3 Farm Bills Explained – Are They Harmful For Farmers

Table of Contents

The 3 Bills*

The Farmers Produce Trade and Commerce (Promotion and Facilitation) Bill, 2020
The Farmers (Empowerment and Protection) Agreement on Price Assurance and Farm Services Bill, 2020
The Essential Commodities (Amendment) Bill, 2020.

The Farmers Produce Trade and Commerce (Promotion and Facilitation) Bill allows barrier-free intra- and inter-state trade of farm produce.
Previously, farm produce was sold at notified wholesale markets, or mandis, run by the ~7000 Agricultural Produce Marketing Committees (APMCs).
Each APMC had licensed middlemen who would buy from farmers – at prices set by auction – before selling to institutional buyers like retailers and big traders.

NEW SYSTEM – Farmers can eliminate middlemen and sell directly to institutional buyers at prices to be agreed between them.
However, farmers’ groups are worried this exposes them to corporates who have more bargaining power and resources than small or marginal farmers.
85% of farmers own less than two hectares of land – difficult for them to negotiate directly with large-scale buyers.

Alternate private ‘mandi’ will lead to ultimate closure of existing APMC ‘mandi’.
No tax on ‘private’ market.
Removal of geographic restriction – small farmers may find it difficult to avail potentially better prices at markets further away because of constraints on travel and storage.
There was no restriction on farmers to sell elsewhere earlier too*

If private buyers start purchasing directly from farmers, they will lose out on taxes that are charged at mandis.
The potential scrapping of mandis, endangers the jobs of millions who work there.

This law will allow farmers to enter into agreements with agri-firms, exporters or large buyers to produce a crop for a pre-agreed price.
Farmers are worried this means the MSP will be removed/no govt. control over prices.
Demand – Link MSP to contract prices

The Essential Commodities (Amendment) Bill proposes to allow economic agents to stock food articles freely without the fear of being prosecuted for hoarding.
Unlimited stocking can lead to artificial price fluctuations and low prices for farmers after harvest.

The acts* are more favourable towards the companies and not legally empowering the farmers.
Strengthen MSP – MSP to be made a legal right. Currently – Procurement is not done for all 20+crops for which MSP is declared
APMC reforms are needed, not its removal.
The middleman will NOT go away.
Investment in Agriculture sector must be from GOVERNMENT, NOT PRIVATE
JIO and BSNL example