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Agriculture Bills 2020 – A Boon or A Bane?

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The Agriculture Bills 2020 have stirred up the already COVID hit nation, what are these bills and why are the farmers so agitated? Read on to find out.

The Lok Sabha passed two controversial legislation on 17 September 2020 – The Farmers’ Produce Trade and Commerce (Promotion and Facilitation) Bill, 2020 and The Farmers (Empowerment and Protection) Agreement of Price Assurance and Farm Services Bill, 2020. The Rajya Sabha had also passed Essential Commodities (Amendment) Bill earlier.

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The combo of these three bills has received backlash by farmers majorly in Punjab and Haryana. Farmers across these states are protesting to take the ordinances back.

On September 10, the Bhartiya Kisa Union asked the government to grant permission for a protest rally which was denied stating the ongoing pandemic as the reason. However, the tractor rally took place where around 100 farmers turned up on tractors and showed dissent.

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Understanding the Bills

Essential Commodities Amendment Bill

It is an amendment to the Essential Commodities Bill, 1955, which gave powers to the central government to “control production, supply, distribution, etc. of essential commodities”. After the amendment, certain edibles — including cereals, pulses, oilseeds, edible oils, potato — can be regulated only under extraordinary circumstances, like price rise, war, famine, etc.

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

This bill seeks to permit farmers to sell their produce outside the mandis or agricultural produce markets, that are regulated by Agricultural Produce Marketing Committees (APMC), who in turn, are regulated by different state legislations.

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Earlier, the APMC Act was made to protect the farmers from being exploited by moneylenders and zamindars. It allowed farmers to have access to these mandis to sell their produce through the middlemen or Angadias, to various buyers as well as the Government at MSP (Minimum Support Price). The APMC Act played a major role in the green revolution during the 1960s.

Farmers (Empowerment and Protection) Agreement of Price Assurance and Farm Services Bill

This bill grants permission for contract farming. As per its Preamble, it allows “national framework on farming agreements that empowers farmers to engage with agri-business firms, processors, wholesalers, exporters or large retailers for farm services and sale of future farming produce at a mutually agreed ‘remunerative price'”.

A Closer Look At The Bills

The agriculture industry contributes to 15% of India’s GDP and around 60% of the population depends directly or indirectly on agriculture and its allied sector. With such a vast sector of the country, there surely was a need for regulations in it. The Modi government has come up with bills which are assumed to be beneficial to farmers yet are being opposed by them. It makes the situation controversial and demands a closer look at the bills to reach any judgement.

The Agricultural Produce Market Committee (APMC) mandis were set to protect the farmers from being exploited by moneylenders and powerful zamindars. Though this helped in the green revolution vividly, it had loopholes of its own.

One needs a license to operate in APMC mandis. This granted the licensing authority a power to establish the infamous ‘License Raj’. Moreover, licenses were given to middlemen with shops and warehouses in these APMC mandis, which demanded a lot of capital investment. These middlemen captured their investment by exploiting the farmers. APMC mandis were often headed by MPs and MLAs who used their power and capital to exploit the poor. Moreover, taxes are mandatory in APMC mandis. It led to the middlemen trying to escape these taxes, thus providing no sale slips to farmers. This way, farmers could not prove their exact income and apply for loans. These middlemen/agents earned their commission and often held a monopoly over the market. The recent amendment in the act lets farmers trade their produce even outside APMCs. It sounds beneficial. But is it that simple? If it is, then why are these farmers protesting?


The ordinances aim for one nation, one market, i.e., they allow farmers to have monotony over the decision of where to sell the produce. But this can lead to the privatisation of the sector. As no APMC Act taxes would apply on sale and purchase of goods outside APMC, corporations would prefer buying the produce outside of APMC mandis. Thus, APMC would collapse as more and more people opt-out of it.

Talking about MSP (Minimum Support Price), it only applies to crops that are sold in mandis, not outside of it. Even though we have a law for mandatory MSP in APMC mandis, only 6% of farmers get it. Now that we have laws, the situation is of the farmer is substandard, imagine the situation outside mandis where MSP doesn’t apply. The amendment will increase the exploitation of these farmers by corporates and decrease the MSP ratio.

It will corporatize the agriculture sector by big companies whose main aim would be to earn profits. Their monopoly would flourish. Farmers would be left with nothing but legal battles they can’t fight.

The government is aiming to sustain a free market. The idea of neoliberalism might look quite appealing on paper but the reality differs. The model that India is aiming for right now, was adopted by the USA and France long back. As the model failed drastically, farmer suicide rates increased in these nations. The agriculture sector in these nations works mainly on subsidies. The question arises, why are we aiming for a model that failed in big economies like the US?

Apart from this, farmers also fear that the government will roll back MSP, which PM Modi stated in his recent address to the nation, would not be the case. However, there is no written proof of the same.

The Politics

BJP claims that these bills are in the best interest of farmers. The opposition, however,  doesn’t believe that. The opposition is making it as a protest to protect farmers’ rights, one can hardly believe that it’s their only motive behind the move. The taxes that apply in APMC mandis is a major revenue for every state government. However, privatisation would help to establish big companies that would pay taxes to the central government. It can, in a way, be a great loss for the state.

Union Cabinet Minister, Harsimrat Kaur Badal resigned from the cabinet to show dissent. Congress also fires questions on the new bill by the centre.

The Solution

Farmers demand the government to roll back the ordinances. They wish to protect APMCs across the country.

At this point, according to the experts, it is preferred that the government makes MSP mandatory (inside and outside of APMC mandis), i.e, mandating MSP as the floor price of the crop. As per RBI’s reports (2016), only 0.4% GDP of the country is invested in the agriculture sector, which is absurd as it is the largest sector. The government must invest more in the agriculture field for the betterment of farmers and the country as a whole.

If these bills are a boon or a bane for the country’s farmers is a controversial question. Though farmers are assuming all the potential downfalls of the move, the nation hopes that it turns out to be a success.

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