India's Farm Bills: Open Market or Oppression
The past few years have witnessed a litany of contentious legislations introduced by the BJP government that not only struck discord in the Parliament but also made the aggrieved citizenry take to the streets. Lately, the three farm bills passed by the Parliament in its Monsoon Session have caused widespread disagreement, both, inside and outside the Parliament. In this article, we discuss the contents of the three bills, the urgency behind enacting them and subsequently analyse their controversial loopholes and unnoticed and unaddressed merits through two contrasting approaches of interpretation, the Idealistic and the Realistic Approach respectively.
The Three Bills and the Need to Enact Them
The Parliament has passed three bills namely The Farmers Produce Trade and Commerce (Promotion and Facilitation) Bill, 2020; The Farmers (Empowerment and Protection) Agreement on Price Assurance and Farm Services Bill, 2020; and The Essential Commodities (Amendment) Bill, 2020. The three bills collectively aim to incentivise inter-state and intra-state transactions for the farmers, ensure a particular quantity of produce for both, buyers and sellers and subsequently give certain powers to the Central Government to regulate the overall supply of certain food items under extraordinary circumstances (war, flood, etc.)
The Farmers Produce Trade and Commerce (Promotion and Facilitation) Bill, 2020 is the most controversial bill as it enables farmers to trade outside the territories of the Mandis regulated by the APMC Act.  It also provides for electronic trading in the specified area and subsequently makes a provision for corporate firms and registered societies (having PAN number) to trade with the farmers. Moreover, it also proscribes the levy of any market fee or fees in such trade that is undertaken outside the ambit of the APMC. Section 14 of the Bill gives an overriding effect to the provisions of the Bill over any State APMC Act or any other law for the time being in force or in any instrument having effect by virtue of any law for the time being in force. Additionally, it vests the Central Government with the power to frame and regulate the rules for carrying out the provisions.
The Farmers (Empowerment and Protection) Agreement on Price Assurance and Farm Services Bill, 2020 aims to provide for contract farming where the farmers can sign an agreement with a contractor prior to the rearing of the produce. It also provides for a guaranteed price to be given to farmers when the market prices are subjected to fluctuations. The conciliation and dispute resolution mechanism that can be resorted to in case of any conflict between the farmers and contractors is also accommodated under this Bill. However, Civil Courts have been barred from jurisdiction, and all disputes must be resolved under the dispute resolution mechanism ascertained under the provisions.
The Essential Commodities (Amendment) Bill, 2020 aims to constrain the restrictions on which the Government can impose stock limits on agricultural produce. It commissions price rise to be the sole determining factor of any stock limit that is to be imposed on the agricultural produce. It also authorises the Central Government to regulate the supply of certain food materials on account of extraordinary circumstances.
Before analysing the literature of the three bills, it is imperative to understand the need and legislative intent behind the introduction of the same. The Agricultural Produce Market Committee (APMC) was established by the government in 2003 to ensure that farmers are safeguarded from any form of exploitation from the large and oppressive retailers. The government regulated APMC was, thus, authorised to conduct auctioning and scanning of products and conclusively ascertain the prices of the produce that would further be quoted to the customers. Moreover, it would also provide the farmers with a Minimum Support Price (MSP) irrespective of whether the produce has had a consumer sale or not.
However, with time, there started to appear some evident loopholes in the APMC mechanism that were tainting the legislative intent with which it was enacted. The rise of middlemen under the APMC soon led to the creation of the agricultural mafia and the APMC became a hotbed of corruption, politics and monopoly of traders and middlemen. There was an unrivalled and unsurmountable monopoly formed under the APMC, and the traditional intermediaries (Arhatiyas) had become extremely rent-seeking. The APMC traders were also notorious for setting high prices, unnecessary hoarding, cartelisation, bid ridding, causing unnecessary inflation, and thereby, grossly and maliciously misleading the farmers. To add to the bargain, a substantial number of farmers have, till today, found it difficult to access the government and APMC facilities due to lack of awareness, long distances and high transportation costs. So much so that most farmers still are unaware of the concept of MSPs.
With a view to counter the above-mentioned defects of the APMC system, the government felt that there was an imperative need to revamp the agricultural trading and transaction regime to make it more transparent, easily accessible, and subsequently, establish a system that is designed for both, increased efficiency and broader marketing. Accordingly, the government introduced the three bills that aim to fill the gaps created by the APMC system.
The Realistic View
Even though the three Acts are introduced with the intent to make up for the shortcomings of the existing APMC model and redress the agricultural trading mechanism, the numerous drawbacks of the new mechanism to be adopted under the three bills have raised serious doubts on their implementation on the broader spectrum. While the Idealistic view perceives the outcome of the enactment as favourable, the Realistic view opines that the advantages are short-termed.
The APMC model forms the most controversial bone of contention. As discussed above, The Farmers Produce Trade and Commerce (Promotion and Facilitation) Bill, 2020 will incentivise the trading of the produce beyond the pale, long-standing Mandis under the APMC model. This specifically means that farmers will have an additional marketing channel to sell their products if they get a higher price for it. However, the Mandi system under the APMC and the Mandi system, in general, is flourishing since years, especially in the states of Punjab and Haryana, that form the epicentre of the ongoing protests. The passing of the bills gives the green light to private corporates who can quote such prices that will, tentatively, attract the awe of the farmers who would shift to trading with the private corporates. This would subsequently lead to a slow yet tragic collapse of the Mandis. Tellingly, in the long run, after the APMC subsumes, the private corporates will create a monopoly and cause widespread exploitation by quoting prices according to their whims and fancies. The farmers also contend that the Bills pay nothing but mere lip service to the MSPs. The Bills would give a free pass to private companies to regulate the MSP and operate solely on the premise of profit maximisation. To add salt to the wound, the government and the Courts will now have little or no jurisdiction to keep a check and grip the mercenary acts of the private companies and individuals. Ironically, the three Bills which were concocted with the ulterior motive to pull the farmers away from the exploitation of the APMC system will be the same bills that push the farmers back into the pit of exploitation of the private corporates.
Another cause of concern is the lack of trust which the farmers have on their new traders. Under the current APMC model, every trader or Arhatiya has to obtain a license to trade in a Mandi. However, according to Section 2(n) of the Farmers Produce Trade and Commerce (Promotion and Facilitation) Bill, 2020, any person with a PAN Card can trade with the farmers. Evidently, with nothing more than just a PAN Card as a source of identity, the new traders will lack authenticity and credibility. The same is lamented by the farmers who fear getting defrauded at the hands of the private corporates and individual traders.
Moreover, the traders and Arhatiyas are wearied about Section 6 of The Farmers Produce Trade and Commerce (Promotion and Facilitation) Bill, 2020 that waives off any market fee, cess or levy for trade or commerce that is done on any platform in a trade area. Even though this brings the middlemen in direct competition with the private companies, it makes it too strenuous for them to compete with the might and muscle of private corporates.
Another spoke in the wheel of the smooth implementation of the Farm Bills is the scepticism towards the legal dispute system prescribed under Section 8 of the bill. Farmers contend that they face a disadvantage on the legal front too. First and foremost, it is an indisputable fact that legal proceedings are extremely expensive and time-consuming. Not only will the arbitration proceedings financially drain the farmers but will also have a detrimental effect on their overall produce, as a substantial amount of money, time and effort will be consumed in transportation and regular proceedings. Even if the farmers muster the courage and resources to resort to arbitration, it is implausible for them to stand against the manipulative and corrupt private giants. The Farmers (Empowerment and Protection) Agreement on Price Assurance and Farm Services Bill, 2020 creates a framework for contract farming between the buyers and sellers prior to the rearing of the farm produce. Even though modern farmers are far more educated and vigilant than they were a decade ago, expecting them to understand and acknowledge the subtle intricacies and nuances of the technically and shrewdly written contracts would still be a far cry. Unequivocally, the fear of an unfavourable legal battle, along with the financial and mental drain alone, is enough to discourage the farmers from resorting to legal dispute resolution.
The legal experts have also expressed their discontent as they conceive that the Central Government has little or no power to frame or regulate laws concerning the agricultural sector. The Constitution gives exclusive power to the State Legislatures to frame or amend laws for the agricultural sector, and in no capacity, does it empower the Central Government to interfere. Even the Concurrent List, on which the Centre has decisive superiority, includes all contracts, including partnership, agency, contracts of carriage, and other special forms of contracts, except those relating to agricultural land. Thus, the interference of the Centre with respect to matters of agriculture, which is solely a State subject, is erroneous and ultra vires.
The Idealistic View
The Idealistic view compounds a rather opposite yet pragmatic interpretation of the three Acts. Notwithstanding the conspicuous loopholes of the Acts (as elucidated in the Realistic view), the faint possibility of them serving the legislative intent and flourishing cannot be disregarded. First and foremost, they liberate the farmers from the unyielding clutches of the APMC model. Consequently, this gives the farmers an incentive to exercise their freedom of choice, interact and trade with the private players (big and small) outside the territorial boundaries of the APMC. This would also open new avenues for price discovery and bargaining for them.
Moreover, a perusal of the provisions of the three Bills would bring to light the fact that the notion that the MSP is recommended to be choked off is nothing but a mere misinterpretation. The literature of the three Bills does not suggest the complete riddance of the MSP. Technically, the bills place the APMC on the same stature as its other counterparts, thereby incentivising competition. The possibility of the APMC flourishing under the new bills by taking advantage of an already well-established customer base may be far-fetched but should not be disregarded. The threat of wounding up only exists for those middlemen who have, for so long, deceived the farmers due to their lack of awareness with respect to price discovery.
The muscle of resistance shown by the Realists, especially the Opposition, is tussling a similar feat of the Idealists who are advocating the merits of the Bills. However, the dubious, controversial and unaddressed provisions of the Bills, accompanied by their ramming through the Parliament has taken a toll on the BJP, despite having a philanthropic intent behind introduction of the Bills. It has lost its long-standing ally, Shiromani Akali Dal, which is aligned to the Realistic View and forms the fulcrum of the parties opposing the Bills. The passing of the Bills in the Rajya Sabha caused havoc and lead to most of the Rajya Sabha leaders taking a walk from the Sabha and protesting. On the contrary, the Prime Minister, who is a preacher of the Idealistic interpretation, came on record and said that contentions against the bill are misleading and smooth implementation of the Bills will, in all probability, be beneficial for the farmers. However, the putative benefits can, in no capacity, override the underlying and unaddressed defects of the bill. With the concerns of the Realistic dissenters conflicting with the Idealistic supporters, it is difficult to envisage how the events will unfold once the Acts are put to process. Either they will prove to be a shot in the arm to the agricultural sector by helping farmers in decreasing their debt and doubling their income, or it will dissipate the agricultural industry to one similar to that of the colonial era, dilapidated and enslaved.
1. The Farmers Produce Trade and Commerce (Promotion and Facilitation) Bill, 2020 -https://www.prsindia.org/sites/default/files/bill_files/Farmers%27%20Produce%20Trade%20and%20Commerce%20bill%2C%202020.pdf
2. The Essential Commodities (Amendment) Bill, 2020.- https://www.prsindia.org/sites/default/files/bill_files/ECA.pdf
3. The Farmers (Empowerment and Protection) Agreement on Price Assurance and Farm Services Bill, 2020- https://www.prsindia.org/sites/default/files/bill_files/Farmers%20%28Empowerment%20and%20protection%29%20bill%2C%202020.pdf
4. Report of the Standing Committee on Agriculture (2019-2020) of the Seventeenth Lok Sabha- Read Page 9- http://220.127.116.11/lsscommittee/Agriculture/17_Agriculture_8.pdf
5. Seventh Schedule, Article 246 of the Indian Constitution- Refer to- Entries 82, 86, 87, 88 of the Union List; Entries 14, 18, 30, 46, 47, 48 of the State List and; Entries 6, 7, 41 of the Concurrent List- https://www.mea.gov.in/Images/pdf1/S7.pdf
Views expressed are solely those of the author.
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About the Author
Saahas Arora is currently reading law at the ILS Law College, Pune. He has been enthusiastic about writing and debating which he pursued with a Debating and Public Speaking course from the University of Oxford in 2016. As a budding lawyer, he takes a keen interest in Constitutional Law, Criminal Law, and women’s rights. Gathering experiences from working under the Indian National Bar Association, LexLife, and the Central Law Agency, he likes analysing and decoding government policies and diplomatic affairs and has been dissecting several socio-legal issues through his writing. At leisure, you would find him indulging in reading, food, and FIFA.