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The Farm Laws 2020- Check the Challenges, Pros and Cons

The Farm Laws 2020: The Indian Agriculture Acts of 2020, commonly known as the Farm Acts, consists of three initiatives introduced by the Parliament of India in September 2020. Following approval by both the Lok Sabha and the Rajya Sabha, the President of India granted assent to the bills on 27 September 2020. This article provides comprehensive insights into the 2020 farm acts, which frequently make headlines. It constitutes a part of the UPSC Syllabus, covering topics related to current affairs, economy, agriculture, and polity.

What is The Farm Laws 2020?

The Farm Laws 2020 were three farm acts passed by the Parliament of India in September 2020. The three acts were:

  • The Farmers (Empowerment and Protection) Agreement on Price Assurance and Farm Services Act, 2020: This legislation establishes a legal framework enabling farmers to engage in pre-arranged contracts with buyers, detailing pricing and providing a mechanism for resolving disputes.
  • The Farmers’ Produce Trade and Commerce (Promotion and Facilitation) Act, 2020: This act broadens the trade areas for farmers’ produce from specific regions to encompass “any place of production, collection, and aggregation.” It facilitates electronic trading and e-commerce of scheduled farmers’ produce. Additionally, it prohibits state governments from imposing market fees, cess, or levies on farmers, traders, and electronic trading platforms for transactions conducted in areas outside traditional trade zones.
  • The Essential Commodities (Amendment) Act, 2020: This amendment grants the central government authority to regulate the supply of certain food items solely under exceptional circumstances such as war and famine. Stock limits may be imposed on agricultural produce only in cases of significant price escalation.

Farm Laws 2020 faced farmer protests due to concerns over lower prices and corporate exploitation. The protests led to the law’s repeal in November 2021, reflecting societal divisions. Government plans for new agricultural reforms remain uncertain.

Pros of the Farm Laws

  • Increased freedom for farmers to sell their produce
     The Farm Laws allow farmers to sell their produce anywhere in the country, without having to go through government-regulated mandis (wholesale markets). This gives farmers more freedom to choose who they sell to and at what price.
  • Improved access to markets
    The Farm Laws make it easier for farmers to access markets, both domestic and international. This is because the laws allow farmers to sell their produce directly to buyers, without having to go through middlemen.
  • Increased competition
    The Farm Laws increase competition in the agricultural market. This is because they allow farmers to sell their produce to a wider range of buyers, including big corporations. This competition can lead to lower prices for consumers and higher prices for farmers.
  • Improved efficiency
    The Farm Laws can improve the efficiency of the agricultural market. This is because they allow farmers to sell their produce directly to buyers, without having to go through middlemen. This can reduce costs and lead to better prices for both farmers and consumers.
  • Promotes innovation
    The Farm Laws can promote innovation in the agricultural sector. This is because they allow farmers to enter into contracts with buyers, which can give them the incentive to invest in new technologies and practices.

Cons of the Farm Laws

Concerns Raised by Farmers Regarding the Farm Laws:

  • Reduction in prices for farmers: Farmers express concerns that the Farm Laws may result in decreased prices for their produce. The laws permit large corporations to purchase directly from farmers, bypassing government-regulated mandis. This could potentially give corporations more leverage in bargaining, leading to lower prices for farmers.
  • Exploitation by corporations: Farmers fear potential exploitation by big corporations under the Farm Laws. Corporations are allowed to engage in contracts with farmers, potentially giving them the authority to dictate terms. This could force farmers to sell their produce at prices below the market rate.
  • Increased inequality in agriculture: The Farm Laws may exacerbate inequality within the agricultural sector. Larger corporations could gain greater access to markets compared to small-scale farmers, leading to a scenario where corporations accumulate wealth while smaller farmers face economic challenges.
  • Reduction in government support: The implementation of the Farm Laws reduces certain forms of government assistance that farmers currently rely on. This reduction in support may pose challenges for farmers, particularly those who are small-scale operators, in sustaining their livelihoods.
  • Lack of price transparency: Concerns exist regarding the lack of transparency in how prices will be determined under the Farm Laws. This opacity could result in farmers not receiving fair prices for their produce.
  • Heightened financial risk: The Farm Laws introduce increased financial risk for farmers. While they allow farmers to enter into contracts with buyers, encouraging investment in new technologies and practices, unsuccessful ventures could leave farmers burdened with substantial debt.

Farm Acts – Critical analysis

The constitutional validity of the acts:

  • Article 246 of the Constitution designates “agriculture” under entry 14 and “markets and fairs” under entry 28 of the State List. However, entry 42 of the Union List grants authority to the Centre to regulate “inter-State trade and commerce”. While trade and commerce “within the State” fall under entry 26 of the State List, they are subject to the provisions of entry 33 of the Concurrent List, allowing the Centre to enact laws that supersede those of the states.
  • Entry 33 of the Concurrent List encompasses trade and commerce in “foodstuffs, including edible oilseeds and oils, fodder, cotton and jute”. Consequently, the Centre can enact laws to facilitate unhindered trade of agricultural produce both across states and within states, thereby overriding existing state APMC Acts. The FPTC Act accomplishes this objective.
  • Nevertheless, experts differentiate between agricultural “marketing” and “trade”. Agriculture encompasses all activities performed by a farmer, from field preparation and cultivation to the sale of produce. The initial sale at a mandi by the farmer constitutes an integral part of agriculture. “Trade” commences only after the produce has been marketed by the farmer.
  • According to this interpretation, the Centre has the authority to enact laws promoting barrier-free trade of farm produce, both inter- and intra-state, and prohibiting stockholding or export restrictions post-sale. However, regulation of the first sale of agricultural produce remains the responsibility of the states, not the Centre.
  • The constitutional validity of the Farm Acts, 2020, will ultimately be determined by the Judiciary.

Need to address misconceptions:

Misconceptions regarding MSP:

  • An examination of the recent laws reveals that contrary to common belief, the existing Minimum Support Price (MSP) system is not being replaced; rather, the new farm bills introduce additional options for farmers.
  • The government has affirmed that procurement at MSP will persist, and mandis will remain operational. Under the new framework, farmers will have the flexibility to sell their produce at locations beyond the mandis.
  • It’s noteworthy that only 6% of farmers actually sell their crops at MSP rates, as per the 2015 Shanta Kumar Committee’s report based on National Sample Survey data. None of the laws directly interfere with the MSP regime.

Misconceptions regarding contract farming:

  • Concerns have arisen regarding contract farming potentially resulting in small and marginal farmers losing their land to large corporations. However, there are provisions in place to safeguard farmer interests by ensuring the protection of land ownership.
  • The legislation explicitly forbids sponsor firms from acquiring farmers’ land, whether through purchase, lease, or mortgage.
  • It’s important to highlight that contract cultivation is entirely voluntary, and farmers cannot be compelled into agreements against their will.

Inevitability of Agricultural Reforms:

  • The Indian farmer represents 40 percent of the country’s population, with an even higher proportion among its impoverished citizens, as evident from available data, signifying significant stress within this demographic.
  • The progress of Indian economic and social development heavily relies on empowering farmers and the rural population. Therefore, there’s a pressing need for agricultural sector reforms to move beyond outdated policies.
  • The Indian farm bills align with international trends, reflecting developments seen in numerous developing economies since the 1990s. These changes aim to encourage private sector involvement, which could greatly benefit the agricultural sector.
  • The International Monetary Fund has endorsed the recent farm acts, considering them a significant step in the right direction.

Challenges Faced by the Farm Laws

The Farm Laws 2020 face several challenges, which have been points of contention and criticism. Here are some of the key challenges faced by the Farm Laws:

  • Opposition from Farmers and Farmer Organizations: One of the primary challenges is the widespread opposition from farmers and farmer organizations across India. Many farmers believe that the laws favour large corporations and undermine their bargaining power, leading to fears of exploitation and decreased income.
  • Concerns about Minimum Support Price (MSP): Farmers have expressed concerns that the Farm Laws may weaken the government’s commitment to providing a Minimum Support Price (MSP) for certain agricultural commodities. The MSP ensures farmers receive a guaranteed price for their produce, and its potential dilution raises apprehensions about income security.
  • Impact on Small and Marginal Farmers: Small and marginal farmers, who constitute a significant portion of the agricultural community, are concerned that the liberalization of agricultural markets may further marginalize them. They fear that without proper safeguards, they may face difficulties in accessing markets, negotiating fair prices, and competing with larger players.
  • Lack of Adequate Consultation and Stakeholder Engagement: Critics argue that the Farm Laws were implemented without sufficient consultation and engagement with all stakeholders, especially farmers and their representative organizations. This lack of consultation has led to a perception that the laws were imposed without considering the ground realities and concerns of those directly affected.
  • Disruptions in Farming Practices: The sudden introduction of new laws and changes to established agricultural practices has led to disruptions and uncertainties in the farming community. Farmers who are accustomed to traditional procurement systems and local agricultural markets may face challenges in adapting to new market dynamics, contractual agreements, and infrastructure requirements.
  • Legal and Administrative Hurdles: The implementation of the Farm Laws has faced legal challenges in courts, including petitions questioning the constitutionality of certain provisions. These legal battles have further complicated the implementation process and created uncertainties regarding the future of the laws.
  • Communication Gap and Trust Deficit: There is a significant communication gap between the government and the farming community, leading to a trust deficit. Farmers feel that their concerns have not been adequately addressed, and this lack of trust has fueled protests and agitations.

Addressing these challenges and finding a balanced solution that addresses the concerns of farmers while also promoting agricultural reforms remains a crucial task for the government and stakeholders involved.

What is Farm Bill 2023?

The Farm Bill 2023 is an extensive legislative framework that regulates the agricultural sector in the United States. Revised every five years, the current Farm Bill is scheduled to lapse on September 30, 2023. It encompasses various facets, such as crop insurance, nutrition assistance, conservation, rural development, and agricultural research. While negotiations for the Farm Bill 2023 are ongoing, several critical topics are under discussion:

  • Crop insurance: Debates center around the costliness of the existing crop insurance program and strategies to enhance its affordability.
  • Nutrition assistance: Reform discussions focus on the Supplemental Nutrition Assistance Program (SNAP), the largest nutrition aid initiative in the U.S.
  • Conservation: Funding allocation for diverse conservation programs prompts discussions on prioritization.
  • Rural development: Considerations are underway to enhance the effectiveness of rural development programs supported by the Farm Bill.
  • Agricultural research: Discussions revolve around refining the focus of agricultural research funded by the Farm Bill.

Given its complexity, understanding the key topics being deliberated upon in the Farm Bill 2023 is crucial. The outcomes of these discussions will profoundly influence the U.S. agricultural landscape. Active participation in the discourse surrounding the Farm Bill’s future is essential.

Farm Laws 2020- Impact on Agricultural Supply Chains and Markets

The Farm Laws have the potential to have a significant impact on agricultural supply chains and markets in India. Here are some of the potential impacts:

  1. Increased competition: The Farm Laws allow farmers to sell their produce directly to buyers, without having to go through middlemen. This could lead to increased competition in the agricultural market, which could benefit consumers by leading to lower prices.
  2. Improved efficiency: The Farm Laws could improve the efficiency of agricultural supply chains. This is because they allow farmers to sell their produce directly to buyers, without having to go through middlemen. This can reduce costs and lead to better prices for both farmers and consumers.
  3. Increased investment: The Farm Laws could lead to increased investment in the agricultural sector. This is because they allow farmers to enter into contracts with buyers, which could give them the incentive to invest in new technologies and practices. This could lead to improved productivity and efficiency in the agricultural sector.
  4. Increased exports: The Farm Laws could lead to increased exports of agricultural products from India. This is because they allow farmers to sell their produce directly to buyers, both domestic and international. This could lead to increased foreign exchange earnings for India.

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What are the 3 Farm Bill passed for farmers?

1. The Farmers' Produce Trade and Commerce Bill 2020, lets farmers sell their produce outside APMC mandis.
2. The Farmers (Empowerment and Protection) Agreement 2020, provisions contract farming and direct marketing.
3. The Essential Commodities Bill, 2020, opens up storage, production, movement, and sale of cereals, pulses, edible oils, and onion.

What are the issues with farmers bill?

The most agricultural products have been removed from the Essential Commodities List. This will lead to price volatility and hoarding.

What is the current status of farmers bill?

On 29 November 2021, the Indian parliament passed the bill to repeal farm laws in the country. The bill was passed without a debate in both the lower house i.e. Lok Sabha and the upper house i.e. Rajya Sabha, despite several demands of it.

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