Everything you need to know about the Farm Laws

Farm laws 2020

Farmers are leaving their villages and soil for better opportunities in the cities for themselves and their children, but this shouldn’t be happening. They should stay in their villages for a better future for their children, agriculture is the foundation of the Indian economy, and we need to incentivize farmers through farmland REIT.

On September 24, the president of India gave his assent to three homestead bills:

  1. The Farmer’s Produce Exchange and Trade (Advancement and Help) Bill, 2020 (FPTC)
  2. The Farmer’s (Strengthening and Security) Understanding of Value Confirmation and Homestead Administrations Bill, 2020 (FAPAFS), and
  3. The Basic Items (Correction) Bill, 2020.

Principal opposition is coming from INC and the organizations backed by it. However, these reforms were also mentioned in the INC’s 2019 election manifesto. The farmers used to barely get anything in exchange for their products since it was a monopoly buyer situation. Simultaneously, the consumer faced high prices for essential items.

The only people who made money and benefitted from this were the middlemen, controlled and backed by politicians. 

The following is a brief overview of the three bills and what they entail.

The Farmer’s Produce Exchange and Commerce(Promotion and Help) Bill, 2020:

Through this, farmers can go into ‘contract concurrences’ with anybody, including an organization, and sell their products for a set timeframe per the agreement. Organizations would now be able to have contracts with farmers for purchasing produce. Farmers, however, can withdraw anytime, even after signing the contract, without penalties if no advance is taken. No interest shall be charged even when taken, and the farmers can return the advance and then withdraw. Sale, mortgage, or lease of farmers’ land is strictly prohibited.

The contract shall be for specified products for a limited time per the Farmer’s choice. They can already set the cost for the product,  norms, characteristics, and legalities. Therefore, higher options to sell or buy, and there will be no intermediaries, so; the farmers will get a better bargain. The competition among buyers will also increase, enhancing farmers’ income.

The Farmer’s (Strengthening and Security) Understanding of Value Confirmation and Homestead Administrations Bill, 2020:

State governments can set up APMC (Horticulture Produce Market Advisory group), thus setting up business sectors or ‘mandis’ – in a few spots in the state. Here, farmers bring their produce, and discount and retail merchants come to purchase the product through sales. The APMCs nationwide guarantee that farmers get a reasonable cost for their products and aren’t compelled to make a miserable deal.

The APMCs direct the purchasers and commission operators by giving them licenses, imposing business sector expenses, and managing any such charges. Presently, the new Commercial center law says that farmers can sell their produce anyplace – and not merely in the APMC-endorsed commercial center. Moreover, they can trade between states, intra-state or even on the web.

The Essential Commodities (Change) Bill, 2020:

The Fundamental Items Act was first acquired quite a while back – in 1955. The demonstration fundamentally controls the creation, storage, and dispersion of specific necessary items. So, if a thing goes under this demonstration – for example, a food thing or an effective medication – at that point, organizations and general stores can’t accumulate these things when there is a deficiency. They can’t misleadingly expand the cost. Private investment in the agricultural sector and supply chains will speed up. Better storage facilities and infrastructure will be provided.

So what has changed in the Farm Bills?

Under the current APMC Acts, all Agri produce was obtained through mandis to which farmers moved their produce. At first, intended to ensure farmers, these mandis changed into neighborhood syndications. Direct value revelation through sales was supplanted by plot and value fixing. In this way, the instruments intended to secure farmers seriously hurt them. Lease looking for conduct as standard. Commission specialists (arathiyas) and go-betweens had a significant impact by being the two purchasers of products and casual credit suppliers.

Raising the minimum support price was not an option. MSP has always been an administrative mechanism. The newer legislations give the flexibility to increase it when needed. MSP will anyway be ensured in private transactions as private trades will be above the rate of MSP.  Farmers will only make private transactions when they get better value for their products outside.

Specialists have called attention to the fact that a solitary 6% of all farmers profited by open obtainment at MSP. In any case, this has driven others to infer that 94% of the farmers must sell their produce in the free market. Despite what might be expected, these great farmers certainly didn’t have that advantage.

Creating the infrastructure for assortment near the homestead door made little exertion. Nor were there enough motivators for ventures over the cold chain and the food preparing industry, as strategy effectively debilitated collection of produce and bartering intensity of farmers. The outcome is that we recycle under 10% of our food creation and lose roughly Rs 90,000 crore yearly because of wastage of produce, inferable from a divided cold chain.

The prime minister announced Aatmanirbhar Bharat Abhiyan on May 12, 2020, for the country. The plan focuses on promoting Indian local products and making India a self-reliant nation. The scheme shall ensure a financial boost to the farmers. The other beneficiaries will include startups, Self-help groups (SHGs), farmers produce organizations (FPOs), multipurpose cooperative societies, agriculture entrepreneurs, etc.

Indian Agrarian Economy

Agriculture in India accounts for only 16% of the GDP. It employs about 59% of India’s total workforce, but almost a third of the national agricultural product gets lost from spoilage. A sector that provides employment opportunities for more than half of its population was devoid of any private investment for seventy years. India ranks first in the number of organic farmers; our major organic exports include medicinal plants, sesame, flax seeds, tea, soybean, rice, and pulses. Indian processed foods and horticultural, agricultural products are exported to more than a hundred countries, ranking second in the production of vegetables, fruits, sugarcane, groundnuts, and cotton.

Aiming towards One nation- One market and making the farming sector self-reliant, the organic e-commerce platforms like www.jaivikkheti.in and ENAM are directly linking farmers with bulk and retail buyers, without any intermediaries, which reduce transaction costs. Farmer produce organizations will be connecting markets and ensure that the primary producers can benefit economies of scale.

Farmers will have the option to go into contract farming with food processors to develop processable assortments and sell them at guaranteed costs. They will not be confined to one location to sell their products and can go into concurrences with farm specialist co-ops. This will give the ‘Cultivating as a Help’ (FaaS) an immense boost.

A few new agri-tech businesses work in this space, using computer-based intelligence techniques to give crop knowledge just as evaluation and examine produce. Empowering mechanical mediations in Indian farming can change this segment; in light of the trustworthy establishments, these changes empower.

The three farm bills are indeed a game-changer for the agricultural sector.

About the Author: Ishita Jha is a second-year media and communications student at MIC, Manipal. She wants to pursue journalism as a career.


  1. Farmers need guarantee for MSP.unless it’ll happen like in European countries where private corporates dominates the market and decide price for their crops.There were large protests against these in last years.

  2. Hi, Lovepreet. Thank you for going through the article. I’d like to answer your question now.
    As it’s mentioned in the article that MSP has always been an administrative mechanism and never legislative in our country. There’s a separate organization called Commission for Agricultural Costs and Prices (CACP) which recommends the govt of India for setting MSP for certain crops at the beginning of the sowing season. MSP isn’t a static thing, it’s dynamic. In case if the functioning of msp isn’t clear from the article, the following factors affect the determination of MSP –
    Cost of production
    Changes in input prices
    Input-output price parity
    Trends in market prices
    Demand and supply
    Inter-crop price parity
    Effect on industrial cost structure
    Effect on the cost of living
    Effect on the general price level
    International price situation
    Parity between prices paid and prices received by the farmers.
    Effect on issue prices and implications for subsidy
    Fixing msp based on the cost of production leads to the total neglect of people’s preference for commodities. Farmers do not bother if growing a particular thing is unsuitable for the land. It leads to serious imbalances in what is being demanded and what is being supplied. Msp however should be derived on a supply and demand basis. If the demand for any commodity falls, and if the msp is kept high, then it will lead to excess supplies and an increase in govt stock which will end up being wasted.

Leave a Reply

Your email address will not be published.


This site uses Akismet to reduce spam. Learn how your comment data is processed.