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The news channels, newspaper and all other sources of information have been covering the live updates of Farmers’ Protest. The country’s Annadatas are showing their dis-concern over the Farm Bill 2020. 

Day by day the Farmer Protest is getting bigger, a series of talks between farmers and the government has churned no fruitful result. With the centre on one side urging farmers to examine the amendments that the government is willing to add and the common farmers finding the three laws unacceptable. What is the entire saga and what will be the economic implication of the 3 farm laws? 

Well, let us dive in to find the answers. 

Agriculture has been an inseparable and most important part of the Indian Economy. It has a significant contribution to the nation’s GDP. When the country got free from the British Raj, it was the agricultural sector that had the responsibility of reviving the heavily crippled economy of India. Since then this quote of - Jai Jawan and Jai Kisan has become popular. So, India, its farmers and the agricultural sector is inseparable. 

Decoding MSP & APMC

When India got independence, the agriculture system was not what we see and know today. The structuring of the agriculture sector primarily in the rural parts of India was predominantly controlled by traders and money lenders. Hence, common farmers found it very difficult to take their farm produce to the market for selling. They had no choice but to depend on traders or money lenders for finances. The condition was such that in most parts of the country the farmers were being exploited!  

To end the farmers’ plight and give them relief, the centre came up with a solution. The then government decided to give the ownership of the products made by the farmers with their hard work. This solution was the Agricultural Produce Market Committee or APMC.

The concept of APMC was designed in such a layered manner. There were market areas or Mandis at the state level that were regulated by the market committee. The task of the committee was to ensure that there was no free buying or selling of crops without any check. Further, the traders had to get a licence from this market committee so as to buy crops from the farmers. It was during this time when MSP or Minimum Support Price was introduced in the mandis or regulated market areas. 

What is MSP? It is simply the price set by the centre to purchase directly from the farmers, ultimately saving them from unnecessary exploitation. It can be said as an incentive for the farmers. All these laws were introduced by the government under the Agricultural Produce Marketing Committee Act

Shortcomings Of The MSP 

India is a huge country and a homogeneous implementation of any law or acts is silky smooth. As time passed, certain problems kept on surfacing with the APMC system. Outlined below are some major one -

- Misuse of power by APMC for giving licence to traders. 

- Some traders collectively form small groups (secretively) & deduct or delay the payment of the farmers

- A farmer is not allowed to enter into a contract with a manufacturer and they have to sell their produces through a specified channel

To amend these issues, the present government proposed the Farm Bill, 2020 with the motto  ‘One Nation, One Market’. With this new regulation, the government aims to bring together the fragmented markets of the agricultural sector and liberalize the trade of agricultural commodities. Ultimately, remove the flaws of the APMC system that is being followed. 


What Are The 3 Farm Laws 2020? 

The first Act - The Farmers Produce Trade and Commerce Act, 2020 basically gives approval to the farmers for selling their farm produce at places outside of regulated market areas or mandis. As per the act, the APMC headed mandis will not be closed completely, rather the farmers will have more choices of markets to sell their farm produces. If any private buyer is willing to provide them more price or a better deal then they can choose to sell it to them rather than taking it to mandis. 

Second Act - The Essential Commodities Act, 2020. The act says that economic agents will be allowed to stock food items & the imposition of stock holding limits will be removed. Also, the commodities like pulses, cereals, oilseeds, onions etc will be removed from the essential commodity category. 

Third Act - The Farmers Agreement on Price Assurance and Farm Service Act, 2020. This is an interesting one! According to this act, the farmers will have the freedom to do farming on a contract basis. What does it mean you ask? 

In simple words, the farmers will have the option to enter into a deal with a company wherein they will produce whatever the company wants and in return, they will be paid a good amount. 

The people standing in support of these acts believe that the 3 rules if implemented thoroughly, the farmers will be able to skip the problems they often face in mandis due to monopoly. They will have a choice to decide where and who to sell their farm produces. This will lead to farmers earning better than before. The transportation cost or marketing cost would reduce as well. The farmers with land less than 5 hectares are expected to benefit from the gain made through contracts. 

All in all the agriculture sector would be able to lure investments for various segments within it. 

Why Are Farmers Protesting? 

But, the twist is that the farmers for whose interest the acts are introduced, they are completely unhappy with it! As a result, there have been protests and endless debates by the farmers displaying their resentment. The ongoing situation in the capital city is getting bigger as the farmers from various states are joining in! 


The ‘annadatas’ believe that the MSP concept would (which is kind of an incentive for them) work better in APMC Mandis and not in private contracts or deals. 

Secondly, in states like Haryana and Punjab where APMC regulated mandis have great significance and legacy the farmers are doubtful about how they will be treated by the big private firms. 

There is a major possibility that they will be treated as a minor party in this kind of system. As a result, they will be a losing end of the bargain. 

In case of any dispute in the contracts, the small marginal farmers would have a weaker side and the private firms would have an edge in such cases.

Lastly, with the proposed system the future of commission agents is also uncertain as farm trade would take place outside of mandis.

Seeing the resentment of farmers and to pacify the situation the centre recently held a discussion with the farmer leaders The government prepared a proposal that was meant to address the concerns the farmers have with the Farm Bill, 2020. 

The 20-page proposal mentions the solutions to issues of the farmers in the form of amendments. 

The proposal states that such changes will be made in the acts wherein the farmers will have an option to approach the civil courts for dispute resolution. And, they will not be at the weaker side of any bargain.

Secondly, the biggest fear that farmers hold is the end of the APMC system as there will be no tax charged outside it. In answer to this query, the government proposed to make such changes in the acts wherein it would give state governments the right to charge taxes on private mandis too. These will be similar to the taxes charged within the APMC system. 

Thirdly, the proposal mentions that to avoid any kind of cheating the state government will be vested with the power to make rules about the respective states’ situation and register the traders as well. Lastly, the government has agreed to give it in writing that the current MSP system will not be demolished. 

But, the proposal of amendments has also been rejected by the farmers. 

The Farmers Rejected The Government’s Proposal

On December 9, the farmers rejected the government’s proposal offering changes in the contentious Farm Laws 2020, stating that the time for discussion has ended.

Now, the farmers have made it clear that the government should have consulted them before formally passing the Farm Bill 2020. It should have discussed the possible economic outcomes of this step and how would it impact the financial state of a common farmer. They are not up for negotiation and demand the legal entitlement to the concept of Minimum Support Price. 

To conclude, the farmers find that the government’s proposal lacks trustability and they continue their firm stand for scrapping the Farm Laws. 

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