Farm Laws 2020 Explained: Everything you need to know about the new agriculture reforms in India

The 10th round of talks was scheduled on 19 January 2021 which is postponed by a day to 20 January 2021 after nine round of talks remained inconclusive. The SC has stayed the implementation of the three Farm Acts 2020 and has constituted a four-member committee to make recommendations on the same within two months.
Created On: Jan 19, 2021 14:52 IST
Modified On: Jan 19, 2021 15:00 IST
Farm Laws 2020
Farm Laws 2020

In September 2020, President Ram Nath Kovind gave his assent to the three 'Agriculture Bills' that were earlier passed by the Indian Parliament. These Farm Acts are as follows:

1- Farmers' Produce Trade and Commerce (Promotion and Facilitation) Act, 2020

2- Farmers (Empowerment and Protection) Agreement on Price Assurance and Farm Services Act, 2020

3- Essential Commodities (Amendment) Act, 2020

GK Quiz on Farm Laws 2020

Farmers (Empowerment and Protection) Agreement on Price Assurance and Farm Services Act, 2020

Citation: Act No. 20 of 2020

Territorial extent: India

Lok Sabha: The Bill was introduced in Lok Sabha on 14 September 2020, passed in Lok Sabha on 17 September 2020. 

Rajya Sabha: It was passed in Rajya Sabha on 20 September 2020. 

Presidential Assent: The Bill received Presidential Assent on 24 September 2020. 

Introduced by: Minister of Agriculture and Farmers Welfare, Narendra Singh Tomar

1- Background: On 5 June 2020, The Farmers (Empowerment and Protection) Agreement on Price Assurance and Farm Services Ordinance, 2020 was promulgated by the Union Cabinet. 

2- Act: It creates a national framework for contract farming through an agreement between a farmer and a buyer before the production or rearing of any farm produces.

3- Provisions:

(a) Farming Agreement: The Act provides for a farming agreement between a farmer and a buyer prior to the production or rearing of any farm produce.

(b) Minimum Period of Farming Agreement: The minimum period of the farming agreement shall be for one crop season or one production cycle of livestock.

(c) Maximum Period of Farming Agreement: The maximum period of the farming agreement shall be five years. It also states that if the production cycle of any farming produce is longer and may go beyond five years, the maximum period of farming agreement may be mutually decided by the farmer and the buyer and explicitly mentioned in the farming agreement.

(d) Pricing of Farming Produce: The pricing of farming produce and the process of price determination should be mentioned in the agreement. For prices subjected to variation, a guaranteed price for the produce and a clear reference for any additional amount above the guaranteed price must be specified in the agreement. 

(e) Settlement of Dispute: The Act provides for a three-level dispute settlement mechanism-- Conciliation Board, Sub-Divisional Magistrate and Appellate Authority.

Farmers' Produce Trade and Commerce (Promotion and Facilitation) Act, 2020

Citation: Act No. 21 of 2020

Territorial extent: India

Lok Sabha: The Bill was introduced in Lok Sabha on 14 September 2020, passed in Lok Sabha on 17 September 2020. 

Rajya Sabha: It was passed in Rajya Sabha on 20 September 2020. 

Presidential Assent: The Bill received Presidential Assent on 24 September 2020. 

Introduced by: Minister of Agriculture and Farmers Welfare, Narendra Singh Tomar

1- Background: On 5 June 2020, the Farmers' Produce Trade and Commerce (Promotion and Facilitation) Ordinance, 2020 was promulgated by the Union Cabinet. 

2- Act: It permits intra and inter-state trade of farmers’ produce beyond the physical premises of Agricultural Produce Market Committee (APMC) markets and other markets notified under the state APMC Acts. 

3- Provisions: 

(a) Trade of Farmers' Produce: The Act allows the farmers to trade in outside trade area such as farm gates, factory premises, cold storages, and so on. Previously, it could only be done in the APMC yards or Mandis. 

(b) Alternative Trading Channels: It facilitates lucrative prices for the farmers via alternative trading channels to promote barrier-free intra-state and inter-state trade of agriculture produce. 

(c) Electronic Trading: Additionally, it allows the electronic trading of scheduled farmers’ produce (agricultural produce regulated under any state APMC Act) in the specified trade area. It will also facilitate direct and online buying and selling of the agricultural produce via electronic devices and the internet.

(d) Market Fee Abolished: As per the Act, the State Governments are prohibited from levying any market fee or cess on farmers, traders and electronic trading platforms for trading farmers’ produce in an 'outside trade area'.

Agricultural Produce Market Committee (APMC): All you need to know

Essential Commodities (Amendment) Act, 2020

Citation: Act No. 10 of 1995

Territorial extent: India

Status: Amended

Lok Sabha: The Bill was introduced in Lok Sabha on 14 September 2020, passed in Lok Sabha on 15 September 2020. 

Rajya Sabha: It was passed in Rajya Sabha on 22 September 2020. 

Presidential Assent: The amendment received Presidential Assent on 26 September 2020. 

1- Background: On 5 June 2020, the  Essential Commodities (Amendment) Ordinance, 2020 was promulgated by the Union Cabinet. 

2- Act: It is an act of Indian Parliament which was enacted in 1955 to ensure the delivery of certain commodities or products, the supply of which if obstructed owing to hoarding or black-marketing would affect the normal life of the people. This includes foodstuff, drugs, fuel (petroleum products) etc.

3- Powers of Central Government:

(a) The Government of India regulates the production, supply, and distribution of a whole host of commodities it declares ‘essential’ in order to make them available to consumers at fair prices. 

(b) The Government can also fix the MRP of any packaged product that it declares an 'essential commodity'. 

(c) The Centre can add commodities in this list when the need arises and can take them off the list once the situation improves. 

(d) If a certain commodity is in short supply and its price is spiking, the Government can notify stock-holding limits on it for a specified period.

4- Powers of State Government: The respective State Governments can choose not to impose any restrictions as notified by the Centre. However, if the restrictions are imposed, traders have to immediately sell any stocks held beyond the mandated quantity into the market. This is done to improve supplies and brings down prices. 

5- Amendment: With the amendment in the Act, the Government of India will list certain commodities as essential to regulate their supply and prices only in cases of war, famine, extraordinary price rises, or natural calamities. The commodities that have been deregulated are food items, including cereals, pulses, potato, onion, edible oilseeds, and oils.

6- Stock Limit: As per the amendment, the imposition of any stock limit on agricultural produce will be based on price rise and can only be imposed if there's-- a 100% increase in the retail price of horticultural produce and 50% increase in the retail price of non-perishable agricultural food items. 

7- Calculation: The increase will be calculated over the price prevailing immediately preceding twelve months, or the average retail price of the last five years, whichever is lower.

It is to be noted that these restrictions will not be applied to stocks of food held for public distribution in India.

Why are Indian farmers protesting?

Indian farmers are fearing that they might lose more than they could gain after the new Farms Laws 2020 thereby taking the protest to the streets. 

As quoted by ANI, Bhartiya Kisan Union leader Rakesh Tikait stated, " They (Central Government) want amendment in them (Farm Laws 2020) but we want these laws to be repealed. We don’t want changes. We will end our protest only when these laws are withdrawn. Like the government brought the three bills, they should also bring a bill on the MSP."

ANI further quoted BKU leader Rakesh Tikait stating that they are ready to have future talks on Farm Laws 2020 with the Government. 

What is 'Pagri Sambhal Jatta Movement' and how it is related to the ongoing farmers' protest?

As reported by AlJazeera, 27-year-old Rashpinder Singh stated that the Indian Government has left the farmers at the mercy of big corporations. It is preposterous to believe that farmers who have small landholdings will have any bargaining power over private players.

As Farmers' agitation against three contentious Farm Laws entered day 34 (on 29 December 2020), the Farmer's Union on 29 December 2020 has accepted Centre's proposal to hold sixth round of talks. 

After agitating farmers accepted Centre's proposal to hold sixth round of talks, Centre sent an invitation for talks on 30 December 2020 to 40 farmer representatives which have been accepted by the farmers. 

As per a letter by Union Agriculture Secretary Sanjay Agarwal, all the issues related to farmers, including the three farm laws, MSP-based procurement, the Commission for the Air Quality Management in National Capital Region and Adjoining Areas Ordinance, 2020, and the Electricity Amendment Bill 2020 will be discussed in detail with the 40 representatives of farm unions. 

The talks scheduled on 30 December 2020 at 2 p.m. between the Centre and 40 farmer representatives took place at Vigyan Bhawan, New Delhi. 

The sixth rounds of talks between the Central Government and the farmer unions reached to conclusions on the issues related to the environment and Electricity Acts, however, their demand of repealing the three Farm Laws 2020 and legal guarantee for MSP (Minimum Support Price) remained inconclusive. The seventh round of talks between the Centre and the farmers took place on 4 January 2021 at Vigyan Bhawan and failed to reach a breakthrough. 

As reported by ANI, Sukhwinder S Sabra, Joint Secy, Kisan Mazdoor Sangharsh Committee stated that if their demands aren't met on 4 January 2021, then, they'll hold tractor march on January 6 and 26, 2021. 

Speaking from the protest site in favour of tractor march, Yogendra Yadav stated, We have decided that on January 7, we will take out a tractor march at four borders of Delhi including Eastern and Western peripheral. This will be a trailer for what lies ahead on January 26.”

As per farmers' leaders, around 3,000 tractors participated in the tractor march held on 7 January 2021 on Kundli-Manesar-Palwal or Western Peripheral expressway and at least 500 on the Kundli-Ghaziabad-Palwal or Eastern Peripheral expressway. It is important to note that the two expressways (Eastern and Western Peripheral Expressway) form a ring around the National Capital Delhi. 

The eighth round of talks between the Centre and the farmers took place on 8 January 2021 at 2 p.m. at Vigyan Bhawan. Union Minister for Agriculture Narendra Singh Tomar, Union Minister for Railways, Commerce and Industry and Consumer Affairs, Food and Public Distribution Piyush Goyal and Union Minister of State for Commerce and Industry Som Prakash participated with the representatives of 41 Farmers’ Unions. 

Union Minister for Agriculture Narendra Singh Tomar stated that the Farm Laws 2020 have been made keeping in mind the benefits of farmers throughout the country. The government is concerned about farmers and wants the agitation to end but due to no solutions, forthcoming issues could not be resolved. He further praised the farmers for keeping the agitation disciplined.

The Farmers’ Unions have asked for a repeal of the Farm Laws 2020, however, the Central Government again suggested amendments. The ninth round of talks took place on 15 January 2021. 

The 10th round of talks was scheduled on 19 January 2021 which is postponed by a day to 20 January 2021. Ministry of Agriculture in a statement stated that the government's ministerial meeting with farmers unions will be held on 20 January 2021 at 2 pm at Vigyan Bhawan, instead of 19 January 2021. 

It is to be noted that 9 rounds of talks have taken place so far between the Government and the Farmers' representatives. However, no solution has been found to date. 

Tractor March on 26 January 2021

Speaking from the protest site in favour of tractor march, Yogendra Yadav stated that a tractor march will be carried out on 26 January 2021.

The Supreme Court stated that the proposed tractor rally on the Republic Day (26 January) by protesting farmers is a 'law and order' matter and Delhi Police will decide who should be allowed to enter Delhi.

Income Tax Raid on Arhtiyas 

The Income Tax raids were conducted at the premises of big Arhtiyas of Punjab within four days of issuing notices, without waiting for responses to the notices. Around 16 Arhtiyas have been served Income Tax notices. There are around 28,000 licensed commission agents in Punjab.

As per leaders of different unions, Arhtiyas are standing shoulder-to-shoulder with farmers in their ongoing protest against the Farm Laws 2020 and the raids were an attempt to divide the farmer and arhtiya unity to sabotage this movement.

Thus, Arhtiyas in the Indian State of Punjab have decided to shut down all the grain markets in the state from 22-25 December 2020 to express resentment over the Income Tax raids. 

Why the Indian farmers rejected the Central Government's proposal?

1- Central Government proposed that the respective State Governments can levy cess on the private mandis.

The proposal was rejected by the farmers as they believe that the creation of private mandis along with APMC will drive agriculture business towards private mandis, ending government markets, intermediary systems and APMCs. As a result, big corporate houses will overtake markets, thereby procuring farm produce at incidental rates. The farmers believe that the Government may delay the procurement (as in the case of paddy), turning the public markets inefficient and redundant.  

2- Central Government proposed that they will give written assurance for the continuation of the existing MSP system.

The proposal was rejected by the farmers as they believe that the new Farm Laws 2020 are brought to dismantle APMCs. Thus, they are demanding a comprehensive Act on MSP pan India and for all crops. They are of the view that a written assurance from the Union Government is not a legal document and holds no guarantee. 

3- Central Government proposed that they will direct the State Governments to register traders in order to regulate them. 

The proposal was rejected by the farmers as the new Farm Laws 2020 have no provision to regulate the traders. As per new Laws, any PAN cardholder can procure grains from the markets at wishful prices and hoard the farm produce. The farmers believe that the Central Government is not ready to take responsibility for the ongoing issue as they want the State Governments to regulate the traders. 

4- Central Government proposed that under the contract farming law, farmers will have the alternative to approach the court and their land will be safe as no loan will be given on farmers’ land and their buildings by mortgaging it.

The proposal was rejected by the farmers as the history of contract farming has many examples of non-payment by the companies making various excuses like substandard produce. For example, in Sugarcane produce, payments were held for years; many cases of non-procurement have been witnessed citing 'poor quality', driving the farmers into a debt trap. Thus, farmers do not have money to repay the loans and have no option to sell/lose their lands.

Government's take on the farmers' protest

On 20 September 2020, Prime Minister Modi referred the Farm Bills 2020 as a watershed moment in the history of Indian agriculture, empowering millions of farmers.

On 29 November 2020, PM Modi in his Mann Ki Baat radio address to the nation stated that all the political parties had been making promises to the farmers but now these promises had been fulfilled, citing an example of the Maharashtrian farmer whose payments for his corn crop was kept pending by traders for four months. 

He further stated that under new Farm Laws 2020, all the dues of the farmers must be cleared within three days of procurement, failing which, the farmer can lodge a complaint.

On 30 November 2020, Prime Minister Modi stated that the farmers are being deceived on these historic agriculture reform laws by the same people who have misled them for decades. He added that the old system was not replaced rather new options were added under the Farm Laws 2020 for the farmers. 

Prime Minister Modi stated, “The new agricultural laws have been brought in for benefit of the farmers. We will see and experience the benefits of these new laws in the coming days.” 

Union Minister of Agriculture and Farmer Welfare, Rural Development and Panchayat Raj, Narendra Singh Tomar stated that the government is committed to MSP, however, it was "not a part of the law" earlier and "is not" today.

Minister of Agriculture and Farmer Welfare, Rural Development and Panchayat Raj, Narendra Singh Tomar in a Press Conference stated, "The Government is ready to consider with an open mind any provision in the new laws where farmers have any issues and we want to clarify all their apprehensions."

The Supreme Court will hear a plea seeking immediate removal of farmers from Delhi borders on 11 January 2021 filed by law student Rishabh Sharma. A Bench of Chief Justice S A Bobde, Justice A S Bopanna and Justice V Ramasubramanian will hear the petition. 

The petition stated that the commuters are facing hardships due to blockades. Emergency and medical services have been severely impacted due to the farmers' agitation. The petition further stated that the farmers should be shifted to a fixed place allotted by the Government and claimed that farmers were allowed to protest peacefully at Nirankari ground in Burari but they refused to accept the offer and are still blocking the borders. 

On 11 January 2021, the Supreme Court stayed the implementation of the three Farm Acts 2020 and constituted a four-member committee to make recommendations on the same. A bench headed by Chief Justice of India S. A. Bobde gave the panel two months time to submit its report for a 'fair, equitable and just solution'.

Members of the Committee

1- Bhupinder Singh Mann, the national president of the Bhartiya Kisan Union and All India Kisan Coordination Committee. (disassociated himself from the SC formed panel).

2- Dr. Parmod Kumar Joshi, an agricultural economist who is also the Director for South Asia, International Food Policy Research Institute.

3- Ashok Gulati, agricultural economist and former chairman of the Commission for Agricultural Costs and Prices.

4- Anil Ghanwat, the chief of Shetkari Sanghatana.

On 19 January 2021, the farmers' unions have refused to attend the first meeting of the SC appointed committee to resolve the ongoing agitation over the contentious Farm Acts 2020, sticking to their demands of repealing the farm laws. 

Spokesperson of Bhartiya Kisan Union, Rakesh Tikait stated, "We don't know, we're not going (to the first meeting of SC-formed committee). Nobody from the agitation approached Court. The government brought the Bill through Ordinance, it was tabled in the House. It'll go back the same route it came from."

December 8 Bharat Bandh called by Farmers' Union

Ahead of 'Bharat Bandh', Delhi's Chief Minister Arwind Kejriwal is on his way to Singhu border. In addition to this, leaders of 11 parties including Congress president Sonia Gandhi, DMK chief M K Stalin, NCP patriarch Sharad Pawar, Samajwadi Party chief Akhilesh Yadav and Left Front’s Sitaram Yechury and D Raja stated that they will lend their 'whole-hearted' support to the December 8 Bharat Bandh called by Farmers' Union, The Times of India reported. 

A day after the scheduled Bharat Bandh called by Farmers' Union, Union Agriculture Minister, Narendra Singh Tomar has called a meeting on 9 December 2020 as the fifth round of talks remained inconclusive with farmers' leaders. 

Criticism

Farmers have called the new Farm Laws 2020 as 'corporate-friendly' and 'anti-farmer'.

(a) President of the Maharashtra Rajya Bazaar Samiti Sahakari Sangh, Dilip Mohite Patil claimed that around 100-125 market committees in Vidarbha and Marathwada regions have reported almost no business and are on the verge of closure after the announcement of the central Ordinance. 

(b) Food Processing Industries Minister, Harsimrat Kaur Badal of Shiromani Akali Dal resigned from her post in protest against these Bills.

(c) Former Chief Minister of Punjab, Prakash Singh Badal returned his Padma Vibhushan to protest 'the betrayal of farmers by the Government of India'. 

(d) Canadian Prime Minister Justin Trudeau stated, "Let me remind you, Canada will always be there to defend the rights of peaceful protesters. We believe in the process of dialogue. We’ve reached out through multiple means to the Indian authorities to highlight our concerns. This is a moment for all of us to pull together."

To this, the Indian Government reacted sharply stating that his remarks are “ill-informed” and “unwarranted”. 

The Ministry of External Affairs (MEA) official spokesperson stated, "We have seen some ill-informed comments by Canadian leaders relating to farmers in India. Such comments are unwarranted, especially when pertaining to the internal affairs of a democratic country. It is also best that diplomatic conversations are not misrepresented for political purposes."

(e) As reported by PTI, social activist Anna Hazare has threatened to go on a hunger strike if his demands on issues concerning farmers are not met by the Central Government by the end of January 2020. He further stated that it would be his 'last protest'. 

(f) Congress Communication Chief Randeep Surjewala while addressing a press conference attacked Prime Minister Modi over three Farm Acts 2020 and stated that if he can’t repeal the Fram Laws and has to depend on the Supreme Court to break the deadlock with farmers, he must resign from the post of Prime Minister. 

Congress Communication Chief, Randeep Surjewala stated, "This is the first government in the past 73 years history of the country that is grossly abdicating its responsibility and telling the farmers to approach the Supreme Court. These three controversial agriculture laws have not been enacted by the Supreme Court but have been forcibly passed by the Modi government in Parliament.”

He further added, “The Constitution has not given the responsibility of framing the laws to the Supreme Court but to the Parliament of India. If this government is incapacitated to discharge this responsibility, then the Modi government has no moral authority to remain in power even for a minute."

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FAQ

When farmers' union have called for Bharat Bandh?

Farmers' union have called for Bharat Bandh on 8 December 2020 against the three Farm Laws passed by the Indian Parliament.

How many farmers are protesting in India?

Around 2-3 lakh farmers are protesting in India as per an estimation by India Today on 30 November 2020.

Why are Indian farmers protesting?

Indian Farmers are fearing that they might lose more than they could gain after the new Farms Laws 2020 thereby taking the protest to the streets.

What is Farmer Ordinance Bill 2020?

The Farmers' Produce Trade and Commerce (Promotion and Facilitation) Bill, 2020, The Farmers (Empowerment and Protection) Agreement of Price Assurance and Farm Services Bill, 2020, and The Essential Commodities (Amendment) Bill, 2020 were collectively passed as a part of 2020 Farm Laws.

What is the new law for farmers?

President Ram Nath Kovind gave his assent to the three 'Agriculture Bills' that were earlier passed by the Indian Parliament. These Farm laws are as follows: 1- Farmers' Produce Trade and Commerce (Promotion and Facilitation) Act, 2020 2- Farmers (Empowerment and Protection) Agreement on Price Assurance and Farm Services Act, 2020 3- Essential Commodities (Amendment) Act, 2020