top of page
  • Writer's pictureBrain Booster Articles


Author: Sudhanshu Joshi, II year of B.A.,LL.B.(Hons.) from Indore Institute of Law, Indore, M.P


Three agricultural bills, The Farmers’ Produce Trade And Commerce (Promotion And Facilitation) Bill, The Farmers (Empowerment and Protection) Agreement on Price Assurance and Farm Services Bill, and The Essential Commodities (Amendment) Bill passed by the Parliament. The purpose of The Farmers’ Produce Trade and Commerce (Promotion and Facilitation) Bill is to allow farmers to sell their produce outside the notified Agriculture Produce Marketing Committee (APMC) i.e mandis. The second proposed law is The Farmers (Empowerment and Protection) Agreement on Price Assurance and Farm Services Bill, under this law farmer will be empowered to contract with agribusiness firms, processors, wholesalers, exporters or big retailers to sell their agricultural produce at predetermined prices. And the third bill is The Essential Commodities (Amendment) Bill This proposed law proposes to remove agricultural products like cereals, pulses, oilseeds, onions and potatoes from the list of essential commodities, and the limit of stores applicable to goods will also be eliminated under normal circumstances except in 'exceptional circumstances' such as war, famine, extraordinary price rise and natural calamity and as such.

There are some questions regarding this bill like the existence of Minimum support price, fear of the end of mandis, Impact of freedom of storage. At the same time, there is also the fear of going into the hands of industrialists of agriculture and their interference in agriculture. These bills will adversely affect the farmers. These three Bills were opposed by various farmer organizations, even before it was passed in Parliament, which is still going on. The centres of these protests are mainly Punjab, Haryana and western Uttar Pradesh.


With the ordinance The Farmers’ Produce Trade and Commerce (Promotion and Facilitation) Bill, farmers can sell their products to any person or institution anywhere in the country. In this bill, arrangements have been made to sell and buy agricultural produce from outside the Agricultural Produce Marketing Committees (APMC mandis). Overall, through this bill, there is talk of one nation, one market. The government says that this ordinance will enable farmers to connect with big retail traders, exporters etc, without fear of exploitation. Union Agriculture Minister Narendra Singh Tomar says that the risk of market uncertainty will not remain on the farmers and the income of the farmers will improve.

If farmers sell their produce outside APMC mandis then States can lose mandi fees. Moreover, by transferring in additional potential buyers, the changes could weaken the prevailing MSP system. However, Prime Minister Narendra Modi has said many times that the government is not ending the MSP nor is it shutting down government purchases.

Crisis on APMC

Section 2(e) and 2(f) of The Farmers’ Produce Trade And Commerce (Promotion And Facilitation) Bill, 2020 deals with ‘inter-state trade’ where Section 2(e) provides trade between farmer and trader of a different state or section 2(f) provide trade between farmer and trader of the same state. APMC markets have the power to levy market fees under section 42 of The APMC act. Levies on mandi include taxes, the middlemen commission and a “rural development charge”. If farmers sell their produce outside APMC markets, then state governments, which earn an income through transactions at mandis, stand to lose out on tax revenues because according to the new law, no state levies will be imposed on trade outside the APMC mandis. So those traders who are purchasing from mandis still have to pay mandi tax are now free from mandi fees. And companies will gradually dominate the mandis and then the mandi system will take over. This will bring the farmers directly into the claws of the companies and they will be exploited.

Crisis on MSP

Minimum Support Price is the price fixed by the Government. The main objective of minimum support price is to protect farmers from exploitation of middlemen, provide the good value of their products and purchase food grains for the public distribution system. If the price of a crop decreases due to overproduction in the market or its excess in the market, then the government agencies buy most of the crop at the minimum support price of the farmers, it is the lifeline of poor and small farmers. But there is no provision of MSP in the Farmers’ Produce Trade And Commerce (Promotion And Facilitation) bill. Inside the mandi, the licensed traders buy produce from the farmers at MSP. But MSP has not been made a benchmark for those doing business outside. Therefore, there is no guarantee of getting MSP out of the market. If the trend of doing trading outside the APMC increases, then APMC mandis will get huge losses and start to decline gradually, if APMC declines, then MSP will automatically decline.


Under proposed law The Farmers (Empowerment and Protection) Agreement on Price Assurance and Farm Services Bill, farmers will be empowered to contract with agribusiness firms, processors, wholesalers, exporters or large retailers to sell the agricultural products they produce at predetermined prices.

In contract farming, farmers will be the weaker players in terms of their ability to negotiate what they need and big companies will start dominating the farmers because 85% of Indian farmers are poor who hold less than 2 hectares of agricultural land and a large number of farmers are illiterate. If a farmer gets into a dispute regarding her/his contract with a private company, it will be very difficult for the farmer to have the dispute settled in her/his favour. Another problem is that in India the size of the holdings is small and the company will have to enter into a contract with a large number of farmers which increases costs of the company, so the company is unable to give a good price to farmers. The Act is silent on the necessary and facultative provisions of contract farming. It fails to deal with the advanced issues of contract farming like quality determination, worth determination conflicts, and sharing of production and market risk.

Fear of legal issues

In any contracts, there is a possibility of the legal issue even if it is contract farming. In the matter of contract farming, the farmers are weaker party because a large number of Indian farmers are poor and illiterate and another major problem is that the section 13-15 of the Farmers (Empowerment and Protection) Agreement on Price Assurance and Farm Services Bill gives provisions for dispute settlement which states that in case of a dispute between the company and the farmer in the matter of contract farming, no civil court will be able to go. In this case, all rights have been given to the SDM. This provision associated with contract farming is quite dangerous because SDM is a very low level officer for handling this type of disputes, it will neither go against the government nor the company, so the dispute should be settled in the court. If SDM does not agree with the government or the company, then the powers with money will get it transferred. In such a situation, farmers will suffer and not only will their time be wasted, but the accumulated capital will also be spent in travelling around the government offices. So, in legal matters of contract farming the companies are stronger players and farmers are the weaker players.

No MSP Support in Contract Farming

There is no provision of MSP in Contract Farming which results in loss of farmers. These private companies buy produce from farmers at a good price for a few years but after they want to maintain their profit margin they buy produce at a low price. When APMC markets start to decline then farmers have an obligation to sell their produce to private companies and these companies will start taking advantage of helpless farmers. This will result in farmer’s suicides.


Earlier, the traders bought and stored the crops at a nominal cost from farmers and put black marketing, to prevent it, the Essential Commodity Act 1955 was made under which more than limit storage of agricultural products was prohibited by the traders.

Now the new bill The Essential Commodities (Amendment) Bill, 2020 has been brought to remove items like cereals, pulses, oilseeds, edible oils, onions and potatoes from the list of essential commodities. There will be no stock limit on these items except under special circumstances like national disaster or famine. In this amendment in Section 3 the Essential Commodities Act, 1955 after subsection (1) a new section shall be inserted namely (1A) in which above provisions are stated.

There are 85 per cent, small farmers, in our country, these farmers do not have a long-term storage system and now the traders, big companies and supermarkets will store agricultural products in their godowns and later sell them to customers at higher prices. The stock limit exemptions under the Essential Commodities Act, 1955 may lead to black marketing and hoarding rather than benefiting the producers. This will cause inflation and the monopoly of few individuals over prices of certain goods.

Impact on Farmers

Under this law, traders will be allowed to store essential commodities and they will buy produce from farmers at good price from one time but the second time when farmers go to sell their produce to these traders, they will say that we already have these commodities, due to which farmers will be forced to sell them for a low price because there is no provision of MSP in these ordinances and APMC mandis will already start declines.

Impact on Market

When merchants, big companies and supermarkets will get the open exemption of storage of commodities then they control inflation whenever they want by not allowing these items to come in the markets, and customers will have to buy these items at expensive prices. In a way, it is the control of the economy in the hands of the capitalists.


Agriculture and Markets is subject of State list of Indian Constitution entry fourteen and twenty-eight severally in List II, the ordinances square measure encroachment upon the functions of the States and against the spirit of cooperative political orientation enshrined within the Constitution. It is clear that the Union List and Concurrent List put matters relating to agriculture outside Parliament’s jurisdiction, and give state legislatures exclusive power. No entry in respect of agriculture in the State List is subject to any entry in the Union or Concurrent Lists. The Centre, however, argued that trade and commerce in food things is a component of the concurrent list, so giving it constitutional demeanour. These ordinances violate the federal structure of the country. The Center should have consulted the states before enacting these ordinances.


Agriculture, that employs half of India's population, has long been in desperate need of reform. However the new and controversial - bills are not to be a curative for farmers' troubles. The bill contains a proxy route to allow a so-called "production agreement" to direct corporate farming, which makes farmers labourers on their farms. Which makes stringent demands on farmers to meet exacting standards without any minimum support price guarantee. This clause will allow for third party enforcement for the protection of corporates. It will promote giant corporations to abolish the minimum support price of farmers, destroy the public distribution system, promote unscrupulous traders and freeze food items. This will create a shortage of food artificially in the market and will lead to irregular prices. These laws threaten India's food sovereignty and security.

Farmers need the freedom to fix the price of their products and not the freedom to sell their products to large corporates. If the Bills are perceived of fine intent, then the government shouldn't recoil from correct parliamentary scrutiny of all its details. Political parties that are opposing these Bills ought to coordinate better keeping farmers’ interests within the forefront, and not their party politics.



bottom of page