Prime Minister Narendra Modi in his televised address to the nation on November 19 announced that the government has decided to repeal the three controversial farm laws passed in the Monsoon Session of Parliament last September.
Since last year, farmers have been protesting against three farm laws — the Farmers' Produce Trade and Commerce (Promotion and Facilitation) Act, 2020; the Farmers Empowerment and Protection) Agreement on Price Assurance and Farm Services Act 2020; and the Essential Commodities (Amendment) Act, 2020.
They also demanded a legal guarantee on Minimum Support Prices (MSP) for their crops.
Let's look at what the laws intended in detail.
Though the farmers expressed objection to all the three farm laws, there key problem was this Act, also known as ‘APMC Bypass Bill’. Cultivators feared that its provisions would weaken the APMC mandis.
Clauses in sections 3 and 4 of the Act allowed the farmers to sell their produce to buyers from within or outside the state in areas outside the APMC mandis. Section 6 prohibited the collection of any market fee or cess under any state APMC Act or any other state law with respect to trade outside the APMC market. Section 14 gave an overriding effect over the inconsistent provisions of the State APMC laws and section 17 empowered the Centre to frame rules for carrying out the provisions of the law.
Farmers feared the new rules would lead to inadequate demand for their produce in local markets. They said transporting the produce outside mandis would not be possible because of lack of resources. This is precisely why they sell their produce at lesser than MSP prices in local markets.
Farmers were also angry with the clauses in Section 8 of the law that said that a farmer and trader could approach the Sub-Divisional Magistrate (SDM) to arrive at a solution through conciliation proceedings. While farmers said they are not powerful enough to access the SDM offices for dispute redressals, critics said this was akin to usurpation of judicial powers.
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Since last year, farmers have been protesting against three farm laws — the Farmers' Produce Trade and Commerce (Promotion and Facilitation) Act, 2020; the Farmers Empowerment and Protection) Agreement on Price Assurance and Farm Services Act 2020; and the Essential Commodities (Amendment) Act, 2020.
They also demanded a legal guarantee on Minimum Support Prices (MSP) for their crops.
What did the laws offer?
Taken together, they loosened rules around sale, pricing and storage of farm produce.The government pressed that these new laws would help making farming profitable for even small farmers.
One of the biggest changes was that farmers were allowed to sell their produce at a market price directly to private players - agricultural businesses, supermarket chains and online grocers. Most Indian farmers currently sell the majority of their produce at government-controlled wholesale markets or mandis at assured floor prices (also known as minimum support price or MSP).
The laws allowed private buyers to hoard food like rice, wheat and pulses for future sales, which could only be done by government-authorised agents earlier.
The reforms, at least on paper, gave farmers the option of selling outside of this so-called "mandi system". But the protesters said the laws would weaken the farmers and allow private players to dictate prices and control their fate. They said the MSP was keeping many farmers going and without it, many of them will struggle to survive. The farmer unions were of the view that India's stringent laws around the sale of agricultural produce and high subsidies had protected farmers from market forces for decades and no change was needed to that approach.
Let's look at what the laws intended in detail.
The Farmer’s Produce Trade and Commerce (Promotion and Facilitation) Act, 2020 or the FPTC Act
This law allowed farmers to trade their produce outside the physical markets notified under various state Agricultural Produce Marketing Committee laws (APMC acts). It overrode all the state-level APMC acts.Though the farmers expressed objection to all the three farm laws, there key problem was this Act, also known as ‘APMC Bypass Bill’. Cultivators feared that its provisions would weaken the APMC mandis.
Clauses in sections 3 and 4 of the Act allowed the farmers to sell their produce to buyers from within or outside the state in areas outside the APMC mandis. Section 6 prohibited the collection of any market fee or cess under any state APMC Act or any other state law with respect to trade outside the APMC market. Section 14 gave an overriding effect over the inconsistent provisions of the State APMC laws and section 17 empowered the Centre to frame rules for carrying out the provisions of the law.
Farmers feared the new rules would lead to inadequate demand for their produce in local markets. They said transporting the produce outside mandis would not be possible because of lack of resources. This is precisely why they sell their produce at lesser than MSP prices in local markets.
Farmers were also angry with the clauses in Section 8 of the law that said that a farmer and trader could approach the Sub-Divisional Magistrate (SDM) to arrive at a solution through conciliation proceedings. While farmers said they are not powerful enough to access the SDM offices for dispute redressals, critics said this was akin to usurpation of judicial powers.
Farmers (Empowerment and Protection) Agreement of Price Assurance and Farm Services Act, 2020
The law sought to create a legal framework for contract farming in its Sections 3-12. The farmers could enter into a direct agreement with a buyer before sowing season to sell their produce at pre-determined prices. It allowed setting up of farming agreements between farmers and sponsors. The law, however, did not mention the MSP that buyers need to offer to farmers.
Though the Centre said the law was an attempt to liberate farmers by giving them choice to sell anywhere, the farmers feared that it would lead to corporatisation of agriculture. They also feared this would mean the MSP will be removed. Critics also said that contract system would make small and marginal farmers vulnerable to exploitation from big companies unless the sale prices continue to be regulated as was being done before the new law came in.
Though the Centre said the law was an attempt to liberate farmers by giving them choice to sell anywhere, the farmers feared that it would lead to corporatisation of agriculture. They also feared this would mean the MSP will be removed. Critics also said that contract system would make small and marginal farmers vulnerable to exploitation from big companies unless the sale prices continue to be regulated as was being done before the new law came in.
Essential Commodities (Amendment) Act, 2020
Through an amendment, to the Essential Commodities Act, 1955, this law did away with the Centre’s powers to impose stockholding limit on food items, except under extraordinary circumstances.
It also removed commodities such as edible oil, onion, and potato from the list of essential commodities. It enabled the government to regulate their supply or include these items back into the list only under “extraordinary circumstances” as per Section 1 (A) of the new law. This would not impact farmers much, experts had said.
As per this law, the stock limits on farming produce would be based on price rise in the market. They could have been imposed only if there was a 100 percent increase in retail price of horticultural products and a 50 percent increase in the retail price of non-perishable agricultural food items.
It also removed commodities such as edible oil, onion, and potato from the list of essential commodities. It enabled the government to regulate their supply or include these items back into the list only under “extraordinary circumstances” as per Section 1 (A) of the new law. This would not impact farmers much, experts had said.
As per this law, the stock limits on farming produce would be based on price rise in the market. They could have been imposed only if there was a 100 percent increase in retail price of horticultural products and a 50 percent increase in the retail price of non-perishable agricultural food items.
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