Farm Bills, 2020

Which are the 3 infamous Farm Bills of 2020? Which have been passed as a bill and which haven't? How will they affect the working of agricultural marketing starting from the farmers till the consumers? Let's Find Out!

The year 2020 brought about a wave of change in the agricultural marketing sector. Two of the 3 infamous farm bills were passed by the Raj Sabha on 20th September 2020. The cartelization and monopolization of the APMCs were an unseen side effect of the acts passed in the mid 1960’s. Such a manner of running APMCs has been worsening the situation of the agricultural supply chain than bettering it. These bills come as an answer to the ineffective and faulty acts of APMC around the nation.

The 3 Farm Bills

1. “The Farmers Produce Trade and Commerce (Promotion and facilitation) Ordinance, 2020”

2. “The Essential Commodities (Amendment) Ordinance, 2020”.

3. “The Farmers (Empowerment and protection) Agreement on Price Assurance and Farm Services Ordinance, 2020”.

The farm bills have shown two contradictory reactions from the farmers around the nation. Just as every coin has two faces the farm bills also have their own pros and cons. The aim of these farm bills is to liberalize the marketing sector of agriculture so as to facilitate farmers to have more freedom to sell their produce where they want and at the price that they want.

The Farmers Produce Trade and Commerce (Promotion and facilitation) Ordinance, 2020

This ordinance is colloquially known as “APMC Bypass ordinance”. It gets its name as it allows the farmers to bypass the APMC system and sell where they see fit. Before this, the state was divided geographically by the APMCs and the farmers had to sell their produce to their region specific APMC. What began with a noble thought of uplifting the farmers had started to cripple the same. This ordinance sees to undo the faults of the APMC as much as possible. At the same time, it does not force any farmers to sell outside the APMC. Those who are getting benefitted by the system may continue to do so.
Praise for the Ordinance:
1. Expansion of market area for the farmers.

2. Freedom to sell where they want and at the rate they want to the farmers.

3. No longer must tolerate the monopoly, unrealistic fees, cartelization and corruption of APMCs.

4. Barrier free Inter and Intra state selling of produce.

Criticism of the Ordinance:

1. Farmers do not have vast knowledge about the markets – Who is buying What and at What price.

2. Fear of discontinuance of Minimum Support price (MSP).

• The MSP is applicable only if a farmer sells in an APMC or to a Government Body. Even then the institutions are not legally bound to purchase the produce at MSP. To put it plainly MSP is not a right of the farmer.

• Although MSP exists for 23 crops, only wheat and rice are procured at those prices to facilitate the working of Public Distribution Systems (PDS).

Figure 1: State wise procurement of Wheat and Rice in 2020-21

Source: Food Corporation Of India

Source: Food Corporation Of India


As small and marginal farmers form the majority of land holders in the country, they have little or no bargaining power while selling to big private companies. This can be seen from the below facts:

1. The small and marginal holdings taken together (0.00-2.00 ha.) constituted 86.08% of the total holdings in 2015-16 against 85.01% in 2010-11 while their share in the operated area stood at 46.94% in the current census as against 44.58% in 2010-11. (Agricultural Census 2015-16)

2. The Semi-medium and Medium operational holdings (2.00-10.00 ha.) in 2015-16 were only 13.35% with 43.99% operated area. The corresponding figures for 2010-11 census were 14.29% and 44.82%. (Agricultural Census 2015-16)

3. The large holdings (10.00 ha. & above) were merely 0.57% of total number of holdings in 2015-16 and had a share of 9.07% in the operated area as against 0.70% and 10.59% respectively for 2010-11 census. (Agricultural Census 2015-16)

Figure 2: Shift in operational land holdings

Source: Agricultural Census 2015-16.

The Essential Commodities (Amendment) Ordinance, 2020

This ordinance generally known as ““Freedom of Food Stocking by Agribusinesses Ordinance” permits economic agents such as household/individuals, Firms, Government and Central Banks to stock up on food grains without incurring the wrath of punishment due to hoarding. As of now this ordinance hasn’t been passed yet and is still under review.

The Farmers (Empowerment and protection) Agreement on Price Assurance and Farm Services Ordinance, 2020

Frequently known as “Contract Farming Ordinance” has provisions to facilitate farmers to enter into contract farming agreements with corporate agricultural companies, wholesalers, retailers, firms etc. The two parties can make an agreement regarding a future crop such as how much to sell and at what price. This ordinance has been passed to help farmers in many ways:

1. To get farmers better profits.

2. Introduce them to new and improved agricultural technologies.

3. Introduce them to new crops.

4. Reduce the influence of middlemen on the supply chain, which in turn increases its price spread.

5. Reduce risks and uncertainties of market, climate, institutions etc.

Source: International Food Policy Research Institute

The Farm Bills, 2020 have been formed with a view to better the current and future generation of farmers. The only hope is that they are practically as good as they look on paper. Forming new laws will not help farmers only better implementation of them will. Its time we stop taking so much from them giving back so little. Also, the entire supply chain needs a makeover to help all the stake holders accrue better profits and earn according to the hard work they put in.