Farm Bill 2020: An overview with the pros and cons on the Agricultural Sector

Recently India saw a strong protest after the Parliament passed three agriculture related bill. Three bills that were passed are Farmers' Produce Trade and Commerce (Promotion and Facilitation) Bill, Farmers (Empowerment and Protection) Agreement on Price Assurance and Farm Services Bill and Essential Commodities (Amendment) Bill.

These bills replaced the Ordinances issued in June 2020 and were passed in order to bring change in some of the key aspect in agricultural economy such as Price of agricultural commodities, Trade of agricultural products, farm services including contracts, and stock limits for essential commodities.

As per the government, these bills will bring a boost in agricultural sector. It would raise farmer’s income and promised to double the income by 2022. It will make the farmer independent of government-controlled markets and fetch them a better price for their produce.These bills aim to develop a new system where farmers are independent to sell and purchase there produce outside the Mandis i.e. APMC (Agricultural Produce Market Committee). It will allow farmers an option to sell their produce directly to these new zones, without going through the middlemen and paying levies such as mandi fees.This will encourage the inter-state trade and reduce the cost of transportation.

Further the bill formulates framework for Contract Farming and sought to remove the stock holding limits. These bills also encourage the Private players to invest in grading, warehousing and other farm infrastructures. It will help in creation of Farmer Producer Organization (FPO), focusing on marginal and small farmers as well. A combined effect of these bills will help in creating a One Nation, One Market in agricultural produce.

But the Farmers have been apprehensive about the bill. They are mainly concerned that this will eventually end the Whole sale market and the assured prices, leaving them with no back up. They are also anxious over the MSP (Minimum Support Price) for their produce. Mostly farmers feel that private players will have upper hand and will exploit the farmers, by deciding the price of the farm produce as per their needs and they cannot return to the mandi or use it as a bargaining chip during negotiations.

Agriculture, which employees the half of the population of India, is considered as the backbone of Indian economy. It has been in desperate need for the reform. But the new - and controversial - bills are unlikely to be a solution for farmers' troubles. With introduction of these new bills, on one side this will improve farm incomes, attract investment and technology, and increase productivity. It will also free the farmer from the control of middlemen who effectively run wholesale markets. But with these changes, they will lose their commissions, and state governments stand to lose crucial tax revenue. Therefore, in a country where agriculture employs so many millions, leaving farmers' fates to the moods of the market cannot be the only answer.