Winter Session: What Are The Three Farm Laws That Modi Govt Passed Last Year And Is Now Set To Repeal

These laws were passed with an objective to bring reforms in the agriculture sector, especially marketing of farm produce

Farmers protest at Delhi border | File Photo

New Delhi: The Cabinet last week approved the government's proposal to repeal the three contentious farm laws that were passed last year and ran into opposition from farmers.

The laws had come into effect after the President gave his assent on September 27, 2020. They led to unprecedented protests by farmers, which have been continuing for over a year now.

The three laws were the Farmers' Produce Trade and Commerce (Promotion and Facilitation) Act, The Farmers' (Empowerment and Protection) Agreement of Price Assurance and Farm Services Act, and The Essential Commodities (Amendment) Act.

Earlier this month, Prime Minister Narendra Modi announced that all three laws would be repealed in Parliament during the Winter Session. He said the laws were passed with the objective to bring reforms in the agriculture sector, but the government "failed to convince" the farmers that these were for their welfare.

With the Winter Session beginning on Monday, all eyes are now on the Lok Sabha where the Farm Laws Repeal Bill, 2021 will be introduced for passage.

Here is a lowdown on the three laws and why they did not go down well with the farmers.

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

This act is basically aimed at setting up a mechanism allowing the farmers to sell their farm produce outside the agriculture produce market committees (APMCs). It means that any licence-holder trader can buy the produce from the farmers at mutually agreed prices. While farmers opposed all three laws, they had a special objection to this act, which was also being called "APMC Bypass Bill". This triggered fear among cultivators that its provisions would weaken the APMC mandis. Clauses in sections 3 and 4 of the Act made farm produces from this trade to be free of mandi tax imposed by the state governments.

Under this, farmers were allowed to sell their produce to buyers from within or outside the state in areas outside the APMC mandis.

On the other hand, Section 6 prohibited the collection of any market fee or cess under any state APMC Act or any other state law with respect to trade outside the APMC market. Section 14 gave an overriding effect over the inconsistent provisions of the State APMC laws and Section 17 empowered the Centre to frame rules for carrying out the provisions of the law. 

Farmers were of the view that the new rules would lead to inadequate demand for their produce in local markets. They were of the opinion that transporting the produce outside mandis would not be possible because of a lack of resources. It is precisely why they sell their produce at lesser than MSP prices in local markets.

Moreover, farmers were also unhappy with the clauses in Section 8 of the law that specified that a farmer and trader could approach the Sub-Divisional Magistrate (SDM) to arrive at a solution through conciliation proceedings. They raised an issue considering that they are not powerful enough to access the SDM offices for dispute redressals.

Farmers (Empowerment and Protection) Agreement of Price Assurance and Farm Services Act

It gives farmers the freedom to do contract farming and market their produces freely. Under this, farmers could get into a direct agreement with a buyer before sowing season to sell their produce at pre-determined prices. It also gave way to setting up farming agreements between farmers and sponsors.  However, the law did not mention the MSP that buyers need to offer to farmers.

The Centre argued that the law offered freedom of choice to farmers to sell anywhere, but the latter feared that it would lead to corporatisation of agriculture and remained worried that MSP will be removed. Some of them objected to the contract system, saying it would make small and marginal farmers susceptible to exploitation from big companies unless the sale prices continue to be regulated as was being done before the new law came in.

Essential Commodities (Amendment) Act is the amendment to the existing Essential Commodities Act

Under this law, items such as food grains, pulses, edible oils, and onion are freed for trade except in "extraordinary circumstances” as per Section 1 (A) of the new law.

The law also removed commodities such as edible oil, onion, and potato from the list of essential commodities. This law also allowed the government to regulate their supply or include these items back into the list only under “extraordinary circumstances” as per Section 1 (A) of the new law. This would not impact farmers much, belief.

As per this law, the stock limits on farming produce would be based on price rise in the market. The limit could have been imposed only if there was a 100 per cent increase in the retail price of horticultural products and a 50 percent increase in the retail price of non-perishable agricultural food items, says PRS Legislative Research.

On the easing of regulation of food items, former Punjab chief minister Amarinder Singh had said it would lead to exporters, processors, and traders hoarding farm produce during the harvest season, when prices are generally lower, and releasing it later when prices increase. Those against it expect irrational volatility in the prices of essentials and increased black marketing.

The government had proposed these laws as reforms similar to 1991 which liberalised the Indian economy linking it with the globalised markets. The new laws were aimed to strengthen basic farm sector infrastructure through greater private investments.

Even the previous governments faced financial constraints when it came to investing in farm and rural infrastructure. The government observed that the growing food markets in India would offer scope to private players and make agriculture profitable for the farmers.

Although farmers remained worried over the assurance on minimum support price, the government had argued that the laws would open up new opportunities so farmers could earn more from their farm produces.