New Farm Bills In India: Features And Impact

New Farm Bills In India: Features And Impact

With the Rajya Sabha passing two major bills related to farmers and their business, let us look at the salient features of the farm bills while noting their impact on the farmers.

Crux of the Matter

Passed Bills
On 20 September, 2020, the Rajya Sabha passed two farm bills passed in the Lok Sabha previously –

  • The Farmers Produce Trade and Commerce (Promotion and Facilitation) Bill, 2020.
  • The Farmers (Empowerment and Protection) Agreement on Price Assurance and Farm Services Bill, 2020.

On 21 September, the Essential Commodities (Amendment) Bill was to be put in the Rajya Sabha.

Features Of The New Bills

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

  • Allows farmers to sell their produce to buyers other than ‘mandis’ (market) regulated by Agricultural Produce Market Committee (APMC) – farmers can sell to private buyers too.
  • Adds the option of selling outside the state of the farmer.
  • Prohibits state governments from imposing market fee on “farmers, traders, and electronic trading platforms” for trading outside the ‘trade area’ or with a buyer other than the mandi.

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

  • Allows agreement between farmers and buyers before the production.
  • Fixes a price before the production for the produce to be sold at.

The Essential Commodities (Amendment) Bill

  • Removes cereals, pulses, onion, potatoes, etc from the “list of essential commodities”.
  • Removes restrictions on storing – earlier, traders could be prosecuted for “hoarding” essential items.
  • Government intervention to occur only in cases of famine, war, or any extraordinary calamity.


  • Farmers would be freed from the middlemen who would lose ‘commission fees’ if the former move outside APMC.
  • Marketing prices would be reduced for the farmers.
  • The risk of market volatility would be transferred from farmers to buyers and sponsors.
  • Contract farming with a proper legal network would increase.

To put in perspective, 86% of “land holdings” by farmers are of less than 2 hectares according to Agriculture Census (2015-16). Consequently, these farmers with small lands end up as ‘net buyers’ of food and essential crops. Moreover, the MSP hikes distress these farmers the most.

  • Farmers would have more options for selling, now having a provision to sell to the private sector if better price is offered.
  • Farmers would be free from ‘mandi tax’ levied by the state.
  • APMC mandis would not be shut, with only an option of private sector being added for farmers.

PM Modi clarified on Twitter that the Minimum Support Price (MSP) and the Government Procurement would continue.

MSP – minimum price for a crop fixed by the Government before farming season – ensures that farmers don’t face loss in case of drastic price decline. The MSP is applicable to APMC only.

Also Read: New Farm Bills In India: Opposition And Reactions

  • A price floor is a government- or group-imposed price control or limit on how low a price can be charged for a product, good, commodity, or service. Governments use price floors to keep certain prices from going too low. 
  • eNAM is an online trading platform for agricultural commodities in India. The market facilitates farmers, traders and buyers with online trading in commodities. The market transactions stood at ₹36,200 crores by January 2018, mostly intra-market. 
  • Jai Jawaan Jai Kisaan was a slogan by the second Prime Minister of India, Lal Bahadur Shastri, in 1965 at a public gathering in Delhi. In 2015, a film based on Shastri’s life was released which was named after this slogan.