the Union Cabinet. 

2- Act: It permits intra and inter-state trade of farmers’ produce beyond the physical premises of Agricultural Produce Market Committee (APMC) markets and other markets notified under the state APMC Acts. 

3- Provisions: 

(a) Trade of Farmers' Produce: The Act allows the farmers to trade in outside trade area such as farm gates, factory premises, cold storages, and so on. Previously, it could only be done in the APMC yards or Mandis. 

(b) Alternative Trading Channels: It facilitates lucrative prices for the farmers via alternative trading channels to promote barrier-free intra-state and inter-state trade of agriculture produce. 

(c) Electronic Trading: Additionally, it allows the electronic trading of scheduled farmers’ produce (agricultural produce regulated under any state APMC Act) in the specified trade area. It will also facilitate direct and online buying and selling of the agricultural produce via electronic devices and the internet.

(d) Market Fee Abolished: As per the Act, the State Governments are prohibited from levying any market fee or cess on farmers, traders and electronic trading platforms for trading farmers’ produce in an 'outside trade area'.

3. Essential Commodities (Amendment) Act, 2020

Citation: Act No. 10 of 1995

Territorial extent: India

Status: Amended

Lok Sabha: The Bill was introduced in Lok Sabha on 14 September 2020, passed in Lok Sabha on 15 September 2020. 

Rajya Sabha: It was passed in Rajya Sabha on 22 September 2020. 

Presidential Assent: The amendment received Presidential Assent on 27 September 2020. 

1- Background: On 5 June 2020, the  Essential Commodities (Amendment) Ordinance, 2020 was promulgated by the Union Cabinet. 

2- Act: It is an act of Indian Parliament which was enacted in 1955 to ensure the delivery of certain commodities or products, the supply of which if obstructed owing to hoarding or black-marketing would affect the normal life of the people. This includes foodstuff, drugs, fuel (petroleum products) etc.

3- Powers of Central Government:

(a) The Government of India regulates the production, supply, and distribution of a whole host of commodities it declares ‘essential’ in order to make them available to consumers at fair prices. 

(b) The Government can also fix the MRP of any packaged product that it declares an 'essential commodity'. 

(c) The Centre can add commodities in this list when the need arises and can take them off the list once the situation improves. 

(d) If a certain commodity is in short supply and its price is spiking, the Government can notify stock-holding limits on it for a specified period.

4- Powers of State Government: The respective State Governments can choose not to impose any restrictions as notified by the Centre. However, if the restrictions are imposed, traders have to immediately sell any stocks held beyond the mandated quantity into the market. This is done to improve supplies and brings down prices. 

5- Amendment: With the amendment in the Act, the Government of India will list certain commodities as essential to regulate their supply and prices only in cases of war, famine, extraordinary price rises, or natural calamities. The commodities that have been deregulated are food items, including cereals, pulses, potato, onion, edible oilseeds, and oils.

6- Stock Limit: As per the amendment, the imposition of any stock limit on agricultural produce will be based on price rise and can only be imposed if there's-- a 100% increase in the retail price of horticultural produce and 50% increase in the retail price of non-perishable agricultural food items. 

7- Calculation: The increase will be calculated over the price prevailing immediately preceding twelve months, or the average retail price of the last five years, whichever is lower.

Why are Indian farmers protesting?

Indian farmers are fearing that they might lose more than they could gain after the new Farms Laws 2020 thereby taking the protest to the streets. 

As reported by AlJazeera, 27-year-old Rashpinder Singh stated that the Indian Government has left the farmers at the mercy of big corporations. It is preposterous to believe that farmers who have small landholdings will have any bargaining power over private players.

Government's take on the farmers' protest

Prime Minister Modi stated, “The new agricultural laws have been brought in for benefit of the farmers. We will see and experience the benefits of these new laws in the coming days.” 

December 8 Bharat Bandh called by Farmers' Union

Ahead of 'Bharat Bandh', Delhi's Chief Minister Arwind Kejriwal is on his way to Singhu border. In addition to this, leaders of 11 parties including Congress president Sonia Gandhi, DMK chief M K Stalin, NCP patriarch Sharad Pawar, Samajwadi Party chief Akhilesh Yadav and Left Front’s Sitaram Yechury and D Raja stated that they will lend their 'whole-hearted' support to the December 8 Bharat Bandh called by Farmers' Union, The Times of India reported. 

A day after the scheduled Bharat Bandh called by Farmers' Union, Union Agriculture Minister, Narendra Singh Tomar has called a meeting on 9 December 2020 as the fifth round of talks remained inconclusive with farmers' leaders. 

Criticism

(a) President of the Maharashtra Rajya Bazaar Samiti Sahakari Sangh, Dilip Mohite Patil claimed that around 100-125 market committees in Vidarbha and Marathwada regions have reported almost no business and are on the verge of closure after the announcement of the central Ordinance. 

(b) Food Processing Industries Minister, Harsimrat Kaur Badal of Shiromani Akali Dal resigned from her post in protest against these Bills.

(c) Former Chief Minister of Punjab, Prakash Singh Badal returned his Padma Vibhushan to protest 'the betrayal of farmers by the Government of India'.