Farm Reform Bills 

#GS3 #Agriculture #Economy #Reforms 


The Lok Sabha on September 17, 2020 passed two farm bills amid protests from the opposition parties and a section of farm organisations.  

  • The two bills include the Farmers' Produce Trade and Commerce (Promotion and Facilitation) Bill, 2020 and the Farmers (Empowerment and Protection) Agreement of Price Assurance and Farm Services Bill, 2020.  
  • The Lok Sabha had also passed a bill amending the Essential Commodities Act on September 15, 2020. These three bills will replace the existing ordinances.  


Farmers' Produce Trade and Commerce (Promotion and Facilitation) Bill, 2020: Key Provisions 

  • The bill aims to create an ecosystem where farmers and traders will enjoy the freedom to sell and purchase farm produce outside registered 'mandis' under the states' APMCs.  
  • The bill's provisions promote barrier-free inter-state/ intra-state trade of farmers' produce.  
  • It will reduce marketing and transportation costs and help farmers in getting better prices.  
  • It will also provide a framework for electronic trading.  


Why is the opposition protesting against the bill? 

  • According to the opposition and some farm organisations, under the provisions of the new bill, the states will revenue as they will not be able to collect 'mandi fees' if farmers start selling their produce outside the registered mandis under states' APMCs markets.  
  • There are also concerns that the bills will adversely affect the influential commission agents in the states if the farmers move out of the mandis. The commission agents do not want their grip over farmers to weaken.  
  • There are also concerns that the bill will end the Minimum Support Price (MSP)-based procurement regime.  
  • The opposition also raised concerns that electronic trading will lead to the end of e-NAM, which is an electronic trading platform that works with physical mandi structures.  
  • Farmers (Empowerment and Protection) Agreement of Price Assurance and Farm Services Bill, 2020: Key provisions 
  • Under the bill's provisions, the farmers will be able to enter into contracts with agri-business firms, processors, exporters, wholesalers or large retails for the sale of their future produce at a pre-decided price.  
  • Under the bill's provisions, small and marginal farmers with land less than 5 hectares will stand to gain.  
  • The bill will transfer the risk of market unpredictability to sponsors from farmers.  
  • It will enable farmers to gain access to modern technology. 
  • It will also help reduce the cost of marketing and boost farmers' income.  
  • The bill eliminates the role of intermediaries and enable farmers to engage in direct marketing for full price realisation.  
  • It will also enable an effective dispute resolution mechanism with redressal timelines.  


Why is there opposition to the bill? 

  • The opposition has raised concerns over the bill as they feel that the farmers in contract farming will become weaker players in their ability to negotiate their requirements. 
  • The bill will give an upper hand to sponsors, who will have an edge in disputes being big exporters, wholesalers and processors.   


Essential Commodities (Amendment) Bill, 2019: Key Provisions 

  • The bill's provisions aim to remove commodities like pulses, oilseeds, onion, potatoes and cereals from the list of essential commodities.  
  • The bill will also do away with the imposition of stock holding limits on such items except during ' extraordinary circumstances' like war.  
  • The bill aims to attract foreign direct investment into the farm sector.  
  • It aims to attract investment for farm structures like moderning food and supply chain and cold storage. 
  • The bill aims to help both farmers and consumers and bring price stability.  
  • Further, the bill aims to pave way for a competitive market environment and cut wastage of farm produce. 


Why is there opposition to the bill? 

  • There are concerns that price limits set for extraordinary circumstances are so high that they might never be invoked.  
  • The bill will enable large companies to stock up commodities. They will be able to dictate terms to the farmers, which may lead to less prices for the cultivators.  



  • However, PM Narendra Modi through his tweets sought to reduce the fears of farmers regarding the end of MSP by tweeting that the MSP-based procurement system will stay.  
  • The Prime Minister called the passing of the bills as 'historic' and stated that they will free the farmers from the clutches of the middlemen and help strengthen themselves by providing various alternatives.  
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