The Farm Bills 2020: A Detailed Analysis and Overview

The Author, Arkadyuti Sarkar, is pursuing BA.LLB from Shyambazar Law College,University of Calcutta,Kolkata while doing internship with Niti Nyaya Law Offices.

Introduction

By the time I am penning this article, there have been many incidental developments in relation to the new and controversial farm laws. On 26th January 2021, i.e. on Republic Day, after agitating and protesting against the newly passed farm laws for months the agitating farmers finally entered Delhi, thereby leading to clashes between Delhi Police and the protestants. Moreover, the agitating crowd breached into the Red Fort and hoisted the “Nishan Sahib”, a Sikh religious flag beside the National Flag. This shameful incident drew coverage by the national media and also generated mixed reactions from the other citizens across the country.

A few weeks back, the Supreme Court had already issued a stay against the newly passed acts. Whether you are a consumer of digital media or television or print media or (well it is quite unobvious in 2021 though) radio news, but it is a mere impossibility that you are unaware of the nationwide agitations and protests going on for months against the 3 controversial firm bills since they were passed by the Parliament in the November of 2020.

The borders of Delhi have been witnessing a huge agitation being organized by farmers, with the majority belonging from Punjab and Haryana. All the heats that are generating in the Delhi border and also across the nation, resulting from the 3 controversial acts. These acts are a) the Farmers (Empowerment & Protection) Agreement of Price Assurance & Farm Services Act, 2020; the Farmers Produce Trade & Commerce (Promotion & Facilitation) Act, 2020; and Amendment to the Essential Commodities Act, 2020.

What are the Bills?

Let us now briefly introspect the provisions of these 3 bills so as to obtain a clear and detailed idea that what are the benefits, harms, effects, and legal technicalities.

Farmers' Produce Trade and Commerce (Promotion and Facilitation) Act, 2020

This bill was promulgated by the Union Cabinet on 5th June 2020 through an ordinance. It permits both the intra-state and inter-state trade of farmers’ produce beyond the physical premises of Agricultural Produce Market Committee (APMC) markets and other markets notified under the state APMC Acts.

Provisions

1. Trading Farmers' Produce: This Act enables the farmers to trade outside the trade area such as cold storage, farm gates, factory premises, and others. Earlier, such trading was solely possible in the APMC yards or Mandis.
2. Alternative Channels for Trading: It facilitates profitable prices for the farmers through alternative trading channels for promoting both barrier-free intra-state and inter-state trading of agriculture produce.
3. Digital Trading: Moreover, it permits the electronic trading of scheduled farmers’ produce (as regulated under any state APMC Act) in the designated trade area. It will also promote direct online purchasing and selling of agricultural produce by the means of electronic devices and the internet.
4. Abolishment of Market Fee: As per the provisions of the Act, the State Governments are prevented from levying any market fee or cess charges on the farmers, traders, and electronic trading platforms in the course of trading farmers’ produce in an 'outside trade area'.

Disadvantages

1. This act shall result in loss of revenues for the States as they would be barred from the collection of “mandi fees’ if the farmers start selling their produce outside the APMC markets.
2. There is no mention of the future of the “mandi agents’ if the entire farm trades shift out of the “mandis”.
3. It shall eventually lead to the end of the Minimum Support Price based procurement system.
4. Digital or electronic trading like e-NAM uses the physical mandi structure. Now if the trade moves out of the “mandis” and they get destroyed in the absence of trading, then the future of e-NAM would become uncertain.

Farmers (Empowerment and Protection) Agreement on Price Assurance and Farm Services Act, 2020

This is one of the 3 farm bills that the Union Cabinet promulgated vide an ordinance on 5th June 2020. It seeks to create a national framework for contract farming as per the terms and conditions of an agreement between a farmer and a purchaser, entered into prior to the production or rearing of any farm produces.

Provisions

1. Farming Agreement: This Act makes provisions for a farming agreement between a farmer and a purchaser prior to producing or rearing any farm produce.
2. Minimum and Maximum Period of the Farming Agreement: One crop season or one production cycle of livestock shall be the minimum period for the farming agreement between a farmer and the buyer.
3. The maximum period of the agreement shall last up to 5 years. It also asserts that if the production cycle of any agricultural produce is longer thereby exceeding beyond 5 years, the maximum period of such an agreement may be mutually decided by the farmer and the purchaser provided the same is explicitly specified in the farming agreement.
4. Pricing assessment and fixation of the Produce: The agreement between the farmer and the buyer should explicitly specify the pricing of the agricultural produce and also the process of the price assessment. For variable prices, a guaranteed price for the agricultural produce and a clear reference for any additional amount higher than the guaranteed price must be explicitly specified in the agreement.
5. Dispute Settlement: This Act makes provisions for the establishment of a tri-level dispute settlement mechanism - Conciliation Board, Sub-Divisional Magistrate, and Appellate Authority.

Disadvantages

1. In terms of their negotiation capacity, the majority of the farmers would be the weaker players as they would be unable to negotiate properly as per their needs.
2. The contractors may refuse to deal with a multitude of small and marginal farmers.
3. The sponsors being big private companies, wholesalers, exporters, and processors will have an edge over the farmers in the event of any dispute.

Essential Commodities (Amendment) Act, 2020

On 5 June 2020, the Union Cabinet promulgated the Essential Commodities (Amendment) Ordinance, 2020. It is a Parliamentary Act that was enacted in 1955 for ensuring the delivery of certain commodities or products, the supply of which on being hindered due to hoarding or black-marketing would influence the regular life of the people. The essential commodities include foodstuff, drugs, fuel (petroleum products), etc.

The Powers of the Union Government and the State Governments Under the Act

This Act has vested the following powers upon the Union Government with respect to the essential commodities under this Act:

1. The Central Government is empowered to regulate the production, supply, and distribution of a whole host of commodities that are declared as ‘essential’ for ensuring their availability to consumers at fair prices.
2. The Government has the power to fix the Maximum Retail Price (MRP) for any packaged product that it has declared an 'essential commodity'.
3. The Centre can make addition and subtraction of commodities in this list with respect to the arousal of necessity and improvement in the situation.
4. The Government can notify stock-holding limits on a certain commodity, for a specified period, in case it is short in supply whereas its price is spiking.

Under this Act, the respective State Governments can opt not to impose any restrictions as notified by the Central Government. However, on the imposition of restrictions, the traders have to immediately sell off any such stock or stocks into the market, if the same has been held beyond the mandated quantity. This is done for increasing supplies and decreasing the prices during emergency situations.

Amendment

The amendment provides for the Government of India to enlist certain commodities as essential for regulating their supply and prices during emergency situations like war, famine, extraordinary price rises, or natural calamities. The commodities that have been deregulated are food items and includes cereals, pulses, potato, onion, edible oilseeds, and oils.

Limitation on Stocking

As per the amendment, the imposition of any stock limit on farming produce will depend upon the surge in price and can solely be imposed in case of a 100% spike in the retail price of the horticultural produce and a 50% increase in the retail price of non-perishable farming food items.

Calculation

The calculation of the increase shall be based upon the price prevailing immediately prior to 12 months, or the average retail price of the last 5 years, whichever is lower.

Provided that these restrictions will be inapplicable to food stocks that are maintained for public distribution in India.

Disadvantages

1. The price limits for emergency situations have been set so high that it is unlikely that they will be ever triggered.
2. Big enterprises will become free to stock commodities. Simply put, they would be able in dictating the terms and conditions to the farmers thereby leading to price loss for them.

Conclusion

Although the recent amendments pertaining to the farm laws are apparently aimed at benefitting the farmers by creating a system for direct transactions between the cultivators and the buyers, the downsides should also not be ignored. It is true that farmers can get a better price and higher gains by the direct transactional relationship with the buyers, but it is also equally true that they are highly vulnerable to exploitation by the big corporates. What has been done for benefitting and protecting the cultivators should not develop into weaponry for their exploitation.

Moreover, if the farmers start selling outside the “mandis” then it would deliver a severe blow to one of the pivotal revenue-generating sources of the State Governments.

Luckily, the Supreme Court of India has stayed these amended acts and has initiated attempts to carefully introspect these controversial bills. It is hoped that the downsides inherent in these acts would be adequately and properly addressed. However, the Republic Day developments have caused nationwide criticism against it but that does not imply that the farm laws be considered negligently.

India is highly reliant upon agriculture and any disruption in this sector would have a major toll in the already downtrodden economy of the country.

Sources

1. https://www.timesnownews.com/india/article/what-is-the-farm-bill-and-why-are-farmers-protesting-against-it/68921
2. https://www.jagranjosh.com/general-knowledge/farm-bills-indian-farm-reforms-2020-1606901455-1
3. https://timesofindia.indiatimes.com/india/what-is-farm-bill-2020-pros-cons-of-three-farm-bills-centre-introduced/articleshow/78180231.cms