EXPLAINED | What the new Farm Bills are all about and why being opposed

By: |
September 18, 2020 6:14 PM

This proposed legislation seeks to give farmers the right to enter into a contract with agribusiness firms, processors, wholesalers, exporters, or large retailers for the sale of future farming produce at a pre-agreed price.

Initiating the discussion on the two bills, Congress leader Partap Singh Bajwa slammed them as "ill-conceived and ill-timed" and said his party "completely rejects" them.

Three key agriculture Bills, approved by the Lok Sabha, are facing staunch opposition from within the ruling coalition with senior minister Harsmirat Kaur Badal resigning in protest and farmers hitting the street.

Here is an explainer on what the new Bills are all about:

1. The Farmers’ Produce Trade and Commerce (Promotion and Facilitation) Bill, 2020: This proposed legislation seeks to give freedom to farmers to sell their produce outside the notified APMC market yards (mandis). This is aimed at facilitating remunerative prices through competitive alternative trading channels.

Farmers will not be charged any cess or levy for sale of their produce under this Act.

Benefits: It will open more choices for farmers, reduce marketing costs, and help them get better prices. It will also help farmers of regions with surplus produce to get better prices and consumers in areas with shortages at lower prices.

Opposition: States will lose revenue as they will not be able to collect ‘mandi fees’ if farmers sell their produce outside registered Agricultural Produce Market Committee (APMC) markets.
Also, commission agents stand to lose if the entire farm trade moves out of mandis.
But, more importantly, farmers and opposition parties fear it may eventually lead to the end of the minimum support price (MSP) -based procurement system and may lead to exploitation by private companies.

2. The Farmers (Empowerment and Protection) Agreement of Price Assurance and Farm Services Bill, 2020: This proposed legislation seeks to give farmers the right to enter into a contract with agribusiness firms, processors, wholesalers, exporters, or large retailers for the sale of future farming produce at a pre-agreed price.

Benefits: It seeks to transfer the risk of market unpredictability from farmers to sponsors. Besides giving them access to modern tech and better inputs, it also seeks to boost farmer income by reducing the cost of marketing.

Opposition: Farmer bodies and opposition parties say the law is framed to suit “big corporates who seek to dominate the Indian food and agriculture business”. It will weaken the negotiating power of farmers. Also, big private companies, exporters, wholesalers, and processors may get an edge.

3. The Essential Commodities (Amendment) Bill, 2020: This proposed legislation seeks to remove commodities like cereals, pulses, oilseeds, onion, and potatoes from the list of essential commodities and will do away with the imposition of stock holding limits on such items except under ‘extraordinary circumstances’ like war, famine, extraordinary price rise and natural calamity.

Benefits: It is aimed at attracting private investment/FDI into the farm sector as well as bringing price stability.

Opposition: Big companies will have the freedom to stock commodities, helping them dictate terms to farmers.

Government Stand: Agriculture minister Narendra Singh Tomar has said the MSP mechanism for farmers will continue. Also, the proposed laws would not encroach upon the Agriculture Produce Marketing Committee (APMC) Acts of the states.

These Bills are to ensure that farmers get better prices for their produce without being subject to the regulations of mandis, he has said, adding the Acts will increase competition and promote private investment which will help in the development of farm infrastructure and generate employment.

Do you know What is Cash Reserve Ratio (CRR), Finance Bill, Fiscal Policy in India, Expenditure Budget, Customs Duty? FE Knowledge Desk explains each of these and more in detail at Financial Express Explained. Also get Live BSE/NSE Stock Prices, latest NAV of Mutual Funds, Best equity funds, Top Gainers, Top Losers on Financial Express. Don’t forget to try our free Income Tax Calculator tool.

Financial Express is now on Telegram. Click here to join our channel and stay updated with the latest Biz news and updates.

Next Stories
1Spike in internal remittance, new EPFO registrations indicate recovery: Report
2FM Sitharaman says GDP growth may be negative, near-zero this fiscal; high hopes in festive season
3Companies turn towards apprentices due to reverse migration of workers, rise in demand in these sectors