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

Lok Sabha passed the Farmers (Empowerment and Protection) Agreement of Price Assurance and Farm Services Bill, 2020. This bill replaces the Farmers (Empowerment and Protection) Agreement of Price Assurance and Farm Services Ordinance, 2020 promulgated on 5 June, 2020.

Provisions of the Bill are:

– The Bill will empower farmers for engaging with processors, wholesalers, aggregators, large retailers, exporters, etc., on a level playing field.

– Before sowing crops, price assurance to the farmers.

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– In case of higher market price, farmers will be entitled to this price over and above the minimum price.

– It will also transfer the risk of market unpredictability from the farmer to the sponsor. Farmers will be shielded, due to prior price determination from the rise and fall of market prices.

– It will also allow farmers to access modern technology, better seed and other inputs.

– It will improve the income of the farmers and also reduce the cost of marketing.

– Effective dispute resolution mechanism has been provided with clear timelines for redressal.

– New technology and research in the agriculture sector.

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

Farming agreement

The legislation provides for a farmer agreement between a farmer and a buyer prior to the production or rearing of any farm produce. One crop season or one production cycle of livestock will be the minimum period of an agreement and the maximum period is five years unless the production cycle is more than five years.

Pricing of farming produce

In an agreement, the price of farming produce should be mentioned. Prices that are subjected to variation, a guaranteed price for the produce and a clear reference for any additional amount above the guaranteed price must be specified in the agreement. Also, the process of price determination must be mentioned in the agreement.

About Dispute Settlement

For the settlement of the disputes, an agreement of farming must provide a conciliation board as well as a conciliation process.

Fair and balanced representation of parties in the Board should be there to the agreement.  Firstly, all the disputes will be referred to the board for resolution. If the dispute is not resolved or remained unresolved by the Board then after thirty days, parties may approach the Sub-divisional Magistrate.

Also, parties have the right to appeal to an Appellate Authority that is presided by a collector or additional collector against decisions of the Magistrate. To dispose of the dispute within thirty days, both the Magistrate and Appellate Authority will be required from the receipt of application.

The Magistrate or the Appellate Authority may impose certain penalties on the party contravening the agreement.  For the recovery of any dues, no action can be taken against the agricultural land of a farmer.

Essential Commodities (Amendment) Bill, 2020: Explained


Indian Agriculture has various characteristics and fragmentation because of small holding sizes and has certain weaknesses like weather dependence, production uncertainties and market unpredictability. These conditions make agriculture risky and inefficient in terms of both input and output management.


– Without any fear of exploitation, the legislation will empower farmers for engaging with processors, wholesalers, aggregators, large retailers, exporters, etc. on the level playing field. It will lower the risk of market unpredictability from the farmer to the sponsor.

The bill will also 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 also in agricultural infrastructure.

With access to the technology, farmers are advice for high-value agriculture and get ready market for such produce.

Farmers will engage in direct marketing thereby eliminating intermediaries that will result in full realisation 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. Clear timelines for redressal has been provided for an effective dispute resolution mechanism.

Government Schemes/Programmes for Welfare and Development of Minorities

Doubts regarding the Bill

– Due to contract farming, farmers will be under pressure and so they will not be able to determine prices.

– Maybe the new system will be a problem for farmers.

– One more doubt is that how will small farmers be able to practice contract farming, sponsors will shy away from them.

– In case of a dispute, big companies will be at an advantage.

Clarification regarding the Bill

– There will be full power to the farmers in the contact to fix the sale price of his choice for the produce. Within a maximum of 3 days, they will receive the payment.

– Throughout the country 10,000 Farmer Producer Organisations are being formed. These FPOs will bring together small farmers and work to ensure remunerative pricing for farm produce.

– When the contract has been signed, the farmer will not have to seek out traders. The produce will be picked up directly from the farm by the purchasing consumer.

– In case of dispute, there is no need to go to the court repeatedly because there will be a local dispute redressal mechanism.

Source: PIB

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