Farmers Produce Trade And Commercial Bill 2020 Best In Farmers Interest

Farmers Produce Trade And Commercial Bill 2020 Best In Farmers Interest


Farmers Produce Trade And Commercial Bill 2020 Best In Farmers Interest

The central government had promulgated three Ordinances on June 5, 2020: (i) the Farmers’ Produce Trade and Commerce (Promotion and Facilitation) Ordinance, 2020, (ii) the Farmers (Empowerment and Protection) Agreement on Price Assurance and Farm Services Ordinance, 2020, and (iii) the Essential Commodities (Amendment) Ordinance, 2020. The Ordinances collectively seek to (i) facilitate barrier-free trade of farmers’ produce outside the markets notified under the various state APMC laws, (ii) define a framework for contract farming, and (iii) impose stock limits on agricultural produce only if there is a sharp increase in retail prices. The three Ordinances together aim to increase opportunities for farmers to enter long term sale contracts, increase availability of buyers, and permits buyers to purchase farm produce in bulk.


Highlights of the Ordinance

  • The Farmers’ Produce Trade and Commerce (Promotion and Facilitation) Ordinance, 2020 allows intra-state and inter-state trade of farmers’ produce beyond the physical premises of APMC markets. State governments are prohibited from levying any market fee, cess or levy outside APMC areas.
  • The Farmers Agreement Ordinance creates a framework for contract farming through an agreement between a farmer and a buyer prior to the production or rearing of any farm produce. It provides for a three-level dispute settlement mechanism: the conciliation board, Sub-Divisional Magistrate and Appellate Authority.
  • The Essential Commodities (Amendment) Ordinance, 2020 allows the central government to regulate the supply of certain food items only under extraordinary circumstances (such as war and famine). Stock limits may be imposed on agricultural produce only if there is a steep price rise.

Key Issues and Analysis

  • The three Ordinances aim to increase the availability of buyers for farmers’ produce, by allowing them to trade freely without any license or stock limit, so that an increase in competition among them results in better prices for farmers. While the Ordinances aim to liberalise trade and increase the number of buyers, de-regulation alone may not be sufficient to attract more buyers.
  • The Standing Committee on Agriculture (2018-19) noted that availability of a transparent, easily accessible, and efficient marketing platform is a pre-requisite to ensure remunerative prices for farmers. Most farmers lack access to government procurement facilities and APMC markets. It noted that small rural markets can emerge as a viable alternative for agricultural marketing if they are provided with adequate infrastructure facilities.
  • The Standing Committee also recommended that the Gramin Agricultural Markets scheme (which aims to improve infrastructure and civic facilities in 22,000 Gramin Haats across the country) should be made a fully funded central scheme and scaled to ensure presence of a Haat in each panchayat of the country.




Govt has now introduced 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. These bills seek to replace ordinances issued earlier in June.


Once again the Opposition has problems and this time even the BJP’ s ally and Government partner What is opposition’s and SAD has opposed it. Its lone minister has even resigned in protest. Why ? Because vested anti farmer middlemen with lots of political clout have been hit hard.


The bills PROHIBITS the State Governments from collecting the market fee, cess or levy for trade outside notified APMC mandis, removes inter-state trade barriers, and provides framework for electronic trading directly between a buyer and a farmer. In simple words, it breaks state’s control over farmers, enabling them to choose who they want to sell to. And dries up state’s money laundering practices, off of APMC mandis. No wonder they’re fuming.


The bills allow farmers to get into contract with private corporates at a mutually agreed price. The concern was that this would do away with minimum selling price or MSP, leading to exploitation of farmers. Govt has confirmed, that is not true, and MSP will continue. So the “mutually agreed price” will always be greater or equal to MSP. Problem solved. But would the opposition or SAD tell that to the farmers? Nope.


The bills remove cereals, pulses, oilseeds, edible oils, onion and potatoes from the list of essential commodities and provides for deregulation of production, storage, movement and distribution of these food commodities. The concern is that this move undermines food security. Is it true? Nope. Govts still hold power to regularize in case of famine, shortages, wars etc. Meaning, when actually needed, they will regularize. In normal times, they won’t. So now, the hoarders are in a big problem. They cannot dictate terms anymore. Hence, protest.


In a nutshell, govt is trying to open up the agriculture market, ensuring minimum price and food security. Opposition, hoarders, and middlemen are protesting, because they will no longer be able to control things, nor siphon out money.


Some farmer organisations are also protesting, because they are being misled on the MSP. Our job must be to pass the right info to tlhem, get them out of the protest chain. And then let the opposition do whatever they want to.


This Bill replaces the Farmers (Empowerment and Protection) Agreement of Price Assurance and Farm Services Ordinance, 2020. Therefore please refer to our legislative brief on the Agriculture Ordinances, 2020.