Introduction
Agriculture has long been the backbone of the Indian economy, providing livelihoods to over half the population. Yet, Indian farmers have faced longstanding challenges—market access restrictions, price volatility, dependence on middlemen, and insufficient returns. To address these issues and liberalize the agricultural market, the Indian Parliament introduced a set of three farm laws in 2020. Among them, the Farmers’ Produce Trade and Commerce (Promotion and Facilitation) Act, 2020 was seen as a revolutionary step aimed at transforming India’s agricultural marketing landscape.
While the Act was presented as a tool for empowering farmers and offering them more freedom, it became a lightning rod for controversy, sparking one of the largest farmer protests in the nation’s history. Eventually, the law, along with the other two farm acts, was repealed in 2021. This article explores the objectives, provisions, advantages, criticisms, and eventual repeal of the Act.
Objectives of the Act
The primary aim of the Farmers’ Produce Trade and Commerce Act was to:
- Provide farmers with the freedom to trade their produce outside the traditional Agricultural Produce Market Committee (APMC) mandis.
- Create an ecosystem where farmers and traders enjoy freedom of choice in sale and purchase of agricultural produce.
- Promote barrier-free interstate and intrastate trade of farmers’ produce.
- Encourage the use of electronic trading platforms for enhanced transparency and competition.
The government emphasized that the Act would dismantle monopolistic structures of APMC mandis and allow farmers to get better prices by accessing a broader range of buyers.
Key Provisions
- Freedom to Trade Outside Mandis
- Farmers could sell their produce in any location, including farm gates, warehouses, cold storages, and processing units.
- This bypassed APMC mandis and their associated fees and levies.
- No State Levies on Trade Outside Mandis
- The Act prohibited any market fee, cess, or levy by state governments on trade outside APMC markets.
- Electronic Trading Platforms
- Enabled the setting up of e-trading platforms for direct and online transactions of agricultural produce.
- Dispute Resolution Mechanism
- Provided for a conciliatory board to resolve disputes between farmers and buyers.
- Sub-Divisional Magistrate (SDM) was designated as the authority to hear grievances and pass orders.
- Interstate and Intrastate Trade
- Farmers could sell across state boundaries without restrictions, enhancing the national agricultural market.
Intended Benefits
The government claimed the Act would:
- Increase competition, thus ensuring better prices for farmers.
- Reduce the role of middlemen, allowing direct engagement between farmers and private players.
- Provide greater market access, particularly beneficial for small and marginal farmers.
- Encourage private investment in supply chains, warehousing, and cold storage.
Criticism and Opposition
Despite its intentions, the Act faced massive resistance, especially from farmers in Punjab, Haryana, and Western Uttar Pradesh. The main criticisms were:
- Undermining APMC Mandis
- Farmers feared that APMCs, which offered a guaranteed procurement system (especially for wheat and rice at Minimum Support Prices or MSP), would be rendered obsolete.
- No Legal Backing for MSP
- The Act made no mention of MSP, creating anxiety that government procurement would gradually reduce, leaving farmers at the mercy of corporate buyers.
- Fear of Corporate Exploitation
- Farmers were concerned that deregulation would allow big corporates to monopolize trade and dictate prices.
- Lack of Consultation
- The Acts were passed with limited stakeholder consultation and without enough discussion in Parliament.
- Jurisdictional Confusion
- Since agriculture is a state subject under the Constitution, states argued that the central law infringed on their rights.
Protests and Repeal
Starting in late 2020, farmers, particularly from Punjab and Haryana, began massive protests. The movement gained national and international attention, with lakhs of farmers camping at Delhi’s borders for over a year. Their demands included:
- Repeal of the three farm laws.
- Legal guarantee of MSP.
- Withdrawal of Electricity (Amendment) Bill.
Despite multiple rounds of talks with the government, the impasse remained. Finally, in November 2021, Prime Minister Narendra Modi announced the repeal of all three laws, citing the government’s inability to convince a section of farmers.
The Farm Laws Repeal Act, 2021 was passed in Parliament on November 29, 2021.
Conclusion
The Farmers’ Produce Trade and Commerce (Promotion and Facilitation) Act, 2020 was envisioned as a transformative reform to liberalize Indian agriculture. It sought to expand market access and empower farmers by offering alternatives to the traditional mandi system. However, its perceived threat to the MSP system, fear of corporate domination, and lack of adequate consultation undermined its acceptance among the farming community.
The episode underscored the importance of inclusive policymaking, especially in a sector as sensitive as agriculture. Future reforms must prioritize stakeholder dialogue, transparency, and state cooperation to ensure both economic efficiency and social equity.
CONTRIBUTED BY:TANISHA ARORA (INTERN)