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 the Three Farm Bill.

The three farm 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.

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

  • As part of this Act, the government will be limited in its capacity to produce, supply, and distribute certain key commodities, such as onions, potatoes, cereals, and pulses.
  • Market-based stock limits on farming produce.  Those taxes can only be imposed if: (i) horticultural produce retail prices increase by 100 percent, and (ii) non-perishable agricultural food prices increase by 50 percent. Furthermore, the increase is calculated over the previous year’s price. Or the average retail price over the last five years, whichever is lower.


  • A new regulation of stock limits was introduced to boost private sector/foreign direct investment in agriculture. Moreover, the stock limit regulation won’t apply to value chain participants if their stock limit stays within their capacity. Furthermore, this would legitimise hoarding, since the government wouldn’t know where stocks are located. 


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

As a result, only 7000 of the 42,000 mandies (markets) required for our size country exist in reality. Farmers often end up selling their produce to private parties while paying the mandi fee at the same time because they cannot transport their produce to distant mandis. Farmers benefit from well-regulated mandis located within 5 km of their villages, as well as assured procurement prices. 

Overriding the existing APMCs will only create a parallel market. It has completely different regulations. Licenses and fees will be required for traders in APMCs. Allow the government to obtain price intelligence. Likewise, private sponsors will undermine the state’s ability to regulate produce trade. Furthermore, the mandis will collapse.

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 do not empower the state government to regulate the market.

Click Now: Farmer Producer Organisation

Constitutionality of the Laws

The Seventh Schedule of the Constitution contains three lists that allocate power between the states and the centre. Parliament has exclusive power to legislate on Union List subjects; States have exclusive power to legislate on State List subjects; On the Concurrent List, both the Centre and states can legislate on 47 subjects. 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. 

Trade and commerce, production, supply, and distribution of domestic and imported goods, including oilseeds, oils, cattle fodder, raw cotton, and jute are listed in entry 33 of the Concurrent List. Additionally, ‘food’ cannot be equated with the term agriculture; that would make all state-exclusive powers in the agricultural sector redundant.

According to the Statement of Objects & Reasons of the Farmers (Empowerment and Protection) Agreement on Price Assurance and Farm Services Act, 2020, Parliament has no power to legislate on the topics covered under the Farmers’ Produce Trade and Commerce Act, 2020.

To determine a law’s constitutionality, the ‘doctrine of pith and substance’ must be applied. The nature and extent of the legislation’s impact on other Lists will also be considered. In addition, Entry 28 of the State List (markets and fairs) is contradicted by Farmers’ Produce Trade and Commerce (Promotion and Facilitation) Act, 2020. The Farmers (Empowerment and Protection) Agreement on Price Assurance and Farm Services Act, 2020 impacts Entries 14, 18, and 46. Therefore, the legislation fails the constitutionality test. As a result, the fate of the Indian Agriculture Market awaits the Court’s decision.


We hope we have provided you with sufficient information regarding your concern; however, if you require additional assistance, please do not hesitate to leave a comment below.

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