Decoding The Farmer Bill 2020 – All You Need To Know

Farmer bill 2020 is getting attention because of the statewide protest and the opposition being skeptical.  These are The Farmers’ Produce Trade and Commerce (Promotion and Facilitation) Bill, 2020, the Farmers (Empowerment and Protection) Agreement of Price Assurance and Farm Services Bill, 2020, and the Essential Commodities (Amendment) Bill, 2020.

The resignation of Food Processing Industries Minister (and Shiromani Akali Dal MP), Harsimrat Kaur Badal, from the Union Cabinet, and dissenting voices from various mass organizations affiliated to the Rashtriya Swayamsevak Sangh left the government high and dry.

What do the Farmer Bills do?

farm bill 2020

Each bill serves various purposes to enhance the farming sector under the tag of “reform”. From definition of trade area to trader and the enhanced possibilities of the farmer, the bills are omnipresent in its own way.

On paper, what the first one attempts to do is allow farmers to sell their produce at places other than the APMC-regulated mandis. It is crucial to note that the idea is not to shut down APMCs but to expand a farmer’s choices.

The second bill proposes to allow economic agents to stock food articles freely without the fear of being prosecuted for hoarding. It also defines who is a trader and what is a trade area under section 2 and section 6 of the bill. The Bill provides a framework for farmers to enter contract farming — that is signing a written contract with a company to produce what the company wants in return of a mutually benefiting remuneration.

Why farmers are protesting?

What is a ‘trade area’?

Section 2(m) of The Farmers Produce Trade and Commerce (Promotion and Facilitation) Ordinance, 2020 defines “trade area” as any area or location, place of production, collection, and aggregation including (a) farm gates; (b) factory premises; (c) warehouses; (d) silos; (e) cold storages; or (f) any other structures or places, from where the trade of farmers’ produce may be undertaken in the territory of India.

  • The definition does not, however, include “the premises, enclosures, and structures constituting (i) physical boundaries of principal market yards, sub-market yards, and market sub-yards managed and run by the market committees formed under each state APMC (Agricultural Produce Market Committee) Act”.
  • The farmers are not sure about the existence of MSP afterward, because there is no mentioning of APMC led mandis. Through there they get the MSP and the state tax also. State governments are afraid of the loss of tax collection by this. However, both the Prime minister and the government assured verbally that the MSP will keep continuing. But is this unofficial confirmation a relief to the farmers?
What is MSP? Understanding MSP and its impact on farmers. | MyFarmInfo Blog
Minimum Support Price
  • The protesters say that the provision of dispute resolution under Section 8 does not sufficiently safeguard farmers’ interests. It becomes a part of bureaucracy by adding the commission appointed by the magistrate and ceases the farmer from going to the civil courts.

In the long run, there is a potential threat of private players exploiting the farmers by isolating financially weak farmers and forcing them to sell out their crops. Does the government foresee this danger and implement any provision to safeguard the farmers? Corporates would leverage the absence of market fees, and this will lead to the collapse of APMC’s.

Governments take on the Bill

Almost all agriculture experts and economists were batting for these reforms in the agriculture sector. The Centre was also persuading states to implement the Model APMC Act, 2002-03. But the states did not fully adopt it. Therefore, the Centre had to adopt the ordinance route… It will lead to helping farmers realize a better price. This is very forward-looking legislation and it is a win-win situation for all farmers, consumers, and entrepreneurs,”

said Ramesh Chand, member of NITI Aayog.

Diversified possibilities to sell their products make the farmers negotiating power strong and more leverage on the market. Farmers are restricted from selling directly to retailers and getting the right price. The farmer bill will remove market inefficiencies while enabling free trade for farmers.

  • Farmers (empowerment and protection) agreement on price assurance and farm services bill allows contract farming. It gives authority to farmers to tie up with large buyers, exporters, and retailers through an agreement. Besides this, it provides a three-level dispute settlement mechanism. First, the conciliation board, then the Sub-Divisional Magistrate, and at last Appellate Authority.
  • Farmers will earn more, as they will have assured prices before sowing. In case of a higher market price, it will entitle farmers to get the selected price before the contract. Farmers will not be on the side of any risk because of market unpredictability.
Farmer protest

The polar opposite viewpoint, from the protesters, is that this move towards greater play of free markets is a ploy by the government to get away from its traditional role of being the guarantor of minimum support prices (MSPs). To be sure, MSPs work in the formally regulated APMC mandis, and not in private deals.

Where to look and What’s to be done?

Despite all the accusations and credibility talking, it’s well known the politics behind everything in India, be it the ruling party or opposition. The fear of losing tax money for the state government forces them to lead the unrest and make the farmers come to the road at any cost. Moreover, The Bihar state election is on the horizon. The pro-capitalist motive of the government is also well known.

There are no easy answers apart from saying that while both have some valid points, neither view is fully correct.

Why should the farmers not have more options? Farmers will get more storage facilities to store their commodities and wait for the vibrant market to sell rather than sell it off at cheap prices because of a lack of storage establishments. Another underlying structural problem is the lack of information with farmers, which inhibits their ability to make the best decision. For instance, how will an average farmer figure out the right price for his or her produce?

The lack of clarity in the bill regarding MSP and the safeguard both legally and financially is a reason to worry for the farmers. The involvement of right-wing organizations in the protest and resigning of the minister is also a strong turning point for the cabinet to reconsider the bill.

Last but not least, this reform is a long waiting one and indeed important to the agriculture sector. India cannot afford to stagger behind with this ineffective and mediocre agriculture sector and laws. The reform is inevitable despite the economic slowdown also. By considering the goodwill of the farmers, the government should educate them about the upgrades and also comforting the private companies to step in so that to begin an agricultural revolution not to exploit anyone!