Name: Nayantara Sengupta

Class: XI

Section: B

Roll Number: 22

Subject: Economics

School: La Martiniere for Girls

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 TOPIC:

THE

FARMERS’ BILL

2020

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 Contents

Serial Topic Page No.

No.
1. Introduction 4

2. Agricultural Marketing in India 5-7

3. The Farmers Bill 2020 and its Provisions 8-10

4. Perspective of the Government of India 11

5. Perspective of the Farmers of India 12-13

6. Conclusion 14

7. Acknowledgement 15

8. Bibliography 16

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 Introduction

Agriculture is said to be the largest and most important sector in the

Indian economy. It serves as the backbone of the economy as it not
only provides food, but also livelihood, income, resources for the
industrial sector, and exports. This sector provides almost 19% of the
country’s GDP (in 2020), and approximately 41.49% of the people
are employed in this sector.
Role of agriculture in the Indian economy:
• The agriculture sector contributes to a large proportion of
India’s national income, despite a continuous decrease in the
share of the sector in India’s national income. The sector
contributed to about 13% of gross value added in 2017-18.
• This sector is a major source of employment for the people of
India, especially in rural areas. It provides employment to an
overwhelming majority of the working population in India.
• Agriculture in India has played an important role in meeting
almost the entire food needs of the people. Our country has also
become almost fully self-sufficient in foodgrains and it no
longer depends on the import of foodgrains.
• The agriculture sector and the industrial sector are
interdependent on each other. They play a symbiotic role in the
sense that the agriculture sector provides resources and raw
materials to the industrial sector, while the industrial sector
provides industrial products and machinery to the agriculture
sector, which serves as a large market for such products.
• Agriculture is also an earner of foreign exchange for India, and
it also serves as a major support to transport system and trade.
• Agriculture also serves as an important source of revenue for the
government, as the government earns revenue in the form of
land revenue, freight charges, and revenue in the form of various
taxes.

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 Agricultural Marketing in India

Agricultural marketing involves the buying and selling of agricultural

produce. The marketing of agricultural produce is relatively different
from what it used to be before as it now passes through a number of
hands before it finally reaches the consumer.
Agricultural marketing plays an important role not only in stimulating
the production and consumption in the country, but also in
accelerating the pace of economic development.

According to the Indian Council of Agricultural Research, agricultural

marketing involves three important functions:
i. Assembling or concentration of goods.
ii. Preparation for consumption (processing).
iii. Distribution of agricultural products.

A chart depicting and explaining Indian Agricultural Marketing

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However, there are some major defects in the system of agricultural
marketing in India. Some of these are as follows:

• Some agricultural commodities are produced in one region, but

sold in other regions of the country or of the world. A number of
middlemen are involved in taking the farm products from the
place of production to the consumer. There may be several
middlemen who are engaged at different levels, and the problem
of this is that it increases the gap between the price paid by the
consumer and that received by the producer or the farmer.
• Indian farmers also lack collective bargaining, as they are not
united while selling their produce. They have to face a small
number of organised traders, and the bargaining power of the
farmers vis-à-vis the traders is low. Thus, they usually get a low
price for their produce.
• There is the defect of distressed sale which is prevalent in the
Indian agriculture marketing system. An average Indian farmer
is forced to sell his produce immediately after the harvest on
account of his poverty, pressure of repayment of loans and also
poor holding capacity. At this particular time, prices are
generally low.
• There are various malpractices in the unorganised markets. For
example, clandestine fixation of price of the produce, the levy of
a number of market chargers and fees, and underweighting by
traders and merchants. Moreover, farmers in India usually do
not appreciate the importance of grading their produce. As their
produce is not classified into different groups and categories,
this gives merchants and traders the chance to exploit the
farmers.
• There is also the problem of lack of proper storage facilities in
rural areas. This forces the farmers to sell their produce at a time
when the markets are oversupplied, and thus, the prices they get
for their produce is low. Sometimes there is also the problem of
inadequate transport facilities. This problem is faced by many
small farmers. In these cases, agricultural produce is carried to
the markets on slow-moving transport, for example bullock
carts. This forces the farmers to sometimes sell their produce in

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 nearby markets, rather than the big, main markets, where they
may not get a fair price for their produce.
• There is also a lack of market knowledge among farmers. The
average farmer is not adequately informed about prevalent
market conditions including prices prevailing in different
markets, demand, supply, etc. Traders, merchants, and
commission agents take advantage of this fact and exploit the
farmers by purchasing their produce at low prices.

Thus, in the view of the defective agricultural marketing system in

India, it is absolutely necessary that the marketing system is
improved. Both the central and state governments have taken a
number of measures to improve the system, such as establishing
regulated markets, construction of storage and warehousing facilities,
issuing uniform standard weights and measures, providing market
information, etc.

Farm produce being sold at a local market

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 The Farmers Bill 2020 and its Provisions

The Farmers Bill of 2020 is a combination of 3 bills:

i. Farmers' Produce Trade and Commerce (Promotion and
Facilitation) Bill
ii. Farmers (Empowerment and Protection) Agreement on Price
Assurance and Farm Services Bill
iii. Essential Commodities (Amendment) Bill.
This is a big structural change attempted on behalf of the Government
of India. The main aim of these bills is to encourage corporate
investments in the agricultural system to make it lucrative for farmers.

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 passed by the House and received the
President's assent turning them into laws on the 27th of September,
2020.
The government has said that these particular reforms will accelerate
growth in the agricultural sector through private sector investment in
building infrastructure and supply chains for farm produce in national
and global markets. They are intended to help small farmers who do
not possess the means to either bargain for their produce to get a
better price, or invest in better technology to improve the efficiency of
farms.
The bill on the Agri Market seeks to let farmers sell their produce
outside the APMC 'mandis' to the clientele of their choice. Farmers
will get better prices through competition and economizing on
transportation.

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The Farmers' Produce Trade and Commerce (Promotion and
Facilitation) Bill, 2020:
• The new legislation creates a system where both farmers and
traders will enjoy liberty of the choice of the sale and the
purchase of the produce.
• The bill also promotes barrier-free inter-state and intra-state
trade and commerce outside the physical premises of markets
reported under State Agricultural Produce Marketing
legislations.
• The farmers will not be charged any cess or levy for the sale of
their produce and will not have to bear any transport costs.
• The bill also proposes e-trading in the transaction platform for
ensuring smooth trade electronically.
• In addition to mandis, freedom to practice trading at farmgate,
cold storage, warehouse, processing units etc. will be
recognised. Farmers will be able to engage in direct marketing,
thus eliminating intermediaries resulting in them getting fair
prices.
The Farmers (Empowerment and Protection) Agreement of Price
Assurance and Farm Services Bill, 2020:
• The new legislation empowers farmers to engage with
processors, wholesalers, aggregators, large retailers, exporters
etc. on fair terms, i.e., contract farming.
• Price assurance will be provided to the farmers even before
sowing of crops. In case of higher market price, farmers will be
entitled to this price over and above the minimum price.
• The bill will transfer the risk of market unpredictability from the
farmer to the sponsor. Due to prior price determination, farmers
will be protected from the rise and fall of market prices.
• It will also allow the farmer to access modern technology, better
varieties of seeds and other resources.
• It will reduce cost of marketing and improve income of farmers.

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The Essential Commodities (Amendment) Bill, 2020:
• This particular bill will remove commodities like cereals, pulses,
oilseeds, edible oils, onions and potatoes from the list of
essential commodities.
• This will remove uncertainties of private investors of excessive
regulatory interference in their business operations.
• The freedom to produce, hold, move, distribute and supply will
lead to harnessing of economies of scale, and attract private
sector or foreign direct investment into the agriculture sector.

. A brief summary of the three Farm Bills, 2020

.

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 Perspective of the Government of India

The Government of India has looked upon this stance as a positive

change in the agricultural sector of India.
The Government claims that these Acts will change Indian agriculture
for the better, and will also attract private investment. The Farmers
(Empowerment and Protection) Agreement on Price Assurance and
Farm Services Act, 2020, provides for contract farming. Under this
scheme, farmers will produce crops as per agreements with corporate
investors for a mutually approved remuneration.
The government has said these reforms will accelerate growth in the
sector through private sector investment in building infrastructure and
supply chains for farm produce in national and global markets. They
are intended to help small farmers who don’t have means to either
bargain for their produce to get a better price or invest in 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.
The bills will also empower farmers through greater market access
and more opportunities for commercial outcomes. By eliminating the
APMC monopoly, the bills will do away with the age-old challenge of
middlemen. The bills could also lead to an open-market, allowing
improved price discovery, supply chain efficiencies and active market
linkages.
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. This will end the
imposition of stock-holding limits except under extraordinary
circumstances.

Thus, the Government is looking upon these schematic changes as a

positive transformation in the Indian agricultural sector.

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 Perspective of the Farmers of India

By loosening the grip of APMCs, the government risks the possibility

of farmers receiving prices below the minimum support price (MSP).
A similar law was passed in Bihar in 2006, when the state abolished
the APMCs. A recent study conducted by the National Council for
Applied Economic Research reported an increased volatility in grain
prices.
Bihar witnessed fractured growth in agriculture after the repeal of the
mandi system in 2006. These experiences have influenced a few
agricultural economists, who believe that rebuilding the existing
system might be a better course of action than tearing it down to
introduce a new system altogether.
Another weakness in the scheme is the lack of policy-level support for
transporting farmer produce. At least 85% of the Indian farming
community includes marginal farmers who do not have access to
markets or transportation facilities.
The bills also create a sudden power-vacuum in the market, thus
creating uncertainty in the production market. In case of the gradual
collapse in the APMC systems, the government has not currently
envisioned an alternate price setting mechanism.
Agriculture falls in the State List under the Constitution of India.
However, the existence of Entry 33 in the Concurrent List gives both
the Centre and the States the power to regulate production, supply and
distribution of products in trade and commerce related to agriculture.
With several state governments expressing disagreement over the
bills, it is likely that they would challenge the bills by exercising their
power.

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A few political parties, some farm organisations like the Bharatiya
Kisan Union (BKU), and also big agricultural bodies like the All
India Kisan Sangharsh Coordination Committee (AIKSCC) and some
section of farmers are opposing the bill. Their statement against the
three bills is that these bills will give the big corporates all the power.
The farmers are apprehensive of receiving MSP for their produce,
notwithstanding assurances from the government. Farmers also fear
that the large retailers and corporate houses, who are in alliance with
MNCs, could take over Indian agriculture with money power.
Farmers from Punjab, Haryana and some other parts of India are
protesting against these bills. Currently, there is a major protest
movement going on at Delhi's borders. Various opposition parties,
including TMC, Congress, DMK, etc., have opposed the bills,
claiming that they are against the interests of small and marginal
farmers.

The Farmers Protest at the Delhi Border

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 Conclusion

The three agricultural bills which were passed by the Indian

Parliament during the monsoon session have now become a reason of
much debate across India. There also an ongoing nationwide protest
comprising of farmers, agricultural organisations and a few political
parties, though, there is one section of the farmers who have accepted
the bills as a positive move.
Farmers, mainly from Punjab and Haryana, led by various farmers’
organisations are currently in talks with the Government, seeking to
have the bills amended, if not completely scrapped. One of the
solutions to the recent issue is that the Government considers setting
MSP for all other crops as well to protect the interests of the farmers
of India.
The farmers and farmers’ organisations have also suggested that the
APMCs should be continued, and the MSP should be determined on
the basis of the quality of the grains. The farmers should be
encouraged to grow and harvest high-value crops, and the
Government should set up suitable and adequate cold-storage chains
to store perishable goods, which can then be sold at appropriate times.
They should also ensure that the farmers’ staying power is improved,
and that they are not forced to sell of their produce immediately after
the harvests. Some farmers or farmers’ organisations should also have
a place in the Niti Aayog so as to provide information and inputs so
aid the construction of new policies or laws affecting the agricultural
sector before they are enacted.
I have thus learned from this project about how agricultural marketing
functions in our country, and how our agricultural sector operates. I
have also learned about how these recent agricultural bills will affect
India’s agricultural sector, the pros and cons of the bills, and the
various responses to the bills and various perspectives.

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 Acknowledgement:

Firstly, I would like to thank my mother for supporting me and

helping me throughout the entirety of this project.
Secondly, I would like to thank my classmates and fellow economics
students for supporting me as well.
Lastly and most importantly, I would like to thank our economics
subject teacher, Ma’am A. Sengupta, for suggesting this particular
topic to us and guiding us students always.

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 Bibliography
1. Frank ISC Economics- D.K. Sethi and U. Andrews; Macmillan
Publishers, 2020.

2. Farm laws 2020: Who are they meant to serve?

https://www.downtoearth.org.in/blog/agriculture/farm-laws-
2020-who-are-they-meant-to-serve--74540

3. Explained: Concerns of protesting farmers, and what the Centre

can negotiate
https://indianexpress.com/article/explained/farmers-big-
concern-and-what-govt-could-negotiate-7073291/

4. Parliament passes the Farmers’ Produce Trade and Commerce

(Promotion and Facilitation) Bill, 2020, and The Farmers
(Empowerment and Protection) Agreement of Price Assurance
and Farm Services Bill, 2020
https://pib.gov.in/PressReleasePage.aspx?PRID=1656929

5. The Farm Bill 2020: 5 things you must know

https://www.indiainfoline.com/article/general-blog/farm-bill-
2020-5-things-you-must-know-120092300301_1.html

6. The Hindu explains | Who gains and who loses from the Farm
Bills?
https://www.thehindu.com/news/national/the-hindu-explains-
who-gains-and-who-loses-from-the-farm-
bills/article32705820.ece

7. What is the Farm Bill 2020: Pros and Cons of the three farm
bills the Centre introduced:
https://timesofindia.indiatimes.com/india/what-is-farm-bill-
2020-pros-cons-of-three-farm-bills-centre-
introduced/articleshow/78180231.cms

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