The farm bill is a package of legislation passed roughly once every five
years that has a tremendous impact on farming livelihoods, how food is grown,
and what kinds of foods are grown. Covering programs ranging from crop insurance
for farmers to healthy food access for low-income families, from beginning
farmer training to support for sustainable farming practices, the farm bill sets
the stage for our food and farm systems. As a leading advocate for family
farmers and sustainable agriculture, it’s our job to make sure that this
important bill is good for farmers, consumers, and for the natural environment.
Every five years, the farm bill expires and is updated: it goes through an
extensive process where it is proposed, debated, and passed by Congress and is
then signed into law by the President. Each farm bill has a unique title, and
the current farm bill is called the Agriculture Improvement Act of 2018. It was
enacted into law in December 2018 and expires in 2023.
The original farm bill(s) were enacted in three stages during the 1930s as part
of President Franklin Delano Roosevelt’s New Deal legislation. Its three
original goals – to keep food prices fair for farmers and consumers, ensure an
adequate food supply, and protect and sustain the country’s vital natural
resources – responded to the economic and environmental crises of the Great
Depression and the Dust Bowl. While the farm bill has changed in the last 70
years, its primary goals are the same.
Our food and farming system confronts new challenges today, but through citizen
and stakeholder action for a fair farm bill, we can ensure the vibrancy and
productivity of our agriculture, economy, and communities for generations to
On September 27, 2020, the president of India Mr. Ram Nath Kovid gave his assent
to the three farm reform bills - The Farmers’ Produce Trade And Commerce
(Promotion And Facilitation) Bill 2020, The Farmers (Empowerment and Protection)
Agreement on Price Assurance and Farm Services Bill 2020, and The Essential
Commodities (Amendment) Bill 2020. These bills were passed by the parliament in
the recently concluded Monsoon season. Our Prime Minister Mr. Narendra Modi
hailed by passage of these bills by saying “A watershed moment in the history of
But the thing to worry about is the farmers for whose betterment these Acts have
been made are on streets protesting these Acts. Farmers organizations like
Bhartiya Kisan Union (BKU) and the All India Kisan Sangharsh Coordination
Committee (AIKSCC) have been protesting the bills from September 2020 itself.
They have raised the slogan of ‘KISAN BACHAO MANDI BACHAO’ and more such other
slogans which was also supported by few opposite political parties and even
sponsored by some Anti – Social and Anti – National elements, who all had an
intention to break nation.
Brief History And Provisions Of New Acts
India is and has been an agrarian economy. After India gained Independence in
1947, farmers used to sell their products direct to the consumers. But due to
prevailing system of Zamidars or money lenders, farmers were trapped in
perpetual debt. Farmers need to buy seeds, fertilizers and other things required
for growing a crop, for buying all these things you need money so farmers took
loans from Zamidars or money lenders who used to charge a very high interest
rate on the principal amount.
Farmers were unable to pay such a hefty amount and
in such cases to get their money back money lenders or the Zamidars used to buy
the whole produce of the farmers but, they paid very less amount to farmers
because farmers did not have the bargaining power. Now to again sow their fields
farmers required money so this cycle continued, and farmers were always in
This process was very exploitative so to help the farmers and end this system
government of India introduced APMC (Agriculture Produce Market Committee) Act.
It was introduced in 1960’s at the very same time when green revolution started
in India many experts believe that in the major of green revolution APMC Act
played a major role. APMCs set up Mandis or Markets across India where farmer’s
produce was sold.
There are around 7000 APMCs in India at present. Now, the
process of selling the produce is that after harvesting crops are brought to the
Mandis or Markets where they sell the produce through auctioning or price
discovery. Whom are the farmers selling the crops? Not to the government but the
middlemen or Arhatiyas. Middlemen are people between the farmer and the retailer
or big traders.
For example, farmers sell their vegetables to the middlemen and
then the vegetable vendor buys vegetable from the middleman, vegetable vendor
will not buy directly from the farmers. Government gives license to these
Middlemen; shops, storage facilities etc. are provided to them in APMC markets.
Many people work in these APMCs, there is storage of grains, so it requires
laborers, accountants so overall it is a self-thriving ecosystem.
which should be noted here is these APMC markets are regulated by state
governments, a tax is charged on each transaction so in a way government knows
at price produce is being sold.
Now what about the produce that are not bought by the middlemen in these
markets? This is being bought by the government at MSP (Minimum Support Price).
MSP is constant throughout the country. MSP also ensured that produce bought be
the middlemen were not below a certain price. When everything is so good are
farmers happy? According to National Crime Bureau report 2018, 1,34,560 suicides
were reported in India out of which 10,350 were farmers remember this was total
number of reported cases.
This system was good seeing 1960’s but with time we
need to evolve similarly, not much was done to APMCs and some problems popped
up. Middlemen started exploiting farmers they formed cartels or an understanding
among themselves and started buying the produce at MSP only and sold to traders
at a high rate. For example, MSP for onion is Rs.8.5 per kg (data as of February
06, 2019) but we buy onions at Rs 35 – 80 per kg depending on state. In a way we
can say Minimum Support Prize became Maximum Selling Price. Voice arose from
time to time to remove these defects and in response government brought the
three Acts in 2020. These three farm Acts seek to replace ordinances issued in
These Acts envisage to bring change in some of the key aspects of the farm
economy — trade in agricultural commodities, price assurance, farm services
including contracts, and stock limits for essential commodities. These Acts
sought to bring much needed reforms in the agricultural marketing system such as
removing restrictions of private stock holding of agricultural produce or
creating trading areas free of middlemen and take the market to the farmer.
Farmers came on to the streets, protesting against three Bills on agriculture
market reforms that were passed by Parliament and became laws once they too got
signed by the President. In Punjab and Haryana, bandhs were observed, with
blocked roads and mass rallies. Opposition parties and farmers groups across the
political spectrum have expressed concern that the laws could corporatise
agriculture, threaten the current mandi network and State revenues and dilute
the system of government procurement at guaranteed prices.
What are the three Bills?
The Bills which aim to change the way agricultural produce is marketed, sold and
stored across the country were initially issued in the form of ordinances in
June. They were then passed by voice-vote in both the Lok Sabha and the Rajya
Sabha during the delayed monsoon session this month, despite vociferous
Opposition protest. The Farmers’ Produce Trade and Commerce (Promotion and
Facilitation) Bill, 2020, allows farmers to sell their harvest outside the
notified Agricultural Produce Market Committee (APMC) mandis without paying any
State taxes or fees.
The Farmers (Empowerment and Protection) Agreement on Price
Assurance and Farm Services Bill, 2020, facilitates contract farming and direct
marketing. The Essential Commodities (Amendment) Bill, 2020, deregulates the
production, storage, movement and sale of several major foodstuffs, including
cereals, pulses, edible oils and onion, except in the case of extraordinary
circumstances. The government hopes the new laws will provide farmers with more
choice, with competition leading to better prices, as well as ushering in a
surge of private investment in agricultural marketing, processing and
Will farmers get minimum support price?
Most of the slogans at the farmers’ protests revolve around the need to protect
MSPs, or minimum support prices, which they feel are threatened by the new laws.
These are the pre-set rates at which the Central government purchases produce
from farmers, regardless of market rates, and are declared for 23 crops at the
beginning of each sowing season. However, the Centre only purchases paddy, wheat
and select pulses in large quantities, and only 6% of farmers actually sell
their crops at MSP rates, according to the 2015 Shanta Kumar Committee’s report
using National Sample Survey data. None of the laws directly impinges upon the
However, most government procurement centres in Punjab, Haryana and
a few other States are located within the notified APMC mandis. Farmers fear
that encouraging tax-free private trade outside the APMC mandis will make these
notified markets unviable, which could lead to a reduction in government
procurement itself. Farmers are also demanding that MSPs be made universal,
within mandis and outside, so that all buyers — government or private — will
have to use these rates as a floor price below which sales cannot be made.
Why were protests vociferous in some States?
More than half of all government procurement of wheat and paddy in the last five
years has taken place in Punjab and Haryana, according to Agriculture Ministry
data. More than 85% of wheat and paddy grown in Punjab, and 75% in Haryana, is
bought by the government at MSP rates. Farmers in these States fear that without
MSPs, market prices will fall.
These States are also most invested in the APMC
system, with a strong mandi network, a well-oiled system of arthiyas or
commission agents facilitating procurement, and link roads connecting most
villages to the notified markets and allowing farmers to easily bring their
produce for procurement. The Punjab government charges a 6% mandi tax (along
with a 2.5% fee for handling central procurement) and earns an annual revenue of
about ₹3,500 crore from these charges.
What are some other concerns?
One of the major concerns raised by regional political parties and non-BJP State
governments is that agriculture falls in the State list, arguing that the Centre
should not be making legislation on this subject at all. They are concerned
about the loss of revenue from mandi taxes and fees, which currently range from
8.5% in Punjab to less than 1% in some States.
Some economists and activists say both Punjab and Rajasthan are considering
legal measures to expand the bounds of their APMC mandi yards to ensure that
they can continue collecting taxes on all agricultural trade within their
State’s borders. States such as Chhattisgarh and Odisha have only seen
procurement increase over the last five years, after the implementation of
decentralised procurement. Paddy farming has received a major boost with
procurement at MSPs and farmers fear their newly assured incomes are at stake.
The majority of agricultural marketing already happens outside the mandi
network, with only 7,000 APMC markets operating across the country. Bihar,
Kerala and Manipur do not follow the APMC system at all.
However, most private
buyers are currently small traders at local mandis. The removal of stock limits
and facilitation of bulk purchase and storage through the amendment to the
Essential Commodities Act could bring large corporate players into the
agriculture space. Although they will bring much-needed investment, they could
also skew the playing field, with small farmers unlikely to match them in
Key provisions of the laws
The key provisions of new farm laws are intended to help small and marginal
farmers (86% of total farmers) who don’t have means to either bargain for their
produce to get a better price or invest in technology to improve the
productivity of farms. The Act on Agri market allows farmers to sell their
produce outside APMC ‘mandis’ to whoever they want. Anyone can buy their produce
even at their farm gates.
Though ‘commission agents’ of the ‘mandis’ and states
could lose 'commissions' and 'mandi fees' respectively (the main reasons for the
current protests), farmers will get better prices through competition and
cost-cutting on transportation. The law on contract farming will, on the other
hand, allow farmers to enter into a contract with agri-business firms or large
retailers on pre-agreed prices of their produce.
This will help small and
marginal farmers as the legislation will transfer the risk of market
unpredictability from the farmer to the sponsor. The third law seeks to remove
commodities like cereals, pulses, oilseeds, edible oils, onion and potatoes from
the list of essential commodities. This provision will attract private
sector/foreign direct investment into the agriculture sector.
What farmers fear?
Farmer unions in Punjab and Haryana say the recent laws enacted at the Centre
will dismantle the minimum support price (MSP) system. Over time big corporate
houses will dictate terms and farmers will end up getting less for their crops,
they argue. Farmers fear that with the virtual disbanding of the mandi system,
they will not get an assured price for their crops and the “arthiyas” --
commission agents who also pitch in with loans for them -- will be out of
The key demand is the withdrawal of the three laws which deregulate the sale of
their crops. The farmer unions could also settle for a legal assurance that the
MSP system will continue, ideally through an amendment to the laws. They are
also pressing for the withdrawal of the proposed Electricity (Amendment) Bill
2020, fearing it will lead to an end to subsidised electricity. Farmers say
rules against stubble burning should also not apply to them.
How MSP affects farmers
MSP is the minimum price paid by the government when it procures any crop from
the farmers. It is announced by the state-run Commission for Agricultural Costs
and Prices (CACP) for more than 22 commodities on an annual basis, after
calculating the cost of cultivation. Food Corporation of India (FCI) -- which is
the main state-run grain procurement agency -- largely buys only paddy and wheat
at these prices. The FCI then sells these foodgrains at highly subsidised prices
to the poor and is thereafter compensated by the government for its losses.
What the government says
The three farm laws have been projected by the government as major reforms in
the agriculture sector that will remove middlemen and allow farmers to sell
anywhere in the country. Until 2020, the first sale of agriculture produce could
occur only at the mandis of the Agricultural Produce Marketing Committee (APMC).
However, after the Farmers’ Produce Trade and Commerce (Promotion and
Facilitation) Act, 2020 came into force it allows farmers to sell outside APMC
mandis in India.
According to the prime minister, these bills were expected to usher in a
revolutionary change in the arena of Indian agriculture and would go in some
way, perhaps a long way, in doubling the incomes of the farmers. We need to
understand these legislations and their long-term impact on the agrarian
structure against the expectation outlined by the government to see to what
extent this policy prescription will go in doubling of farmers’ incomes and what
kind of revolution will now be on the anvil.
As per census 2011, 96 million cultivators enumerated farming as their main
occupation, down from 103 million in 2001 and 110 million in 1991. Still 46% of
the workforce is working full-time in farmlands. The size of the operational
holdings for small and marginal farmers has shrunk from 1.15 hectares in 2010-11
to 1.08 hectares in 2015-16, according to provisional estimates of the 10th
agriculture census 2015-16, and small and marginal holdings constitute almost
90% of our total agricultural land holdings.
Another striking feature of India’s agriculture is the continuing trend of
increase in the numbers of small holdings in the country. The first agricultural
census done in the beginning of the 1970s reported that figure at 71 million. In
the last five decades, those numbers have grown exponentially from 138 million
in 2010-11 to 146 million in 2015-16, as per provisional estimates of
agriculture census 2015-16.
In other words, the average size of operational holdings has considerably
reduced from 2.28 hectares in 1970-71 to 1.15 hectares in 2010-11, and 1.08 in
2015-16, shows data.
What is more worrying is the fact that the top 10% of the households are now
cultivating almost 50% of India’s total cultivable lands whereas the bottom 50%
are cultivating less than 0.5% of India’s cultivable lands. The decline in the
India’s bottom 50% land holdings is steady. The table below is rather
self-explanatory of the plight of the farming sector households.
Low income levels
|Table 1: Percentage of land
cultivated by bottom 50% and top 10% of rural households
Given the state of holdings and the fact that two-thirds of them are in dry land
farming areas of the country it is not surprising that the average income levels
for the farming households and individuals are extremely low. As per
various estimates from governmental sources, the average income of farming
household stood at a mere Rs 8,931 per month in 2016-17. This would roughly
translate into slightly over one lakh rupees for a year.
What is alarming is the fact that almost 35% of the income has come from the
wages. There is little reason to believe that the above figures have changed.
Overall, we can safely state that almost 85% of our farmers fall in the category
of marginal and small farmers with less than two hectares of land holdings. It
is against this crucial factor that we need to understand the legislations
passed and the impact they might have on the very structure of our agrarian
What are the three bills?
The present government introduced three acts:
- The Farmers Produce Trade and Commerce (Promotion and Facilitation)
- The Farmers (Empowerment and Protection) Agreement on Price Assurance
and Farm Services Ordinance, 2020; and
- The Essential Commodities (Amendment) Ordinance, 2020.
Rajya Sabha passed these three bills while farmers are protesting against all
three Farm Bills, while it was further given an asset by the President of India
which at all gave it a shape of an Act, there were majorly protesting against
the provisions of the first Farm Bill.
The Farmers’ Produce Trade and Commerce (Promotion and Facilitation) Bill
2020 or The Market Place Law
We have already discussed the process currently in place well according to the
new market place law, farmers can sell their produce anywhere not just in the
APMC approved mandis or market places but literally anywhere i.e., they can sell
inside the state, outside the state, or if they wish they can also sell it
online. Which means according to union government this law is been brought in to
give freedom of choice to farmers they will have a variety of marketplaces. The
government says, this is actually going to do good to them because they can
choose from several options.
The Farmers (Empowerment and Protection) Agreement on Price Assurance and
Farm Services Bill 2020 or The Contract Farming Law
Farmers can enter into ‘written agreements’ with anyone, including a company,
and sell them their produce for a set period of time, as per the contract. In
other words, companies can now have contracts with farmers for buying with
farmers for buying their produce. They can set the price for the produce, the
standards and qualities and other legalities can be mentioned beforehand. The
Union government says this will protect and empower farmers to sell to anyone a
whole seller, a retail giant or an exporter. They will have written contracts
which will protect the farmer in case the buyer tries to cheat them. And they
can also sell future produce today, according to the government.
The Essential Commodities (Amendment) Bill 2020 or Essential
Essential Commodities Act was first brought in decades back in 1955. The Act
basically controls the production, supply and the distribution of certain
commodities that are known to be essential. So if an item comes under this Act
for instance a food item or an important drug then companies and supermarkets
cannot hoard these items when there is a shortage, they also cannot artificially
increase the prices etc. the list of essential commodities as per the original
- Drugs (medicines); Fertilizers (inorganic, organic, mixed);
- Foodstuff (including edible oilseeds and oils);
- hank yarn made wholly from cotton;
- Petroleum and petroleum products;
- Raw jute and jute textiles;
- Seeds (food crops, fruits and vegetables, cattle fodder and jute seeds).
The new amendment has removed food stuff such as Potato, Cereals, Pulses, edible
oilseeds and oils, from the list of essential commodities which means unless
there is a dire circumstances like a war or famine or an extraordinary price
rise these commodities will not be considered under the essential commodities
Further, the government cannot impose a stock limit i.e. it cannot stop a
supermarket chain or a retailer from hoarding unless there is a 100% (percent)
increase in price of perishable goods or 50% (percent) increase in price of
non-perishable goods. All items removed from essential commodities act are:
Rice, Wheat, Potatoes, Onions, and Oil.
Everything looks great on paper, but then where does the problem lie? Well there
is a difference between good legislation and good implementation of the Act,
many critics have raised their concerns regarding this Act. The very first
concern is that an Act which is going to be implemented in the whole country has
neither been discussed with states which will be most affected by the Act nor
with the experts in this field accusing the government of destroying cooperative
We witnessed a wide protest over all in the Country, which was more intense in
Punjab, Haryana and Western Uttar Pradesh. The reason is obvious as this region
has the most organized form of APMCs. Although there is no provision of removing
of APMCs then why are farmers fearing and raising slogans of MANDI BACHAO? APMCs
are under state government and are maintained by taxes collected in APMC
Government says in private markets, which can be set up now, no taxes will be
charged in the transactions of private market so this would save taxes, all
companies and traders will buy farm produce from private markets which will
slowly result in the end of APMC because the state government will have no funds
to maintain APMC. If this happens states will have a lot of revenue loss and
union government has not mentioned any way to compensate them, especially in
Punjab and Haryana.
Middlemen will become jobless and there is a concern that there is a possibility
of middleman in private sector also because our farmers are not in a position to
bargain with corporate houses. In private sector there will be no control and
exploitation by middlemen may multiply. (86% farmers of our country are
marginalized farmers i.e. they have less than 2 acres of land.) With the end of
APMCs, MSP will also practically end this is the most important concern.
We are talking about ‘One nation One market’, ‘freedom of choice of market’ any
farmer can sell his farm produce anywhere, looks good on seeing but the ground
reality is this already exists and a farmer can sell his produce any where he
wishes in any part of country, it does not happen because our farmers do not
have medium and money to transport goods from one place to another because
government itself says 86% of farmers are marginalized.
Contract farming is looked upon as privatization of farming, two major concerns
here are that farmers will never be able to negotiate with the corporate
sector. Act does not prescribe or specify that contract price of the crop should
be at least equivalent or above the MSP. It means the contractor/companies can
pay whatever price they want to the farmer.
Being big private companies, exporters, wholesalers, and processors, they will
always have an edge in disputes. Written contract is not mandatory which means
farmer will never be able to prove violation of terms of contract. Farmers have
a valid point because they have seen privatization in markets of seeds and
fertilizers where government believed prices will go down because of competition
but results are opposite, and farmers fear the same in this case also.
Limits of hoarding have been removed because the situation of ‘Extraordinary
price rise’ is way to high to reach which simply means big private players can
any time cause artificial price fluctuation. Not only farmers will be affected
by it, consumers will also be affected because the main goal or focus of a
private company will be to raise its profits.
Yes, there were many flaws in the decades old APMC Act, but critics believe that
the need was to plug the loopholes instead of introducing a new system
altogether. A similar system has already been introduced in America and some
European countries where it has failed miserably, we can only hope this does not
happen in India and government will not repeat those mistakes.
From the attitude of government, the stand of government is very clear that it
is not going to change anything because already it has been termed as
Masterstroke. Right now, it is just an Act both are results are possible;
farmers income becomes double as said by the government, or their conditions
worsen as feared by farmers. History is the best judge. While the intent of
Government is laudable, we will be able to see the results of these new Acts
after few years only. Right now, everything is just a speculation.
Farmers are debt ridden, starved of funding and of assured price mechanism. The
three legislations if taken together accentuate the crisis even further. In the
absence of a guaranteed support price mechanism, the legislations even fail to
mention a very strong support for the MSP as a benchmark price as a fundamental
condition for open agriculture trade and winding up of mandis.
For years farmers have demanded statutory support price for their produce from
the government. The question is what is the base level of that income that will
be taken for it to double and to what?
There is a need to restore the shaken confidence of the agrarian sector. In
order for that to happen the government of India needs to give an iron clad
guarantee on holding the price line 100% over and above the inflation-linked
cost of production to the primary producer and not allowing any players to offer
a price below that line to them. Only such a guarantee will ensure the
confidence of the farmers in the system.
We need to understand that if the country has to come out of her grave economic
crisis, the answer does not lie in the economies of the urban or of the
extractive economies of the capital. The answer decisively lies in the revival
of the rural with dignity and respect. The country, it must be understood,
cannot survive if the rural falls and chances of such an event happening today
can only be averted with a considered policy response initiated with empathy and