Tuesday, April 23, 2024

Farm Laws 2020: Beginning of a New Era and controversy behind

Farmers, a community, which gives us food to keep us alive, but the same was always kept under poverty in a planned manner by our policy makers.

By Dr. Abhishek Atrey

During the 800 years of slavery, it was only this community who suffered the maximum and always remained below poverty. They suffered atrocities at the hands of Zamindars, Mahajans etc. Their generations remained under loan taken by their fathers or grandfathers. With the fight for independence another fight for land reforms was also fought by our freedom fighters. Therefore after Independence unlike Britain where land belongs to the King, we adopted the principle that land belongs to the tiller of the soil.As a result immediately after getting independence Zamindari Abolition and Land Reforms Acts and Agriculture Reforms Acts were enacted in all the States, against which a very long legal fight was also fought by Zamindars and other ruling class but ultimately all these Acts were upheld by the Hon’ble Supreme Court.

Agriculture Produce Market Committees (APMCs) were also established in all the States through legislation. The idea behind establishment of APMCs was to provide better and consolidated market to farmers to sell agriculture produce, to provide farmers better prices for their agriculture produce, to save them from unnecessary and arbitrary fee and taxes and to maintain their proper representation in management of these agriculture markets. But even after 73 years of independence every year we see lakhs of suicides of farmers due to financial crisis, their education, nutrition at the minimum level. Most of the villages are far away from basic facilities of life such as drinking water, medical, roads, electricity, communication or connectivity.

There is a well known slogan of political leaders that “India lives in villages” just to get their votes but after winning elections they all unite with one goal that is to keep farmers below poverty in planned manner.

The phenomenon of APMC and MSP (Minimum Support Price) always remained very useful tools in the hands of policy makers to keep farmers below poverty line always. When there is concept of MRP (Minimum Retail Price) for all other goods produced or manufactures in India, why the concept of MSP was evolved for agriculture produce only is a mystery which we have to understand. Initially MSP was kept even lower than the cost price of any agriculture produce and farmers were bound to sell their produce at that price, it is only during last few years MSP is gradually increased above cost price but the difference of cost price and MSP of any agriculture produce never touched the level of difference of cost price and MRP of any other product. Several lakh suicides of farmers every year even after 73 years of Independence clearly shows that the system of APMC and MSP blatantly failed in achieving its objects. Therefore a need was being felt from a long time to change this system.

Critical Analysis of Farm Laws 2020:

In last few years several States decontrolled several agricultural products by amending schedules of their APMC Acts. On 5thJune 2020 three Ordinances were passed by the Modi Government,which were later onsubstituted by Acts by the Parliament in September 2020, by overriding State APMCs Acts, which in the wisdom of the Parliament was a solution to do away with the system of both APMC and MSP and to eradicate long time poverty of farmers. Salient features of these 3 Farmers Acts are summarized as under:

(i) The Farmers (Empowerment and Production) Agreement on Price Assurance and farm Services Act, 2020:

This Act empowers farmers to enter into farming agreements including “Trade and Commerce Agreements” or “Production Agreements” with any sponsor to produce or to sell farmers produce at the price agreed in these agreements with the sponsor and to handover delivery of farmers produce to any sponsor at any place outside the mandis under control of APMCs notwithstanding anything contained in any State APMC Act. Section 5 of this Act mandates that every such agreement shall specifically provide for (a) a guaranteed price to be paid for such produce and (b) a clear price reference for any additional amount over and above the guaranteed price, including bonus or premium to ensure best value to the farmer and such price reference may be linked to the prevailing prices in specified APMC yard or electronic trading and transaction platform or any other suitable benchmark prices.

However section 5 is placed in this Act by the Parliament with intention to provide minimum guaranteed price to the farmers for their agriculture produce, which shall be fixed in advance in the farming agreement which will be executed at the beginning of season and may be for one season to 5 years but according to section 4 that price shall be subject to quality, grade and standard. However section 5 also provide for price reference over and above the guaranteed price and prevailing prices in APMC yards.

By closely looking into section 4 and 5 of this Act, intention of Parliament doesn’t seem to be wrong and an effort was done to make a fair balance between farmers and sponsors or future purchasers but since these provisions are not very properly worded, it annoyed the entire farmers community of the country because there is no guarantee of any MSP in section 5 of this Act.

Regarding APMCs intention of the Government is clearly visible to decontrol farming produce from clutches of APMCs but still Parliament didn’t do it directly but did the same indirectly by snatching area of jurisdiction of APMCs without actually destroying or abolishing all APMCs in one go, however they could do so, but the same indirect method was not adopted by Parliament in case of MSP and it removed the MSP word from the entire Act, which was to be done by the Government at appropriate time in phased manner. Thus in my opinion if only few words are added in section 5 (a) and section 5 (a) is substituted like below the entire controversy of farmers will be solved and the intention of the Government will be fully visible and the entire farmers community will again started showing faith in the Government otherwise this little mistake may become cancer or epidemic.

Present section 5 (a) a guaranteed price to be paid for such produce,

Proposed section 5 (a) a guaranteed price to be paid for such produce, which shall not be less than Minimum Support Price fixed by the concerned State Governments for such produce irrespective of quality, grade or standard of such produce at the time of purchase.

Apart from this dispute resolution mechanism is given in this Act, for which Central Government also notified Farmers Agreement on Price Assurance & Farm Services (Dispute Resolution) Rules 2020 on 21.10.2020 and also issued Model Farming Agreement, which are available on the website of Ministry of Agriculture, Government of India.

(ii) The Farmers Produce Trade and Commerce (Promotion and Facilitation) Act, 2020:

This Act was enacted by the Parliament with the following purposes:

(a) To eradicate monopoly of APMCs from farmers produce,

(b) To open market of free trade and commerce in the field of farming

(c) To allow inter State and intra State trade of farming produce without any control of State Governments of APMCs

(d) To allow farmers to sell their farmers produce outside the area of APMCs as such by making entire country agriculture mandi or trade area

(e) To establish a system of trading of agricultural produce through electronic trading and transaction platform like Grofers, Big Bazar etc. and by providing mechanism for electronic registration for such trader and penalty for breach of any condition of registration by such trader,

(f) To develop a price information and market intelligence system for farmers’ produce and a framework for dissemination of information relating thereto such as share market, gold market etc.

(iii) The Essential Commodity (Amendment) Act, 2020:

Bythis Amendment Act the Parliament inserted sub section (1A) in section 3 of the Essential Commodities Act, 1955 and no provision of Essential Commodities Act, 1955 was deleted. Before understanding true nature of this Amendment Act, first we have to look into section 3(1) of the original Act which runs as under:

“3. Powers to control production, supply, distribution, etc., of essential commodities.―(1) If the Central Government is of opinion that it is necessary or expedient so to do for maintaining or increasing supplies of any essential commodity or for securing their equitable distribution and availability at fair prices, 1[or for securing any essential commodity for the defence of India or the efficient conduct of military operations], it may, by order, provide for regulating or prohibiting the production, supply and distribution thereof and trade and commerce therein.”

And newly inserted section 3 (1A) runs as under:

‘(1A) Notwithstanding anything contained in sub-section (1),—(a) the supply of such foodstuffs, including cereals, pulses, potato, onions, edible oilseeds and oils, as the Central Government may, by notification in the Official Gazette, specify, may be regulated only under extraordinary circumstances which may include war, famine, extraordinary price rise and natural calamity of grave nature;

By comparing both these provisions it is apparent that earlier Central Government had powers under section 2A, to declare, add or remove any commodity as essential commodity by notification in consultation with State Governments and under section 3 Central Government may provide for regulating or prohibiting the production, supply and distribution of any essential commodity and trade and commerce thereinfor maintaining or increasing supplies of such commodity or for securing their equitable distribution and availability at fair prices, or for securing any essential commodity for the defence of India or the efficient conduct of military operations. However after coming into force newly inserted sub section 1A of section 3 now Central Government itself controlled its own powers by declaring that the supply of such foodstuffs, including cereals, pulses, potato, onions, edible oilseeds and oils, as the Central Government may, by notification in the Official Gazette, specify, may be regulated only under extraordinary circumstances which may include war, famine, extraordinary price rise and natural calamity of grave nature. The effect of this sub section will be that supply and distribution of these food stuffs, notified by Central Government, can be regulated only under extraordinary circumstances.

By Sub section (b) Central Government gave some relaxation to value chain participants in stock limit of agricultural products, but such relaxation does not apply in case any order is passed by Government in relation to Public Distribution System or Targeted Public Distribution System.

Therefore it is clear that in fact this amendment also does not change the powers of scenario. Earlier also Central Government had powers to add or remove any commodity from the schedule of essential commodity and now also powers are same. However certain relaxations are given to corporates involved in trade of farming products for price hike and stock limit which are essential to give them if we are going to enter in entirely a new era of contract farming. But these relaxations can again be taken of by the Government in cases of emergency or for the purpose of Public Distribution System.

Objections and apprehensions against three Farm Laws:

There is a huge countrywide agitation against these new farm laws. The agitators are challenging these farms laws on roads and in courts on several grounds. I tried to accumulate their grounds, which in my wisdom are summarized as under:

(i) These laws will bring food stuff beyond reach of poor people and middle class and will leave the entire market of food stuff in the hands of corporates without any regulation and control.

(ii) Food prices will be uncontrolled like petrol or diesel and there will remain no control of Governments over them and food will become a luxury item, which will bring mass level malnutrition in the country. Governments could not provide safe drinkable water in the entire country till now and such uncontrolled price hike of food stuff will result in genocide of poor persons in systematic manner.

(iii) There will be no control or role of State or Central Government on fixation of MSP for farmers produce and there is no obligation on corporates to purchase farmers produce on any minimum price or below MSP.

(iv) The price guaranteed in the agreement is subject to quality and standard, the corporates may reject the produce after its production in the name of poor quality and standard.

(v) These laws will struck down all State APMC laws in one stroke.

(vi) In the absence of funds and infrastructure gradually all APMCs will come to an end and after some time there will remain control of big corporates only over farming, farmers, food and agriculture industry.

(vii) A parallel uncontrolled and unregulated market will come into force,

(viii) There is enough scope in these laws for exploitation of poor and illiterate farmers and to flourish corporate greed of multinational companies because these big companies will always be in unequal bargaining position.

(ix) Parliament has no legislative competence to enact these farm laws,

(x) These laws are violative of fundamental rights guaranteed under Article 14 and 23 of the Constitution

(xi) These laws are violative of Article 39 (C), 40 and 243 G of the Constitution,

(xii) These laws are encroachment of Parliament on State subjects given in List II of 7th Schedule and as such against Federal Structure, which is a basic structure of Constitution.

Analysis of objections and apprehensions:

As far as objections from (i) to (viii) are concerned they are mere apprehensions of agitators with the presumption that every farmer in the country is illiterate and below poverty line and he doesn’t know whether he is going to enter in a beneficial contract or not. Here I would like to say that today we are not in 1950s but it is 2021 and please don’t underestimate knowledge of farmers of this country. There is enough education and literacy among farmers, their children are getting higher education, they are controlling maximum numbers of political posts all over country, internet and communication brought knowledge of the world in the mobile of everyone and in every family, all farmers have their bank accounts and they all can very well understand pros and cons of farming agreements, therefore to say that they are in unequal bargaining position is not correct in present days situation.  It is only beginning of a new era which will end long lasting monopoly of APMCs throughout the country and will allow farmers to sell their products outside mandi also at higher prices. It will always be open for the farmers to sell their product in mandis if they will get better prices there. We should be positive towards better future and should not forget that the law is always dynamic and can be changed according to circumstances.

As far as objections no. (ix) to (xii) are concerned, these are legal contentions and we have to analyse these objections under Constitutional perspective and the law settled by the Hon’ble Supreme Court through several judgments. It is vell settled law that any legislation can be challenged only on two grounds (i) it lacks legislative competence or (ii) it is in violation of any fundamental right guaranteed under Chapter III of the Constitution.

To determine legislative competence of Parliament these farm laws we have to read Article 243 G, 246, 248, 249 and 250 of the Constitution along with certain entries of List I, II and III of the 7th Schedule of the Constitution. It is well established that Parliament is competent to enact laws on any subject given in List I and III and States have exclusive rights to enact laws on the subjects given in any entry in List II and also on any subject given in List III subject to the extent of inconsistency with any law made by Parliament. However according to Article 249 and 250 Parliament can also enact laws on subjects of State list in case of emergency or in case any resolution is passed by Council of States to that extent by two third majority of members present and voting. For the sake of knowledge certain entries of these three lists may be referred, from where sources of these laws can be drawn:

List I—Union List – Entries 42, 82, 92A and 92B

List II—State List – Entries 5, 6, 14, 15, 16, 17, 18, 21, 26, 27, 28, 30, 45, 46, 47, 48 and 49

List III—Concurrent List-  Entries 6, 7, 18, 33 and 34

Also Read: North-East Delhi riots: Court directs DCP to give charge-sheet copies to accused, notes delay due to non-compliance


Since the validity of these laws is under challenge in the Hon’ble Supreme Court and different high Courts, therefore I am not going in any deep study on that issue, and it is for the Hon’ble Supreme Court to decide as to whether Parliament was competent to enact these laws or not and under which of these entries. However to sum up in my opinion if only one amendment is done in section 5 (a) of the Farmers (Empowerment and Production) Agreement on Price Assurance and Farm Services Act, 2020, as mentioned above, the Government can settle down the present controversy and can leave the constitutional validity to be decided by the Courts. Otherwise all these three farms laws are cumulatively make a very good package to bring the farmers and farming in this country in new era to compete with international standards.

The Author is Advocate On Record, Supreme Court of India


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