Farmer’s Bill 2020: Impact on Farmers And State Government

India is an agrarian country as approximately, 58% of India’s population is dependent on agriculture as their primary source of livelihood. Most of the resources of country came from agriculture.  After India gained Independence in 1947, farmers used to sell their products direct to the consumers. But they were exploited in the hands of zamindars or money lenders.  Thus, the government of India introduced APMC (Agriculture Produce Market Committee) Act.

APMC markets are regulated by state governments, a tax is charged on each transaction so in a way government knows at price produce is sold. The products which are not purchased by the middlemen are bought by the government at MSP (Minimum Support Price). MSP is constant throughout the country. But still the agricultural sector has been ignored despite being the primary source of livelihood of most of the population.  This sector had faced economic, social, and environmental neglect resulting in vast-ranging problems in overall development of the nation. Farming and agriculture are the backbone of Indian economy. 

The newly passed farmer’s bill are a set of three bills that have become acts which will give farmers the freedom to trade across states and empower them to turn into traders of their own procedure and be in control of the process. The intention behind these farmer’s bill is the regulation which will create an ecosystem where the farmers and traders enjoy freedom of choice of sale and the promotion of barrier-free inter and intra state trade and commerce.

What Is Farmer’s Bill 2020?

The newly passed farmer’s bills have accelerated several questions and debates all over the Country. The bill replaces the Farmers (Empowerment and Protection) Agreement of Price Assurance and Farm Services Ordinance, 2020. The bills are.

 The Farmer’s Produce Trade and Commerce Bill,2020, Farmers (Empowerment and Protection) Agreement on Price Assurance and Farm Services Bill,2020, and Essential commodities (Amendment) Bill,2020.  The bills had passed into acts on 27th September 2020 after the approval of president. The bills have subjected to many debates all over the country and the farmer’s protests these bills have also discussed along with the bills.

Key Features Of The Farmer’s Produce Trade And Commerce (Promotion And Facilitation) Bill, 2020:

1). Trade Outside Market Premises

2). Abolition Of Market Fee

3). Electronic Trading

4). Dispute Resolution

Key Features Of Farmers’ (Empowerment And Protection) Agreement On Price Assurance And Farm Services Bill, 2020:

1).   Farming Agreement-The ordinance provides for a farming agreement between a farmer and a buyer prior to the production or rearing of any produce. The minimum period is one production cycle of livestock and maximum is five years. The written agreements can be even between farmers and a company.

2).  Pricing Of Farming Produces-The price of farming produce should be mentioned in the agreement.

3). Dispute Settlement– A farming agreement must provide for a conciliation board as well as a conciliation process for settlement of disputes

Key Features Of The Essential Commodities (Amendment) Bill, 2020:

1). Regulation Of Food Items

2). Stock Limit

3). Exclusion

Main provisions and Highlights of the Ordinance:

  • The new legislation will empower farmers for engaging with processors, wholesalers, aggregators, exporters, and large retailers. There will be a price assurance to farmers even before the sowing of crops. This will help farmers from rise and fall of market prices.
  • Farmers will get prices over and above the minimum price.
  • It will enable easy and better access of farmers to modern technology, better seeds, and other essentials needed for cultivating.
  • There will be emergence of new technologies and modes of research in agriculture sector.
  • It will reduce the cost of marketing and improve the income of farmers.
  • It promotes inter-state and intra-state trade of farmer’s produces.
  • The Farmers Agreement Ordinance creates a framework for contract farming through an agreement between a farmer and a buyer prior to the production of any farm produce. It provides for a three-level dispute settlement mechanism: the conciliation board, Sub-Divisional Magistrate and Appellate Authority.
  • Stock limits may be imposed on agricultural produce only if there is a steep price rise.
  • The farmers will have full power in the contract to fix the sale price of his choice for the produce. They will receive a payment within 3 days.
  • There will be formed several Farmer Producer Organizations are being formed throughout the country. They will help to bring small farmers together in work.
  • Even in case of a dispute, farmers will not need to go to court repeatedly. There will be a local dispute redressal mechanism.
  • Farmers can sell their products outside registered Agricultural Produce Market Committee (APMC) markets without paying any state taxes or fees.

Critical Analysis Of The Bill

The main concern about this Act is the actual implementation of the Act. Even though everything was great about these bills on paper, still implementation and assurance of the provisions in these bills are not clear. The government is going to implement the Act throughout the country without any proper discussions. There should be done proper discussions among the states and central government on the implementation of these bills. Also, experts in these fields accused the central government destroying cooperative federalism. This is because even the central government have powers to make laws throughout the country but matters concerning   and affecting state governments such as agriculture should be discussed with them prior to the formation and implementation of laws.

This shows the government’s undemocratic approach. These bills represent an unprecedented encroachment into the rights of states as agriculture and markets are state subjects under Entries 14 and 28 respectively in List 2 of the Constitution of India. This clearly be going against the federal polity enshrined in the constitution. Even though the Central government had argued that the trade and commerce in food items fall under Entry 33 in concurrent list, hence leading to the constitutional property of Farmers bill. But still any laws affecting intra-state trade are a direct interference with state powers and will seriously curtail the efficiency of state legislature on matters listed on state list. The Central Government is bound to respect the autonomy of states in a federal structure.

Another concern other than violating rights of state governments is violation of rights of stakeholders or farmers. Even though the law is enacted to ensure economic independence and assurance of livelihood to farmers, there had not conducted any proper discussions about the bills or its provisions among government and farmers. There were concerns about the end of MSP (Minimum Support Price) among farmers. This was because there were high chances of exploitation by large corporate companies through several malpractices.

Also, the existing system where farmers are already free to sell their products to any one as most APMC acts contain exclusion clauses. Therefore, the freedom to sell outside the APMCs are not affected by these acts. Even though APMCs have their own shortcomings, still their role in ensuring the availability of an MSP for farmers cannot be overlooked.  Even the revenues of State governments are going to decrease as a large part of the revenue is generated from fees or cess on transactions in farm produce in APMC markets.  Also, the elimination of middlemen will not completely stop exploitation as contracts with large corporate can also lead to exploitation in a large scale. This is mostly because the bill clearly ignores the fact that farmers lack sufficient capital and lack of storage facilities which will eventually coerce farmers to sell their products at lower prices to corporations.

The middlemen are not always having negative impact on farmers as they help them to connect to the outside world. The government however had hastily passed the Farmer bills in parliament despite strong opposition. This all can be considered as the undemocratic nature of central government.


The bills have been enacted by government to empower the farmers and were implemented to accelerate growth in agricultural sector. It will enable farmers the freedom to trade across states and empower them to turn into traders of their own procedure and be in control of the process. Even though the laws seemed great in papers, but the effect will depend upon the actual implementation of these provisions. The government should lend financial help to farmers as implementation of these laws are not enough. This is because most farmers lack sufficient capital to be independent and ensure a standard form of living as well. The government must ensure that the concerns of state governments and farmers must be cleared and should be taken proper measures before the implementation of the said laws. As the development of agricultural sector is the key to the economic development of the nation, proper measures must be ensured.


1). What Is Farmer’s Bill 2020?

It is a series of bills introduced in 2020 by government to empower the farmers. There are three bills under this act, they are: The Farmer’s Produce Trade and Commerce Bill,2020Farmers (Empowerment and Protection) Agreement on Price Assurance and Farm Services Bill,2020, and Essential commodities (Amendment) Bill,2020. 

2). Do You Think Farmer Bills 2020 Is Violation Of Rights Of State Governments?

Yes, because agriculture and markets are subjects under state list. So, the state governments must be informed prior about the laws and should be discussed with the state governments about the enactment and implementation of laws. This act of central government can be said to be a direct encroachment towards rights of state governments.

3) Is The Farmer’s Bill Really Will Lead To The Improvement Of Farmers All Over The Country?

If the provisions in the act implemented with due care, then it will result in improvement of lives of farmers. But if the provisions are not clearly mentioned or done properly it will lead to exploitation of farmers in the hands of large corporative for a long period.


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