Kara Sears
Agriculture law in India has been a topic of contention in recent years, with the 2020 Indian agriculture acts, or Farm Bills, sparking protests from farmers across the country. The acts were initiated by the Parliament of India and approved by the Lok Sabha and Rajya Sabha in September 2020, with the aim of deregulating government-run wholesale markets and allowing farmers to sell directly to food processors. However, farmers feared that this would result in the end of government-guaranteed price floors and reduce their earnings. This led to widespread protests, with farmers demanding the inclusion of a Minimum Support Price (MSP) guarantee law. The acts were also opposed by several state legislative assemblies, which argued that they were passed unconstitutionally and were anti-farmer. In November 2021, Prime Minister Narendra Modi announced that the three farm laws would be repealed, and protests ceased. The Indian government has recognized the need for agricultural sector reforms, but the challenge lies in unifying laws across diverse states and protecting the interests of farmers, who constitute a significant portion of the country's population.
| Characteristics | Values |
|---|---|
| Year | 2020 |
| Number of Acts | 3 |
| Purpose | To change the way agricultural produce is marketed, sold and stored across the country |
| Impact | Increased freedom of choice for farmers to sell their produce |
| Farmer Protection | Adequate protection of land ownership to protect farmer interests |
| Farmer Concerns | End of government-guaranteed price floors |
| Farmer Protests | Yes |
| State Opposition | Kerala, Punjab, Chhattisgarh, Rajasthan, Delhi, West Bengal |
| Supreme Court Verdict | Stayed implementation of the Farm Laws and appointed a committee to look into farmer grievances |
| Government Action | Repealed the three acts |
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What You'll Learn
The Farmers Produce Trade and Commerce Act, 2020
Agriculture law in India has been a topic of much discussion and debate in recent times, with the introduction of three agriculture acts in 2020, often termed the Farm Bills. One of these acts is The Farmers Produce Trade and Commerce Act, 2020, which aims to provide an ecosystem that facilitates the freedom of choice for farmers and traders regarding the sale and purchase of agricultural produce outside of conventionally defined marketplaces.
Prior to this Act, agricultural trade in India could only be conducted in Agricultural Produce Market Committee (APMC) market yards, or 'mandis'. The new Act allows trading in "outside trade areas", such as farm gates, factory premises, warehouses, silos, and cold storages. It also prohibits state governments from levying any market fee or cess on farmers and traders, providing an incentive for buyers to purchase products outside the regulated APMC mandi. The Act seeks to facilitate lucrative prices for farmers through competitive alternative trading channels to promote barrier-free interstate and intrastate trade of agricultural goods.
The Act also involves the use of an electronic transaction platform, facilitating direct and online buying and selling of products through electronic devices and the internet. This is expected to boost efficient, transparent, and barrier-free trade and commerce of farmers' produce. The Act further encourages contract farming and an increased sense of ownership among farmers, supporting the Prime Minister's vision of Atmanirbhar Bharat.
The Acts have faced protests from farmers in various parts of India, who allege that they will hurt their earnings and reduce the prices they receive for their crops. The major issue raised in the protests is that the Act would remove the APMC mandis, which are the central place of transaction for farmers in states like Punjab and Haryana. However, it is argued that this Act does not make any major changes to the functioning of these markets, as states have already been making amendments to their APMC Acts and many have already allowed the direct purchase of crops from farmers.
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Minimum Support Price (MSP)
Agriculture laws in India have been a topic of much discussion and debate in recent years, with protests by farmers and various state legislative assemblies passing resolutions against the central farm laws. One of the key points of contention is the Minimum Support Price (MSP).
MSP is the minimum price set by the Government of India for select crops raised during the kharif and rabi seasons. The government considers this price remunerative for farmers and provides them with a minimum guaranteed profit for their harvest. The MSP is typically announced before the sowing or planting season and is separate from the procurement and issue prices.
The concept of MSP was introduced in the 1960s during the Green Revolution in India, which aimed to increase the productivity of agricultural land through the use of high-yield varieties, better equipment, and fertilizers. The Agricultural Price Commission (APC), set up in 1965, introduced a range of price policies, including procurement at predetermined prices, minimum support prices, and a distribution system to supply food grains at subsidised rates.
Over time, the MSP evolved from being an incentive for farmers to adopt technology to becoming a market intervention and farmer income scheme. The implementation of MSP is done through various agencies, including the Food Corporation of India (FCI) and the National Agricultural Co-operative Marketing Federation (NAFED). However, the effectiveness of MSP has varied across states and commodities, with low awareness among farmers about its existence and the availability of procurement agencies buying at MSP.
Despite the benefits of MSP, it has also faced criticism and concerns. In 2020, the Indian government introduced three farm acts that did not include MSP as a mandatory provision. Protests by farmers erupted, fearing the end of government-guaranteed price floors and a potential decrease in their earnings. To address these concerns, the Supreme Court stayed the implementation of the farm laws in 2021 and appointed a committee to look into farmer grievances.
The inclusion of MSP in the farm laws and its legal enforcement have been demanded by protesting farmers and farmer organizations. They seek a guarantee of MSP through parliamentary legislation and direct communication with the Government of India on agricultural matters.
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Agricultural Produce Market Committees (APMC)
Agricultural Produce Market Committees (APMCs) are marketing boards established by state governments in India to protect farmers from exploitation by large retailers and to ensure that the farm-to-retail price spread does not reach excessively high levels. APMCs are regulated by states through their adoption of an Agriculture Produce Marketing Regulation (APMR) Act.
Prior to India's independence in 1947, the major concern of government policy related to agricultural marketing was to keep the prices of food for consumers and agro-raw materials for industry in check. After independence, the focus shifted to protecting the interests of farmers and providing them with incentive prices to increase the production of agricultural commodities.
The Government of India designed a model APMC Act in 2003 as a first attempt to bring reform to the agricultural markets. The model APMC act was introduced in 2003, but since agriculture is a state subject, states have taken various viewpoints in their policies. Out of 29 states in India, over 18 states have amended the APMC in some way to make the entry of private players possible in the forms of Contractual Farming or Private Mandis. Currently, 18 states in India have established APMC mandis, although 19 states in India have already allowed the direct purchase of crops from farmers.
The National Agriculture Market (NAM) is a pan-India electronic trading portal that links the existing APMC mandis across the country to form a unified national market for agricultural commodities. The NAM reduces transaction costs and information irregularity, even when the agricultural produce continues to flow through the mandis. States can administer agriculture marketing as per their agri-marketing regulations, under which the state is divided into various market areas, each administered by a separate APMC, which will impose its own marketing regulation, including fees.
There are approximately 162 APMC-regulated markets across the state of Karnataka. The Maharashtra State Agricultural Marketing Board (MSAMB) runs 295 APMCs in Maharashtra under the APMC Act enacted by the Government of India. In Tamil Nadu, 21 market committees have been established for every notified area, and 277 regulated markets are functioning under these committees for better regulation of buying and selling agricultural produce.
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Farmer protests
The 2020 Indian agriculture acts, often referred to as the Farm Bills, were three acts passed by the Parliament of India in September 2020. The acts would have deregulated the system of government-run wholesale markets, allowing farmers to sell directly to food processors. However, farmers feared that this would result in the end of government-guaranteed price floors, reducing the prices they would receive for their crops. This sparked protests against the new acts, with farmer unions and opposition politicians describing the laws as "anti-farmer".
The protests began in February 2024, with unions holding local protests, mainly in the Punjab state. After two months, farmer unions from Punjab and neighbouring Haryana began a movement named "Dilli Chalo" (Let's go to Delhi), with tens of thousands of members marching towards the nation's capital. In November 2020, a nationwide general strike was held in support of the farmers, with thousands converging at various border points on the way to Delhi. Eleven rounds of talks took place between the central government and farmer unions between October 2020 and January 2021, but they were inconclusive.
The protests were criticised by the Indian government, which claimed that they were infiltrated by Khalistanis and were a foreign conspiracy. On India's Republic Day in January 2021, tens of thousands of farmers held a parade with a large convoy of tractors and drove into Delhi, deviating from pre-sanctioned routes and resulting in violence and clashes with police. The protests continued, with farmers camping at the borders and blocking inter-state mobility. The Supreme Court of India stayed the implementation of the farm laws in January 2021 and a committee was appointed to look into farmer grievances.
In November 2021, Prime Minister Narendra Modi announced that the government would repeal the three bills. The Farm Laws Repeal Bill was passed by both houses of Parliament later that month. However, farmer unions continued to demand guaranteed minimum support prices (MSPs), reminding the government of its aim to double farmers' incomes by 2022. In March 2024, thousands of Indian farmers protested in New Delhi once again, demanding a law guaranteeing minimum crop prices.
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State-level implementation
Agriculture is a state-level concern in India, as outlined in Schedule 7 of the Indian Constitution. As such, agricultural reforms are implemented differently across the country. In 2017, the central government released a number of model farming acts, but several states failed to implement the suggested reforms. In 2020, the Parliament of India passed three acts, collectively referred to as the Farm Acts or Farm Bills, which aimed to deregulate the system of government-run wholesale markets. These acts were intended to create a national framework for selling crops, removing various charges and restrictions for selling outside individual states.
However, the Farm Acts were met with widespread protests from farmers, who feared that the new laws would result in the end of government-guaranteed price floors, thereby reducing their earnings. In response to these protests, the Supreme Court stayed the implementation of the Farm Acts in January 2021 and appointed a committee to investigate farmer grievances. Despite assurances from the Minister of Agriculture & Farmers' Welfare that the government remained committed to Minimum Support Price (MSP) guarantees, protests continued.
As of November 2021, five states (Punjab, Chhattisgarh, Rajasthan, Delhi, and Kerala) had passed resolutions against the Farm Acts, seeking their withdrawal. The West Bengal assembly became the sixth state to do so in January 2021, and the Punjab assembly passed another resolution against the acts in March 2021. In response to the growing opposition, Prime Minister Narendra Modi announced the repeal of the three Farm Acts.
While the central government has attempted to unify agricultural laws across the country, the diverse cultural and geographical landscape of India presents significant challenges. Additionally, the condition of farmers varies greatly from state to state, with average incomes ranging from as low as ₹5842 in Andhra Pradesh to much higher amounts in other states. To address these disparities, the Department of Agriculture and Farmers Welfare provides a Farmer Friendly Handbook for various states, offering information on schemes and programmes relevant to farmers in each region.
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Frequently asked questions
The Indian agriculture acts of 2020, also known as the Farm Acts or Farm Bills, are three acts initiated by the Parliament of India in September 2020. The acts aimed to deregulate the system of government-run wholesale markets, allowing farmers to sell directly to food processors and private buyers.
The Farm Acts were introduced to address issues with the existing laws that regulated Indian agricultural markets, such as centralization, reduced competition and participation, and excessive fees. The new laws sought to create a more integrated market, enhance efficiency, and provide farmers with more autonomy and freedom of choice.
The Farm Acts faced opposition and protests from farmers in various parts of India, including Punjab, Haryana, and other states. Farmers feared that the removal of government-regulated markets would result in lower prices for their crops and potential land loss to big corporates. Several state legislative assemblies, including Kerala, Punjab, and Delhi, passed resolutions against the farm reforms and demanded their withdrawal.
In response to the widespread protests, the Indian government announced in November 2021 that it would repeal the three Farm Acts. Prime Minister Narendra Modi urged protesting farmers to return home and assured a fresh start. The government planned to introduce a single bill in Parliament to repeal the acts, and any decisions made by the boards constituted under the acts would be nullified.
