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The Three Farm Laws

English हिंदी বাংলা मराठी தமிழ்తెలుగు

Agriculture comes under the state list of Schedule 7, but because past efforts to improve farming have not worked well, the central government decided to step in and make changes with new rules, overriding the states' control.

The Indian Farm laws were introduced in September 2020. These three laws aim to change how agricultural products are marketed, sold, and stored across the country, mainly focusing on improving the connections and processes in the agricultural sector.

THE THREE LAWS WERE:

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

The act aims to open the agri-produce sale and marketing outside the registered APMC (Agriculture Produce Market Committee) that is notified mandis.
Allows barrier-free inter-state trade.
It will facilitate online buying and selling.
Provides a supportive framework for electronic trading.

Farmers (Empowerment and Protection) Agreement on Price Assurance and Farm Services Act, 2020

The laws empower farmers to enter into contracts with agribusiness firms, processors, wholesalers, and exporters, allowing them to sell future products at pre-decided terms and prices, eliminating intermediaries.
The farming agreement can last for a maximum of five years.
There is a three-level dispute settlement mechanism:
1. Conciliation Board
2. Sub-Divisional Magistrate
3. Appellate Authority

If one party is unsatisfied with the decision of the authority with original jurisdiction, they can appeal to another authority.

Essential Commodities (Amendment) Act, 2020

Remove cereals, pulses, oilseeds, onions, and potatoes from the list of essential commodities, removing the limit on how much can be stored by business persons except in extraordinary circumstances like war.
Attract private sector investment and FDI (Foreign Direct Investment) by reducing regulatory interference in business operations. The aim is to fulfill financial needs of the sector for new technology
The laws also encourage investment in farm infrastructure, such as cold storage, and modernize the food supply chain, which is the network of individuals and companies involved in delivering the product to the consumer.
Promote price stability, benefiting both farmers and consumers.
Create a competitive market environment and reduce wastage of farm produce.

Effects of the Three Acts on Minimum Support Price (MSP)

Farmers are worried that the new changes might remove the Minimum Support Price (MSP) system.
They fear that allowing tax-free private trade outside APMC mandis could make these regulated markets useless and reduce government buying.
The growth of private markets (private mandis) could overshadow government markets and APMCs, causing them to lose money.
Critics say that ending APMC monopolies could threaten guaranteed buying of food grains at Minimum Support Price(MSP), giving more power to private buyers and making it harder for farmers to negotiate fair prices.

MSP - A minimum cost fixed by the government to ensure that the produce from farmers is when the purchased market price falls below the production cost saving them from potential loss.

Critics say it's a big problem for farmers in Punjab and Haryana that the new laws don't legally support Minimum Support Prices (MSP). In these states, the government buys a lot of wheat at MSP.
They argue that instead of making state systems unnecessary, efforts should focus on helping more farmers benefit from MSP and making APMCs work better.

Frequently Asked Questions (FAQs)

What are the Indian Farm laws introduced in September 2020?
The Indian Farm laws introduced three main acts to change how agricultural products are bought, sold, and stored. They aim to modernize farming practices and improve market accessibility for farmers.
What does the Farmers' Produce Trade and Commerce Act, 2020 do?
This act allows farmers to sell their produce outside traditional markets (APMC mandis), promoting easier interstate trade and online selling. It aims to give farmers more choices in selling their crops.

How does the Farmers (Empowerment and Protection) Agreement Act, 2020 help farmers?
This act lets farmers make agreements with businesses to sell their crops at agreed prices in advance. It reduces middlemen and gives farmers more control over their earnings.
What changes did the Essential Commodities (Amendment) Act, 2020 bring?
This act removed limits on how much certain crops can be stored by businesses. It aims to attract more private investment in agriculture and improve infrastructure like storage facilities.
Why are farmers concerned about Minimum Support Prices (MSP) under the new laws?
Farmers worry that these laws don't guarantee a minimum price for their crops, which they rely on for stable income. They fear private buyers might offer lower prices, reducing their earnings and financial security.

References

Written by Arshita Anand

Arshita is a final year student at Chanakya National Law University, currently pursuing B.B.A. LL.B (Corporate Law Hons.). She is enthusiastic about Corporate Law, Taxation and Data Privacy, and has an entrepreneurial mindset