With this article we will attempt to gain a better understanding of the three contentious farm laws that have caused nationwide protests amongst farmers.

Introduction

During the monsoon session of the parliament in 2020, three bills were passed and were enacted into legislation with the signature of the president. The passing of these laws caused a huge uproar amidst the agricultural diaspora of the country with protests erupting nationwide, seeking the rescinding of the bills. So strong was the antipathy towards the bills that the protests continued through harsh winters and a year and a half of lockdown during the COVID-19 pandemic. Analysis: What Were The Three Farm Bills That Led To The Farmers’ Protest?

The three bills were called 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. The intent behind these farm bills was to attract and involve private investors directly into the process of procurement of farm produce, essentially transforming it into a free market. This article examines the three Acts and the major contentions surrounding them.

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

Also known as the APMC (Agricultural Produce Market Committee) Bypass Act, gives the centre an overriding power over the inconsistent provisions of the APMC Acts of individual states through Clause 14 of the Act.

APMC (Agricultural produce market committee) is the regulating body that was incorporated to protect farmers from middlemen. The committee ensured that the farmers could directly sell their produce on a rate fixed by the market committee. However, due to rampant corruption within the committee the bill sought to remedy the problem.

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).

Clause 6 prohibits the collection of any market fee or cess under the State APMC Acts on the trade of farmers’ produce outside the APMC mandis.

Basically, this Act empowers the Central Government to frame rules and regulations with regards to the sale of farm produce.

The Opposition argued that the aforementioned ‘benefits’ under the Act would lead to the corporatisation of agriculture. The biggest criticism of the Act was the omission of a fixed Minimum Support Price (MSP), which guaranteed that the government will procure the unsold produce at a minimum support price in the event of a lack of demand. Local farmers feared that they may not find an adequate demand for their produce if it is privatised.

Most farmers were small landowners and did not have the means to transport their produce at long range distances. Consequently they would have been forced to sell their produce in the local market at a price lower than the MSP.

Farmers (Empowerment And Protection) Agreement Of Price Assurance, Farm Services Act, 2020

This farm bill sought to create a legal framework for contract farming in India wherein farmers could enter into a direct agreement with a buyer to sell the produce at predetermined prices. Entities that could enter into an agreement with farmers to buy their agricultural produce include individuals, companies, firms, and societies. Farming agreements could cover mutually accepting terms between farmers and the entities including the supply of various resources for farming, farming technology, and the quantity of produce.

This farm bill also provided for a three-tier dispute resolution system: 

• The conciliation board, comprising representatives of parties to the agreement
• The sub-divisional magistrate 
• An 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 in the event of a dispute. 

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.

Essential Commodities (Amendment) Bill, 2020

This farm bill intended 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. The intent here was to assure private entities that there would be minimum interference from the government in regulating the produce.

Stock limits on farming produce were 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 an average retail price over the last five years, whichever is lower.

The changes in the regulation of stock limits in the farm bill were introduced to harness the financial resources of the private sector as well as foreign direct investment in the agricultural industry. Additionally, the stock limit regulation would 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. 

The Problem With APMC

As mentioned before, the 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. 

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. 

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 to get a licence, pay a fee. Additionally, allow the government to obtain price intelligence. 

Additionally, 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 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 that ‘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 legislation does 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.

Conclusion

Laws and their provisions affect the functioning of a society. At the same time it may not always make sense to the common man given that the policies and frameworks are created from a macro economic point of view and not everyone understands the big picture. If you have any legal queries or are in need of legal assistance, do get in touch with us so that our team of lawyers can understand your requirements and help you with your needs .