Analysis of Three Farm Bill

Last Updated at: Dec 21, 2020
Analysis of Three Farm Bill
The heads of all farmer unions protesting against the Centre’s new farm laws will observe a one-day hunger strike on 14th December 2020. The agitating farmers have also urged the Union government to convene a special session of Parliament to repeal the three farm laws.


The President recently signed off three bills about agriculture which were passed by the Indian Parliament during its monsoon session. The bills have been met with a huge uproar by the opposition and have led to protests by farmers’ organisations across the country. The effectiveness and constitutionality of the bills have been brought into question and Prathapan TN, a Congress MP from Kerala has already challenged them at the Supreme Court. Let’s get into the analysis of Three Farm Bill.

The three bills, now Act, namely, the Farmers’ Produce Trade and Commerce (Promotion and Facilitation) Bill, 2020, Farmers (Empowerment and Protection) Agreement of Price Assurance, Farm Services Bill, 2020, and the Essential Commodities (Amendment) Bill, 2020 are meant to attract private investors and transform the deplorable state of Indian agriculture. This article examines the three Acts and the major contentions surrounding them.

Key Highlights of the Three Farm Acts

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

  • Also known as the APMC Bypass Act, this Act, through Clause 14, has an overriding power over the inconsistent provisions of the State APMC Acts.
  • Clauses 3 & 4 give farmers the freedom to engage in intra-state or inter-state trade of their agricultural produce from sources that are not restricted to the physical markets created under various state Agricultural Produce Marketing Committee laws (APMC Acts).
  • According to Clause 6, it prohibits the collection of any market fee or cess under the State APMC Acts on the trade of farmers’ produce outside the APMC mandis.
  • The Act empowers the Central Government to frame rules and regulations under the Act.


  • The Opposition argues that the aforementioned ‘benefits’ under the Act would lead to the corporatisation of agriculture. Since the Act does not mention a fixed MSP, local farmers might not find adequate demand for their produce.
  • Most farmers are small landowners and do not have the means to transport their produce to large distances. Ultimately, they will be forced to sell their produce in the local market at a price lower than the MSP.

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2. Farmers (Empowerment and Protection) Agreement of Price Assurance, Farm Services Act, 2020

  • This Act seeks to create a legal framework for contract farming in India wherein farmers can enter into a direct agreement with a buyer to sell the produce at predetermined prices.
  • ‘Sponsors’ i.e entities that may partake in an agreement with farmers to buy their agricultural produce may include individuals, companies, firms, and societies.
  • Farming agreements can cover mutually accepting terms between farmers and sponsors including the supply of various resources for farming, method of farming, and the quantity of produce.
  • The Act also provides for a three-tier dispute resolution system: the conciliation board—comprising representatives of parties to the agreement, the sub-divisional magistrate, and appellate authority.


  • The principal concern with contract farming is regarding the negotiating power of the parties involved. Corporates or rich sponsors may not necessarily pay a fair price to the farmers for their produce due to the lack of the farmers’ ability to fairly negotiate or afford any sort of long-standing legal proceeding. 
  • Further, the entire farmer industry will fall into the hands of the capitalists who exploit the land and the farmers for their own private needs, impacting the agro-ecological diversity of the country.

3. Essential Commodities (Amendment) Bill, 2020

  • This Act seeks to restrict the powers of the government for the production, supply, and distribution of certain key commodities by editing and removing certain products such as onions, potatoes, cereals, and pulses from the list of essential commodities.
  • Stock limits on farming produce to be based on a price rise in the market.  They may be imposed only if there is: (i) a 100 per cent increase in the retail price of horticultural produce, and (ii) a 50 per cent increase in the retail price of non-perishable agricultural food items. Moreover, the increase is to have calculation over the price prevailing during the preceding twelve months. Or the average retail price over the last five years, whichever is lower.


  • The changes in the regulation of stock limits were introduced to harness private sector/foreign direct investment in the agricultural industry. Additionally, the stock limit regulation will not be applicable to value chain participants of agricultural agreements if their stock limit remains within their installed capacity. Moreover, this would legitimise hoarding, with the government having no information on the location and ownership of stocks. 


Agricultural Produce Market Committees (APMC) is the marketing boards establishments by state governments to eliminate the exploitation of farmers by intermediaries; where they force to sell their produce at extremely low prices. Further, APMCs are physical markets where sales is through auction and meant to ensure worthy prices and timely payment to the farmers for their produce. 

However, the ground reality of APMCs is that against the requirement of 42,000 mandies (markets) required for a country of our size, only 7000 exist. A huge percentage of the farmer population is unable to transport all of their produce to far off mandis and end up selling it to private parties while paying the mandi fee at the same time. Further, well-regulated mandis available at a 5 KM range from each village will assure a market for the farmers and at the same time, help in providing assured procurement price. 

The present Act that overrides the provisions of the existing APMCs will only create a parallel market. It is with completely different regulations. APMCs is a market where traders will require get a license, pay a fee. Additionally, allow the government to obtain price intelligence. Similarly, the state government will lose its ability to regulate the trade of produce with the entry of private sponsors. Moreover, this will lead to the collapse of the mandis.

These Acts will not formulate in consultation with the actual stakeholders – the farmers. They fail to provide farmers with guaranteed prices (MSP), oversight of the players. Likewise, transactions, and prices and do not empower the state government to regulate the market.

Constitutionality of the Laws

The Seventh Schedule of the Constitution contains three lists that distribute power between the Centre and the States. The Parliament has exclusive powers to legislate on the subjects in the Union List; the states alone can legislate on subjects in the State List; the Concurrent List has 47 subjects on which both the Centre and states can legislate. But in case of a conflict, the law made by Parliament prevails. 

The State List contains eight entries with terms relating to agriculture: Entry 14 (agricultural education and research, pests, plant diseases); 18 (rights in or over land, land tenures, rents, transfer agricultural land, agricultural loans, etc.); 28 (markets and fairs); 30 (agricultural indebtedness); 45 (land revenue, land records, etc.); 46 (taxes on agricultural income); 47 (succession of agricultural land); and 48 (estate duty in respect of agricultural land). However, the Union List and Concurrent List do not refer to matters relating to agriculture, giving state legislatures exclusive powers. 

Entry 33 of the Concurrent List mentions trade and commerce, production, supply and distribution of domestic; and imported products of an industry over which Parliament has control in the public interest; foodstuffs, including oilseeds and oils; cattle fodder; raw cotton and jute. Moreover, it cannot be said the ‘foodstuffs’ is synonymous with the term agriculture; that would make all the state-exclusive powers on the agricultural sector redundant.

The Farmers (Empowerment and Protection) Agreement on Price Assurance and Farm Services Act, 2020, and The Farmers’ Produce Trade and Commerce (Promotion and Facilitation) Act, 2020 do not mention, in the Statement of Objects & Reasons, the constitutional provisions under which Parliament has the power to legislate on the subjects covered.

To determine the constitutionality of any legislation, the “doctrine of pith and substance” must be put into use. Further, the character of the legislation and the extent to which the legislation impinges on other Lists will have consideration. Moreover, the Farmers’ Produce Trade and Commerce (Promotion and Facilitation) Act, 2020 flies in the face of Entry 28 of the State List (markets and fairs). And, The Farmers (Empowerment and Protection) Agreement on Price Assurance and Farm Services Act, 2020 impinges on Entries 14, 18, and 46 of the State List. Therefore, it can be inferred that the legislations do not hold up to the test of constitutionality. Hence, we must now await the Court’s decision which will decide the fate of the Indian Agriculture Market.