Three Farm Laws to Nurture Large Corporates and Not Farmers or Consumers

At the outset we need to note that as agriculture is in the state list, the central government has no right to formulate laws.


To begin with let us take a look into three important aspects of the three controversial farm laws passed by Narendra Modi led Bharatiya Janata Party central government.

  1. No farmers’ organisations had demanded or asked for these three laws. The demands of the farmers and the rules set in these laws are literally opposite to each other.
  2.  The three laws were not discussed in the parliament before their approval; they weren’t discussed even out of parliament. No farmers’ organisations were consulted prior to the passing of these laws.
  3. Farmers’ organisations across the country have been protesting against these laws. Bharatiya Kisan Sangh (BKS) a farmers’ organisation of the BJP was one of these protesting organisations.

At the outset we need to note that as agriculture is in the state list, the central government has no right to formulate laws. Against this backdrop, following is a bird’s eye view of three farm laws that have stirred up a strong farmers’ movement in the country which has been carried out for ninety seven days for today.

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The Farmer’s Produce Trade and Commerce (Promotion and Facilitation) Act, 2020

This law which is also known as  Agricultural Produce Market Committee (APMC) bypass law, according to the central government would help the farmers to sell their produce outside APMC. The law is supposed to facilitate the trade through E-commerce and a direct relationship between the farmers and the traders with no charges. The government also has been assuring that the law would help the farmers in trading both within their states and out of them. Therefore the government’s stance has been that this law would promote the interests of farmers.

We need to note that these assurances by the government are not new interventions. Even before this Act was passed by the government, farmers could sell their produce outside APMC.

Up until now the traders who were buying the produce from farmers at the APMC were being taxed. Now the traders who purchase the produce outside the APMC are not taxable. This rule would surely affect APMCs and result in their closure. So the government’s argument that this law aims to help farmers is far from the truth.

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Traders are the true beneficiaries under the rules of this law and not the farmers.

The farmers on the other hand have been demanding for a law regarding Minimum Support Price (MSP). The law does not even mention MSP. The State and Central government announce the MSP for around twenty three crops every year. When the government purchases the produce from the APMCs at the MSP farmers are benefited. As the new rules under this law would result in the closure of the APMCs, who would give the MSP?

APMCs regulated the trade of the agricultural produce and guarded farmers from the possible exploitation in the hands of the traders. It is not only the fate of APMC and MSP that is alarming. This law takes away rights of farmers to approach any Court of law in case of a conflict with the traders. According to the column 15 in chapter 5 of this law farmers cannot approach any Civil Court and instead they may approach appointed officials starting from the level of tahsildar to that of a joint secretary. As these officers are infamous for being easily influenced by the rich and powerful, farmers will be pushed into a vulnerable position.

Finally, even though APMCs’ performance was not satisfactory they were protecting the interests of the farmers. An intensified farmers’ struggle could have reworked on the lacunas in the APMC. This chance is taken away by this law which would dissolve or further weaken these pro-farmers’ marketing committees. The government’s claim that the farmers will be benefited by the independent trade outside these committees and by the competitive markets is simply not true. In reality, the absence of APMCs would facilitate few corporations to monopolise the market. Farmers would be compelled to sell their produce at low prices. We have thousands of examples informing us about the possibility of such anti-farmer developments. Therefore this law is devoid of any scope for maintaining the interests of the farmers.

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

The second law which is also called contractual farming law is supposed to facilitate contractual farming and E-commerce. This is true. However the question is, how would farmers benefit from this?

This law lays out in detail the ways in which traders, private companies and large corporates could enter into a contract with farmers. Such contracts would not help farmers after all as all of them would be focusing on the benefits of these companies, and farmers would not be the ones to design the terms, and conditions and rules of these contracts .

These contracts would consist of the standards of the quality of the agricultural produce as expected by these traders. These standards are often unrealistic as they are not set after considering the spectrum of external factors that influence the quality of the agricultural produce. Rain, quality of the seeds and various environmental factors influence the quality of the produce. These unrealistic standards would result in the loss of market for the farmers’ produce.

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There have been cases in the past where larger companies have refused to purchase the produce from their contract farmers upon the standards not being met.

Just like the first law, under this law no farmer can approach any Court of Law in case of any dispute with the contract companies. Farmers are to appeal to a department set up for the redressal purposes. In case of a dispute the contracting company is found to be in the wrong. The company is to pay one and a half part of the total expenditure incurred by the farmer. On the other hand when the famer is found at fault ( the reason might vary from the quality to the usage of a high amount of pesticides etc. The companies may refuse to purchase the produce.), the total investment of the company in the production of the particular crop must be reimbursed.

The Essential Commodities (Amendment) Act, 2020 

This third law is an amendment to the already existing law that was passed in 1955 to prevent unnecessary hoarding of food crops. Recognising that such hoarding results in inflation, this law was passed setting the limits for hoarding. The 2020 amendment has weekend the limits set for hoarding of cereals, pulses, potato, onion and cooking oil.

Though this amendment suggests that in the times of wars, drought and inflation the limit to hoarding be set, a column in the law makes this suggestion meaningless.

The limit is to be levied only when the prices of produce of gardening crosses hundred rupees and the prices of the non perishable produce crosses fifty rupees. However this limit is not applicable to processors or value chain participants.

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The main reason for the price of toor dal going up to two hundred rupees in 2015, for example, was this illegal hoarding of the pulse. This law, simply, legitimises such illegal hoarding. Such legitimisation paves way for the traders to purchase produce from the farmers at unreasonably low prices and thus unnecessary hoarding of food which inturn causes an extreme shortage of food. This shortage would boost inflation. However according to this amendment limits on hoarding can be levied if the market prices are rupees fifty and hundred during the harvesting, thus preventing farmers from selling at high price.

APMC, Minimum Support Price, Food Corporation of India (FCI) and Public Distribution System (PDS) are four pillars of Indian food system. There has been a considerable amount of, seventy percent of cut in the current budget allocation made for the subsidies handed over by the FCI. This clearly shows that the government is going to take a back step in purchasing agricultural produce. Government would stop or reduce purchasing the produce at MSP rates in the APMCs. This automatically would weaken the PDS on which the economically backward classes depend for food grains.

Finally these three laws are meant to nurture large corporates and not the farmers and consumers. These laws were passed with a sole intention of privatising agriculture on which fifty percent of the country is dependent on.

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First published in Nyayapatha. Translated by Yogesh S.


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June 2024


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