Kara Sears
The Indian agriculture acts of 2020, often referred to as the Farm Bills, were three acts passed by the Parliament of India in September 2020. The three farm laws have been a subject of controversy, with protests from farmers in various parts of India alleging that the laws will hurt their earnings. The laws sought to deregulate government-run wholesale markets, allowing farmers to sell directly to food processors, but farmers feared that this would result in the end of government-guaranteed price floors, thereby reducing crop prices.
| Characteristics | Values |
|---|---|
| Initiated by | Parliament of India |
| Approved by Lok Sabha | 17 September 2020 |
| Approved by Rajya Sabha | 20 September 2020 |
| Presidential assent | 27 September 2020 |
| Purpose | To deregulate government-run wholesale markets, allowing farmers to sell directly to food processors |
| Support | Shetkari Sanghatana, Gita Gopinath, Salvatore Babones, US State Department, 866 academics from various educational institutes |
| Opposition | Farmers, Kerala legislative assembly, Punjab assembly, Bharatiya Kisan Sangh, 413 academics from various universities |
| Effect | Suspended by Supreme Court until further orders |
| Impact | Farmers feared the end of government-guaranteed price floors, reducing their earnings |
| Criticism | Passed "unconstitutionally" and in "complete disregard" of parliamentary norms |
| Sections | 3, 4, 6, 14, 17 |
| Related Acts | Farmers' Produce Trade and Commerce (Promotion and Facilitation) Act, 2020; Essential Commodities (Amendment) Ordinance, 2020 |
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What You'll Learn
Farmers' fears of corporatisation of agriculture
The three Indian agriculture acts of 2020, also known as the Farm Bills, were controversial due to farmers' fears of corporatisation of agriculture and the removal of the Minimum Support Price (MSP). The Acts aimed to deregulate government-run wholesale markets, allowing farmers to sell directly to food processors and trade outside the physical markets notified under state Agricultural Produce Marketing Committee (APMC) laws.
Farmers feared that this would result in the end of government-guaranteed MSP price floors, reducing the prices they would receive for their crops. They also worried about the inadequate demand for their produce in local markets, as transporting it outside mandis was not feasible due to a lack of resources. The APMC mandis would be weakened, and farmers would be vulnerable to exploitation from big companies without regulated sale prices.
The Farm Bills sought to create a legal framework for contract farming, allowing farmers to enter agreements with buyers before the sowing season to sell their produce at predetermined prices. However, critics argued that the contract system would make small and marginal farmers vulnerable to exploitation from large corporations unless sale prices continued to be regulated.
The Standing Committee on Agriculture (2018-2019) acknowledged that Gramin Haats (small rural markets) could become a viable alternative for agricultural marketing with adequate infrastructure. They recommended that the Gramin Agricultural Markets scheme, which aims to improve infrastructure and facilities in 22,000 Gramin Haats, should be fully funded and expanded.
The Acts also aimed to increase opportunities for farmers to enter long-term sale contracts, attract private investment, and increase the availability of buyers, who would be permitted to purchase bulk farm produce. While some argued that the laws would free farmers from monopolistic APMCs and middlemen, farmers feared corporatisation and the removal of MSP, leading to protests across India.
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Protests against the laws
The three farm laws passed by the Parliament of India in September 2020 were met with protests from farmers across the country. The laws were often termed the "'Farm Bills'" and were seen as "anti-farmer" by many farmer unions and opposition politicians. The protests, which began in 2020 and continued into 2021, were the largest such protests in decades.
Farmers objected to all three laws, but their key concern was with the Act also known as the 'APMC Bypass Bill'. This Act allowed farmers to sell their produce outside the physical markets notified under state Agricultural Produce Marketing Committee (APMC) laws. Farmers feared that this would lead to inadequate demand for their produce in local markets and that they lacked the resources to transport their goods outside of APMC markets. They also worried that it would result in the end of government-guaranteed price floors, reducing the prices they would receive for their crops.
The other two laws were The Farmers (Empowerment and Protection) Agreement of Price Assurance and Farm Services Act and The Essential Commodities (Amendment) Act. The former allowed for the creation of a legal framework for contract farming, with farmers entering into direct agreements with buyers before the sowing season to sell their produce at predetermined prices. However, it did not mention the minimum support price (MSP) that buyers needed to offer, and critics argued that it would make small and marginal farmers vulnerable to exploitation. The latter law removed the government's powers to impose stockholding limits on food items, except under extraordinary circumstances.
The protests took various forms, including marching to Delhi, where they were met with police resistance, and a 24-hour strike by millions of people across India. Six state governments passed resolutions against the farm laws, and three states tabled counter-legislation. On 12 January 2021, the Supreme Court of India suspended the implementation of the laws and appointed a committee to review the legislation. However, this did not satisfy the protesters, who did not trust the panel to address their concerns.
Despite the government's insistence that the laws would benefit farmers, it eventually repealed the farm laws in November 2021 after it became clear that the protesting farmers would not back down. Prime Minister Narendra Modi announced the repeal in a televised address, expressing regret that his government had been unable to convince farmers of the laws' advantages.
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Support for the laws
The three Indian farm laws of 2020 were controversial, with protests from farmers and opposition parties. However, there was also support for the laws from several groups, including:
The Government
Prime Minister Narendra Modi referred to the laws as a "watershed moment in the history of Indian agriculture", stating they would "ensure a complete transformation of the agriculture sector" and empower millions of farmers. He also said that the bills fulfilled promises made by all political parties to farmers.
The Bharatiya Janata Party
The BJP had included farm reforms in its manifesto promises for years.
Academics
In January 2021, 866 academics from several educational institutes, including DU, JNU, Gorakhpur University, Rajasthan University, and Gujarat University, signed an open letter expressing support for the three farm laws.
International Monetary Fund
Gita Gopinath, the Chief Economist of the International Monetary Fund, said the farm bills were "very important steps in the right direction". She stressed that the implementation of these laws must be correct.
Sociologists
Sociologist Salvatore Babones supported the farm laws, stating that the reforms would transform Indian agriculture from a "locally managed rural economy into a modern national industry".
Farmers Union
The Shetkari Sanghatana, a farmers' union in Maharashtra, supported the bills and wanted market forces to decide the prices of agricultural commodities. They argued that the minimum support prices had weakened farmers rather than empowering them. According to a Supreme Court-appointed committee, 85.7% of farmer organisations, representing around 3.3 crore farmers, supported the laws.
US State Department
In February 2021, the US State Department expressed support for the laws, stating that they would improve market efficiency and private investment and encourage dialogue between the government and those who oppose the laws.
Experts
Some experts said the laws would free farmers from monopolistic APMCs and the control of middlemen. The laws were expected to benefit all stakeholders—farmers, industry, and consumers. They would help small and marginal farmers (86% of total farmers) who lack the means to bargain for better prices or invest in technology to improve productivity.
The laws sought to create a legal framework for contract farming, allowing farmers to enter into direct agreements with buyers before the sowing season to sell their produce at predetermined prices. They would also establish a more integrated market, creating competition and enhancing the efficiency and effectiveness of the agricultural sector's marketing domain.
The laws were also expected to strengthen basic farm sector infrastructure through greater private investment, making agriculture profitable for farmers.
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The APMC Bypass Bill
The key provisions of the APMC Bypass Bill include:
- Sections 3 and 4 allowed farmers to sell their produce to buyers within or outside their state, outside the APMC mandis.
- Section 6 prohibited the collection of any market fee or cess under any state APMC Act or other state laws for trade outside the APMC markets.
- Section 14 gave overriding power over inconsistent provisions of state APMC laws.
- Section 17 empowered the central government to create rules for implementing the law.
The Act aimed to address issues in the existing APMC system, such as cartelization, limited competition, and undue commissions and market fees charged by traders and associations. The government argued that the law would liberate farmers by giving them the choice to sell their produce anywhere and attract private investment to improve market infrastructure.
However, farmers expressed concerns about the potential negative consequences of the APMC Bypass Bill. They feared that it would lead to the corporatization of agriculture, inadequate demand for their produce, and the removal of Minimum Support Prices (MSPs), which could reduce the prices they receive for their crops. Small and marginal farmers also worried about their vulnerability to exploitation by large companies without regulated sale prices.
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The three Ordinances
The Farmers’ Produce Trade and Commerce (Promotion and Facilitation) Ordinance, 2020
This law expands the scope of trade areas for farmers to sell their produce, allowing them to do so in "any place of production, collection, [or] aggregation". It overrides all state-level Agricultural Produce Marketing Committee (APMC) acts, allowing farmers to trade their produce outside the physical markets that were previously notified under various state APMC laws.
The Farmers (Empowerment and Protection) Agreement on Price Assurance and Farm Services Ordinance, 2020
This law establishes a legal framework for contract farming. It allows farmers to enter into direct agreements with buyers before the sowing season, selling their produce at pre-determined prices. It also permits the set-up of farming agreements between farmers and sponsors. However, the law does not mention the minimum support price (MSP) that buyers are required to offer to farmers.
The Essential Commodities (Amendment) Ordinance, 2020
This law removes the Centre's powers to impose stockholding limits on food items unless there is a sharp increase in retail prices.
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