A Critical Analysis of Farm bills, 2020

Legal Method Assignment

Submitted by

Ahmed Hamza Shabih Fatima

Roll No. 5 Roll No. 53
Student ID: 201909662 Student ID: 201903269

Submitted to:
Dr. Subhradipta Sarkar

B.A.LLB.(3rd Semester)(Self Finance)

Faculty of Law, Jamia Millia Islamia

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 Contents

S.No. Title Page No.

1.0 Abstract 03.

2.0 Introduction 03.
3.0 The Farm Bills 2020 04.
4.0 Historical Background 08.
5.0 Boon of Farm Bills 2020 10.
6.0 Bane of Farm Bills 2020 11.
7.0 Conclusion 14.
8.0 Bibliography 15.

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 1.Abstract

The basic objective of this paper is to do a complete analysis of the newly proposed farm bills
2020. Starting with an Introduction to our topic this paper moves forward to throw the light on
the historical Background of the newly amended farm bills. Secondly, this paper would discuss
about the pro et contra of the proposed bills, clearly analysing the recent outrage among the
farmers. Towards the end this paper will present a brief Conclusion.

2. Introduction

In India, the agricultural sector has been the major part of the economy since ages. Despite being
the primary source of livelihood of the majority of the population, the agricultural sector has
been ignored by the governing bodies. The agrarian population of this country has often been at
the receiving end of the consequences of unprecedented policies of the Government. This sector
has faced economical, social as well as environmental neglect resulting in vast-ranging problems
in the overall development of the country.

Around 58% of India’s population is dependent on the agriculture sector as their primary source
of livelihood which happens to include 70% of rural households, with 82% of them consisting
small and marginal farmers. According to the Farm Census 2015-16, about 86.2% of small and
medium farmers have been reported as having less than 5 acres of land. 1

In June 2020, the Central Government has introduced three ordinances centred at far-reaching
agricultural reforms in the country. Government has stated that the objectives of the Act are to,

● Freeing up the curbs on trade of the farm produce,

● liberalising the regulatory system,
● providing barrier-free trading platform and creating a farmer-friendly environment.

1 Government of India, "Report on Number and Areas of Operational Holdings" (Ministry of Agriculture and
Farmers Welfare, 2019).

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The provisions of these ordinances are proposed to override all State laws in this regard.
However, the ordinances have been met with strong resentment from the farmers as well as the
commission agents, middlemen (arhtiyas), who have taken to the streets demanding the
elimination of the ordinances. These were introduced as Farmer Bills in the Parliament in the
Monsoon Session and have been passed by both the Houses in September amid strong
opposition. 2

3. Farm Bills 2020

Three Agri Reforms in Contention

The Farmers' Produce Trade and Commerce (Promotion and Facilitation), the Farmers
(Empowerment and Protection) Agreement of Price Assurance and Farm Services and the
Essential Commodities (Amendment) Act were proposed by the House and have received the
President's assent turning them into binding laws. It has been assured that the Minimum Support
Price Mechanism will stay, and further adequate protection of land ownership was put in place to
protect the farmers interest.

Purpose:

The government has debated that these reforms will enhance the growth in the sector through
investment by private sector in building mechanism and supply chains for farm produce at
national and global markets level. They will intend to help small farmers who lack the capacity
to bargain for their own produce for getting better price or who lack in investing in better
technology to improve the productivity of farms .The bill on Agri market seeks to allow farmers
to sell their produce outside APMC 'mandis' to whoever they want 3. Farmers will hence get
better prices through competing in the market with other farmers and cost-cutting on
transportation. Apparently, this Bill could mean states will have to lose 'commissions' as well as
'mandi fees'4.The legislation on contract farming will allow these farmers to enter into a trading
directly with agribusiness firms as well as large retailers on pre-agreed prices of their produce.

2 Kripen Dhaliwal, "Critical Analysis on the Farmers Bills, 2020", available at: http://www.lexforti.com (last
visited on October 20th, 2020).
3 Editorial, "Will the Farm Bills Benefit Farmers", The Hindu, Sept 25, 2020.
4 Ibid.

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The Essential Commodities (Amendment) Bill, 2020, seeks to remove commodities like cereals,
pulses, oilseeds, edible oils, onion and potatoes from the list of essential commodities 5. This will
seek to end any imposition of stockholding limits not withstanding extraordinary circumstances.

Aftermath of the implementation of Ordinances

Farmers in Punjab and other parts of India have been protesting against these reforms. Harsimrat
Kaur Badal has tendered her resignation after the Bills were passed. Opposition parties,
including TMC, Congress, DMK and BSP, opposed these farm bills, debating they were against
the interests of marginal farmers. It is also being debated that the bills can potentially become a
conspiracy to defeat the Green Revolution.

1) Essential Commodities (Amendment) Bill, 2020: This bill seeks to deregulate the
production, trade, storage, movement and sale of several agricultural good. By this act, the power
of the government to regulate food commodity supply and storage is curbed, not withstanding
some extraordinary circumstances like famine, aggression or war.

2) Farmers’ Produce Trade and Commerce (Promotion and Facilitation) Bill, 2020:
This bill allows farmers to trade for their produce outside the Agricultural Produce Market
Committee (APMC) mandis, without being required to pay and cess or state taxes.

3) Farmers (Empowerment and Protection) Agreement on Price Assurance and Farm Service
Bill, 2020:
This Bill looks forward to allow the farmers for practicing contract farming, which involves
getting into agreement with agri-business firms, other processors such as wholesalers and
exporters and also involves the direct marketing strategies.

The Farmers’ Produce Trade and Commerce (Promotion and Facilitation)

Ordinance, 2020

Trade of Farmers’ Crop: The Ordinance allows inter-state as well as intra-state trade of

farmers’ produce outside:
5 Editorial, "Everything you need to know about new farm laws", The Economic Times, Sept 21, 2020.

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 (i) the physical premises of market areas utilised by the market committees formed under the
state APMC Acts
(ii) other markets which are notified under the state APMC Acts.6
Such trade can be conducted in any of the ‘outside trade area’, i.e., any place of the production,
storage, as well as assimilation of farmers’ produce including: (i) farm gates, (ii) factory campus,
(iii) warehouses, (iv) silos, and (v) cold storages.

Electronic trading Mechanism: This Bill permits the electronic trading of farmers’ produce
(agricultural produce regulated under any state APMC Act) in the specified trade area.  An
electronic trading and transaction portal can be set up to promulgate the online trading of such
produce through electronic devices and internet directly.  
The following entities may establish and operate such portals:
(i) companies, partnership firms, or registered societies, having a permanent account number
under the Income Tax Act, 1961 or any other document notified by the central government
(ii) a farmer producer organisation or any other agricultural cooperative society.7

Abolishment of Market Fee: The Ordinance prohibits the state governments from levying any
kind of tax, cess, market fee on farmers, traders, or on electronic trading portals which will be
set up for trade of farmers’ produce conducted in an ‘outside trade area’.

The Farmers (Empowerment and Protection) Agreement on Price Assurance

and Farm Services Ordinance, 2020

Agreement of Farming: The Ordinance provides for a farming contract between a farmer and
the buyer prior to the production or harvesting of any farm produce.  The minimum period of an
agreement has to be one crop season, or one production cycle of livestock.  The maximum period
has to be five years, unless the production cycle takes more than five years.8

6 Government of Jndia, "Marketing Ibidstructure and Agricultural Marketing Reforms" (Ministry of Agriculture).
7 The Farmers' Produce Trade and Commerce ( Promotion and Facilitation) Bill, 2020, available at:
http://www.prsindia.org (last visited on October 19th, 2020) .
8 The Farmers (Empowerment and Protection) Agreement on Price Assurance and Farm Services Ordinance, 2020,
available at: http://www.prsindia.org (last visited on October 19th, 2020).

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Price Allocation of the Produce:  Another requirement lies that the price of farming produce
should be mentioned in the agreement.  For prices which are subjected to variation, a guaranteed
price for the produce and thereafter a clear reference for any additional amount in addition to the
guaranteed price must be clearly specified in the agreement 9. Whatsoever, the process of
determining the price with regard to any conditions must be mentioned in the agreement.
Dispute Settlement: The farming contract must provide for a conciliation or arbitration board as
well as a systematic conciliation process for settlement of any arised disputes.  The Board should
have a fair representation of the parties that are primary to the agreement. Firstly, the disputes
have to be referred to the board for resolution.  If the dispute remains unresolved by the Board
which will be set up after thirty days, parties may approach the Sub-divisional Magistrate for
resolution.  Parties will happen to have a right to appeal to an Appellate Authority against
decisions of the Magistrate.  Both the Magistrate and Appellate Authority will be required to
dispose of a dispute within set period of time which is thirty days from the receipt of
application.10 The Magistrate or the Appellate Authority have the right to impose certain
penalties on the party which contravene the agreement. Nothing can bring about any action
against the agricultural land of farmer who are party to the contract for recovery of any dues.

The Essential Commodities (Amendment) Ordinance, 2020

Food Items Regulations: The Essential Commodities Act, 1955 which gives power to the
central government to designate certain commodities (like food items, fertilizers, and petroleum
products) as essential commodities. 11 The central government has the right to regulate or halt the
production, distribution, supply, storage, trade and commerce of these essential commodities.
This Amendment Bills provides that the central government can regulate the supply of certain
food items including cereals, pulses, potatoes, onions, edible oilseeds, and oils, only under dire

9 Ibid.
10 The 3 Farmer Bills And the Controversies Surrounding Them, available at: http://www.livelaw.in (last visited on
October 19th, 2020).
11 The Essential Commodities Act, 1955 [Act 10 of 1955], s. 3A.

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 12
circumstances.   These include: (i) war, (ii) famine, (iii) extraordinary price rise and (iv)
aggression (v) natural calamity of grave nature.13

Stock limit based on price rise: The Bill requires that any kind of imposition of the stock limit
on respective agricultural produce has to be based on price rise.  A stock limit can be imposed
only on conditions where there is:
(i) a 100% increase in retail price of horticultural produce;
(ii) a 50% increase in the retail price of non-perishable agricultural food items. 14
  The increase will be calculated over the price which is prevalent immediately preceding twelve
months, or the average retail price of the last five years, whichever stands lower.15

4. Historical Background
India is and has always been an agrarian economy. After India gaining Independence in 1947,
farmers sold their products directly to the consumers. But due to system of Zamidars or money
lenders prevalent since a long time, farmers were trapped in perpetual debt. For growing a crop,
farmers required seed, fertilizers, and other agricultural goods for which they lent money from
the Zamindars or money lenders who put high interests on the principal amount. Incompetency
of the farmers to pay such heavy interests rendered Zamindars to buy all of their produce at low
prices. This cycle continued and kept farmers always in debt.
This process was very exploitative so to help the farmers and end this system government of
India introduced APMC (Agriculture Produce Market Committee) Act16. It was introduced in
1960’s when green revolution started in India.. APMCs set up Mandis or Markets across India

12 The Essential Commodities (Amendment) Ordinance, 2020 , available at: http://www.prsindia.org (last visited
on October 21st, 2020).
13 Ibid.
14 Ibid.
15 Ibid.
16 A Critical Analysis of the Farm Bills, 2020, available at: http://www.latestlaws.com (last visited on October
10th, 2020).

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where farmer’s produce was sold. There are around 7000 APMCs in India at present. 17 After
harvesting the crop, the produce is brought to the Mandis where they are auctioned for set prices.
The Farmers sell the crop to the middlemen. Middlemen are people between the farmer and the
retailer or big traders.18 Middlemen are provided license by the Government. Facilities like
shops, storage facilities etc. are provided to them in the APMC markets. Many people work in
these APMCs, there is storage of grains, so it requires labourers, accountants so overall it is a
self-thriving ecosystem which provides a great platform for a number of employment. APMC
markets are regulated by the state governments, tax is charged at each transaction giving the
government record of the prices. .

The produce which is not bought by the middlemen is bought by the government at MSP
(Minimum Support Price). MSP is constant throughout the country.

According to National Crime Bureau report 2018, 1,34,560 suicides were reported in India out of
which 10,350 were farmers remember this was total number of reported cases 19. After 1960s,
problems popped up. Middlemen started exploiting farmers by forming cartels among
themselves and started buying the produce at MSP only and sold to traders at a high rate. For
example, MSP for onion is Rs.8 per kg (data as of October 26th, 2020) 20 but we buy onions at Rs
35 – 40 per kg depending on state. In a way we can say Minimum Support Prize became
Maximum Selling Price. To bring about the change the government finally came up with the acts
in 2020. These three farm Acts seek to replace the ordinances issued in June 2020.

These Acts envisage to bring about changes in the key aspects of the agricultural economy —
trade in agricultural commodities, price fixation, other farm services. These Acts sought to bring
reforms in the agricultural marketing system such as removing the restrictions of private stock
holding of farm produce or creating trading areas free of middlemen and take the market directly
to the farmer.

17 Ibid.
18 Farm Bills 2020 Explained, available at: http:/www./tradebrains.in (last visited on October 16th, 2020).
19 Suicides in India, available at: http://www.ncrb.gov.in (last visited on October 14th, 2020).
20 Onion, available at: http://apeda.in.

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 5. Boon of The Farm Bills, 2020

I) Beneficiary to the Farmers

Freedom of Choice

With the implementation of these new Farm Bills, there comes the decline of Mandis by which
the farmers have now access to choose their buyers according to their own discretion depending
upon the price variation presented by the private entities. Farmers can engage with agri-business
companies, retailers, exporters for service and sale of produce on their own and hence can have
access to modern technology. They have the power to sell their fruits or vegetables to anyone, as
well as anywhere.

It is this power which is considered to be the foundation of their growth. They have got the
freedom to sell not only fruits and vegetables but other materials such as grains, sugarcane,
mustard, etc.

Increase in Farmers' Income

According to the government rules & regulations, this Bill seeks to increase the income of the
farmers in the agriculture sector. It is anticipated that freedom to retailers, corporates, private
entities could increase the farmers income thereby accomplishing the government's vision of
doubling farmers income by 2022.21 Centre has said that these proposed Bills will make the
farmer independent of government controlled markets and fetch them a better price for their
produce. The farmers will get attracted towards comparatively good crops, and if the farmer
produces costly crops his income will automatically increase and he will also support agriculture
growth.22

II) Intra-state and Inter-state Trade

21 Government of India, " Report on Doubling Farmers' income" (Niti Aayog) .

22 The Farmers Bills 2020 and its Pros and Cons, available at: http://www.livelaw.in (last visited on October 28th,
2020).

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The Bills propose to create a system in which the farmers and traders can sell their purchase
outside the periphery of the Mandis. It will encourage intra-state trade by which there can be an
angle of reduction in the transportation expenses for the farmers.

As mentioned by the Centre, APMC will still be functioning in the state but after the
implementation of these Ordinances there will be inter-state trade outside its periphery and the
farmers will then be able to sell their produce from their field, home or any other place.

III) Removal of Commodities from the Essential Commodities Act

The Essential Commodities (Amendment) Act, 2020, seeks to remove commodities like cereals,
pulses, oilseeds, onion, and potato from the list of essential commodities 23 and will do away with
the imposition of stock holding limits. Hence, Farmers' will have a choice to produce any good
and trade in it.

6. Bane of The Farm Bills, 2020

I) Issues arising from the Corporatisation

Conditions of Farmers

After gaining Independence, the conditions of Farmers in India has not improved much. As per
2011 census, 96 millions cultivators enumerated farming as their main occupation decreasing
from 103 million in 2001 and 110 million in 1991. Knowing that farming employs almost 46%
of total work force directly, its contribution to GDP is less than 20%.24

Analysing the conditions of the Farmers as being poor and debt ridden, a sudden change in the
agricultural format of the country can be troublesome. Talking about the main issues of farmers,
one of them is that their perception regarding the bills which is not positive. Farmers are
resentful of the idea of enjoying autonomy in selling their products. They are reluctant and are
not ready to accept any changes in the existing system of MSP and APMC. Especially if we take
into account the farmers from Punjab and Haryana, they are hugely benefited from green

23 The Essential Commodities (Amendment) Act, 2020, s.1A.

24 Government of India, "2011 Census" ( Ministry of Home Affairs).

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revolution and hence oppose this bill strongly. Their demand is to not being about any change in
the system of MSP and APMC. In Punjab and Haryana alone government purchased almost 201
lakhs tone of wheat and 226 lakh tone of rice and that also at MSP.

Privatisation
Government has significantly deregulated its authority on the matters of agriculture market by
establishing privatisation. Private firms being profit oriented may bind farmers with unfavourable
contracts. This will also arise an issue for the farmers for getting adequate legal aid in
comparison to these big private enterprises. Most importantly, the marginal farmers will be the
most affected. Promoting trade outside APMC will hence reduce the significance of mandis and
the role of middlemen.

Non Functioning of APMCs

Currently, APMC mandis acts as a link between private sector and the farmers, hence moving the
transaction out of APMC will make it a non-functioning asset. The two central issues arising
from this can be noted as,
● Huge revenue loss: Government will not be able to levy any cess or tax on transactions
done in APMC which will lead to revenue loss.
● Loss of Occupation : Many people who are employed in the APMCs and the Mandis will
lose their job and hence will become unemployed. The middlemen will be left jobless.
● Direct Contract with Retailers: The absentee landlord may now go for getting into direct
agreements with the corporates and retailers rather than the tenants which can hinder the
income of the small farmers.
● Open Market: Another concern arises that the Agriculture sector will be thrown into an
open market and because of the present lag in the economy, the market may not be able
to provide profitable price to the farmers for their produce.

II) Constitutional Issues

Entry 33 of List III:

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The 7th Schedule has defined the subjects of jurisdiction for the Union and State Governments. 25
List III has subjects on which both state and Union have their jurisdiction and is called
Concurrent list, in which, any issues arising out of the jurisdiction, the Union laws will always
suffice.
Entry 33 of the List III states the power of the Union Government to make laws on the matter of
trade, commerce, production, supply of Industrial Goods.26 By implementation of the Farm Bills
and bringing the private sector into play, the Government has invoked Entry 33.
The Agricultural Sector comes under the state list and the state has exclusive rights to make any
decisions related to the agricultural area. Entry 14, 26, 27 and 28 provides the State Government
these rights. 27
Entry 26 states, "trade and commerce within the state", Entry 27 states, "production, supply and
distribution of goods" and Entry 28 states, "markings and fairs". Entry 26 and Entry 27 are
subjected to the Entry 33 of List III and therefore these laws have encroached the jurisdiction of
the State which hence violated the idea of federalism which forms the basic structure of the
Constitution.

Doctrine of Colourable Legislation: The SC in one of its judgement has stated that it is
unethical to do things indirectly which cannot be done directly. 28 Hence this bill can be seen
under the eyes of the Doctrine of Colourable Legislation.
Also the parliament has passed these bills without doing any proper scrutiny by any
parliamentary committee. So these suspicious circumferences also raises finger at the
constitutional validity of these newly formulated farm bills.

25 The Constitution of India, art 246.

26 Ibid.
27 Ibid.
28 The Supreme Court Reportsk. C. Gajapati Narayan Deo and Others v. The State of Orissa 1953 AIR 375, 1954
SCR 1.

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 7. Conclusion

Agriculture sector in India contributes the the maximum part of the economy. It is not just a
sector of revenue in India but also a way of living for almost 3/4th of the population of India.
Any changes brought in the agricultural sector can have a drastic effect on the farmers who
are considered to be the backbone of our country. Keeping in my mind these newly
formulated acts, both results are possible; farmers income can become double as stated by the
government, or their conditions can get worsen as feared by farmers. History is and has
always been the best judge. Perhaps, being just a speculation, a lot of the success of these
bills depends on the consensus and trust of the people. There is genuine uncertainty among
the farmers over what private procurement will mean. What farmers need and are asking for
is legally guaranteed remunerative prices which the government has promised. If the Bills
are perceived of good intent, then the government should not shy away and go for a proper
parliamentary scrutiny of all its details as it is important to make the farmers secure about the
upcoming policies.

While the intent of Government is laudable, we will be able to see the results of these new
Acts only after few years of implementation.
 BIBLIOGRAPHY
A. Primary Sources

I. The Constitution of India, 1950.

II. Statutes
 The Essentials Commodities, 1955.
III. Reports
 Government of India, Report on Number and Areas of
Operational Holdings (Ministry of Art and Agriculture).
 Government of India, Report on Marketing Infrastructure and
Agricultural Marketing Reforms (Ministry of Agriculture).
 Government of India, Report on Doubling Farmers’ Income
(NITI Aayog)
 Government of India, 2011 Census (Ministry of Home Affairs)
B. Secondary Sources

IV. Websites
 The 3 Farmer Bills and the Controversies Surrounding them,
available at: http://www.livelaw.in
 A Critical Analysis of the Farm Bills, 2020, available at:
http://www.latestlaws.com
 Farm Bills 2020 Explained, available at:
http://www.tradebrains.in
 Suicides in India, available at: http://www.ncrb.gov.in
 Farmers Produce Trade and Career (Promotion and
Facilitation) Bill, 2020, available at: http://www.prsindia.org
 Farmers (Empowerment and Protection) Agreement on Price
Assurance and Farm Services Ordinance, 2020, available at:
http://www.prsindia.org
 Onion, available at: http://www.apeda.in
 Farmers Bill 2020 and its Pros and Cons, available at:
http://www.livelaw.in
V. Newspaper Reports
 Vikas Dhoot, “Will the Farm Bills Benefit Farmers”, The
Hindu, September 25, 2020.
 Saurabh Goswami, “Everything You Need to Know About
New Farm Laws” The Economic Times, September 21, 2020.