The Lok Sabha has passed three agriculture sector bills in the ongoing monsoon session amid strong protests by opposition parties. BJP's old ally in Punjab, SAD leader Harsimrat Kaur Badal resigned from the Union council of ministers in protest against the legislation as the two farm bills one on Agri market reforms and the other on contract farming provisions along with the one on amending Essential Commodities Act were passed in the lower house. 

Political parties and farm organizations such as the Bhartiya Kisan Union (BKU) and the All India Kisan Sangharsh Coordination Committee (AIKSCC), an umbrella body of several other organizations, have been protesting against the bills which they believe are designed to help big corporate houses at the cost of farmers, other groups such as Maharashtra-based Shetkari Sanghatana support such reforms. The opposition parties have also opposed the three bills, calling them "anti-farmers".

A section of people on social media as well expressed doubts regarding the newly passed farm bills. So let's try to understand what these bills aim to change. 

During the ongoing Monsoon session of the parliament, the government introduced the three bills to replace three ordinances introduced on June 5, which were subsequently passed by the lower house of parliament this week.

The Farmers' Produce Trade and Commerce (Promotion and Facilitation) Bill, 2020: 

Section 2(n) of this ordinance defines a “trader” as “a person who buys farmers’ produce by way of inter-State trade or intra-State trade or a combination thereof, either for self or on behalf of one or more persons for the purpose of wholesale trade, retail, end-use, value addition, processing, manufacturing, export, consumption or for such other purpose”. Thus, it includes processor, exporter, wholesaler, miller, and retailer.

Under the state Agricultural produce market committee (APMC) Act, commission agents who were financially verified and had licences used to carry out the trade. The new bill aims to end the role of middle man, by removing the role of commission agents or arhatiyas. (Arhatiyas are commission agents who trade under present mandi system for which they require a licence/registration as provided for in the State APMC Act)

Now, under this ordinance, “Any trader with a PAN card can buy the farmers’ produce in the trade area.” It does not specify any financial requirement or licence in trade areas outside APMC mandis.

This has generated fear of traders not fulfilling payments, especially if they have not been verified or are not required to put down a deposit, The protesters say arhatiyas have credibility as their financial status is verified during the licence approval process.

A trader can operate in both an APMC mandi and a trade area. However, for trading in the mandi, the trader would require a licence/registration in the State APMC Act.

This bill essentially allows traders to bypass the current APMC mandi system, and trade outside previously designated areas. Hence, providing freedom of choice relating to the sale and purchase of produce.

The points of contention in this bill are also the lack of the mention of floor pricing methods like the Minimum Support Pricing. However, it has been clarified multiple times that the government is not doing away with MSPs. MSP will be given to the farmers the way it was being given in the past.

Section 6 states that “no market fee or cess or levy, by whatever name called, under any State APMC Act or any other State law, shall be levied on any farmer or trader or electronic trading and transaction platform for trade and commerce in scheduled farmers’ produces in a trade area”. Therefore, this provision will reduce the cost of the transaction and will benefit both the farmers and the traders.

Farmers (Empowerment & Protection) Agreement of Price Assurance and Farm Services Bill, 2020:

This bill creates a framework for contract farming through an agreement between farmer and buyer.

Section 3 of the Contract Farming bill states that "A farmer may enter into a written farming agreement in respect of any farming produce and such agreement may provide for— (a) the terms and conditions for the supply of such products, including the time of supply, quality, grade, standards, price and such other matters; and (b) the terms related to supply of farm services." Section 19 of the bill, however, puts a bar on jurisdiction of a civil court. This creates an issue since the agreements are voluntary - including for written contracts.

The farmers expressed their apprehensions that the proposed legislation was "corporate agriculture bills" which were framed to suit "big corporates who seek to dominate the Indian food and agriculture business".

However, this new legislation aims to empower farmers for engaging with processors, wholesalers, aggregators, wholesalers, large retailers, exporters etc., on a level playing field without any fear of exploitation. It will transfer the risk of market unpredictability from the farmer to the sponsor and also enable the farmer to access modern technology and better inputs. It will reduce the cost of marketing and improve the income of farmers.

This will also attract private investment in farming and link farms to global markets as legislation will act as a catalyst to attract private sector investment for building supply chains for the supply of Indian farm produce to national and global markets and in agricultural infrastructure. Farmers will get access to technology and advice for high-value agriculture and get a ready market for such products.

Farmers will engage in direct marketing thereby eliminating intermediaries resulting in full realization of price. Farmers have been provided with adequate protection. Sale, lease or mortgage of farmers' land is totally prohibited and farmers' land is also protected against any recovery. Effective dispute resolution mechanism has been provided for with clear timelines for redressal.

The Essential Commodities (Amendment) Bill, 2020

This acts remove cereals, pulses, oilseed, edible oils, onion and potatoes from the list of essential commodities and also does away with the imposition of stock limit except under exceptional conditions. 

Farmers unions and activists are protesting saying that this amendment - meant to promote better stocking of farm products - would greatly benefit big corporations in stocking up on such goods in a way that smaller competitors like Farmer Producer Organisers (FPOs) would not be able to do. 

However, contrary to this, the government says that this bill will likely to attract private investment in cold storage, warehouses, processing. This will help create a competitive environment and modernise farm supply chain by the introduction of cold storages, the government says. It will bring price stability and raise farm incomes, also reduce the wastage of farm produce. 

Congress opposing the bills 

Congress MPs also raised slogans inside the Parliament complex, calling the Bills a “death knell for the future of farming”. The party also strongly opposed The Essential Commodities (Amendment) Bill passed earlier this week.

However, in its 2019 Lok Sabha elections manifesto, the Congress had said, “The Essential Commodities Act, 1955 belongs to the age of controls. Congress promises to replace the Act by an enabling law that can be invoked only in the case of emergencies.”

The party had also promised to repeal the Agricultural Produce Market Committees (APMC) Act. This is precisely what the Farming Produce Trade and Commerce Bill seeks to do by allowing barrier-free, inter- and intra-state trade of primary agricultural commodities.

Why reforms are needed?

India has phenomenal potential in agriculture, but due to no major reform for decades and archaic laws and regulations have held back investments and depressed productivity. 

Under the current scenario, middlemen grab a big chunk of profit, while farmers used to suffer. There were restrictions on the sale of farm produce and also poor access to high-quality farm inputs.