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FARM BILLS 2020: A Closer Look | Some Perspective

FARM BILLS 2020: A Closer Look | Some Perspective
Author: CA Anurag Sharma | 3rd Feb 2021 | Read Time: 6-8 mins 

As I sit to write this, let me, at the very oust, tell you that I—am also a farmer. My grandfather is a farmer and I still have in my memory a clear, vivid picture of the green, lush fields of my village– which is in Nalanda district, Bihar (yes, you guessed it right… wahi Nalanda University wala), where I used to spend my summer vacations back in the school days.

Hi guys..this is Anurag Sharma…qualified CA, CFA charterholder, a working professional with 6 years of corporate experience working across MNCs, and have recently ventured into teaching (at SSEI)–a passion I’ve wished to pursue for some time now. Today I wish to throw some light on the Farm Bills- like to share a perspective or 2 on the same.

Coming to the topic, I’m almost certain that most of us are aware that Indian farmers are protesting about some law which our favorite Modi Government has passed.

I believe– that is where most of us would be at.

And this is really unfortunate as we, the youth– read this from the comforts of our homes…. getting no-questions-asked groceries delivered at our doorstep without any hassle.

But let me tell you what I feel… this may not be something we care about, but should! Being the youth, being the next-generation– which will run the country in future, we should care about every aspect/agenda that affects our Nation. And by caring I mean we should understand in details as to what is the reality and should not jump to conclusions based on what is out there on social media (which anyways has lost it’s credibility and is now in competition with daily soaps and bollywood for TRP’s and advertisement revenue)

It is our social and moral responsibility to not just be a citizen, but to be an informed citizen.

About the Bill:

The BJP Government– on 5th June 2020, when the entire world was still figuring out how to deal with Covid19 Pandemic, passed an ordinance to implement 3 new laws relating to Agriculture:

  1. The Farmers’ Produce Trade and Commerce (Promotion and Facilitation) Bill, 2020; (FPTC)
  2. The Farmers (Empowerment and Protection) Agreement of Price Assurance and Farm Services Bill, 2020 (FAPAFS)
  3. The Essential Commodities (Amendment) 2020 Sunday (ES)

And on Sunday 20th September 2020, instead of normal voting– the Bill was passed by Rajya Sabha through voice vote amidst a lot of drama.

Essentially—in lay man’s terms— these 3 Bills aim to change the way agricultural produce is marketed, sold and stored across the country.

Let us look at some of the key points:

  • In the current setup, agricultural produce are mostly sold through Agricultural Produce Market Committee (APMC), referred to as ‘Mandi’ in general–which is nothing but an organized market place where farmers bring their produce and sell them at a Minimum Support Price (MSP) set by government and state government levy certain taxes.
  • This setup is not followed by all the states, as agriculture is a state subject and many states have their own setup (like Bihar, Maharashtra etc).
  • The APMC Setup is most prevalent in states like Punjab, Haryana & Western UP. That is why you see farmers from these regions protesting more as compared to other states.
  • The New FPTC Act allows farmers to sell their produce outside APMC, without any taxes at a price decided between the buyer and seller. And rightly so, why should there be any restriction on selling farm-produce in APMC —whereas other products and services in the country can be bought and sold freely without restrictions.
  • While these provision looks good on paper, farmers fear that it will lead to collapse of the APMC setup, and ultimately MSP, which provides a lot of support to small farmers.
  • The second Act, FAPAFS–allows the farmers to enter into a forward agreement with corporates, wholesalers, exporters etc for contract farming (where farmer produces on behalf of these parties) with maximum period extending upto 5 years. The Government says that it’s intention with the Act is to transfer price-risk from the farmers to the corporates– by allowing farmers to enter into forward contracts at pre-determined price and also bring about new investment, invention & FDI into the agricultural sector. The farmer’s fear is that they will not be able to negotiate favorable terms against these large corporate houses and will end up getting exploited.
  • The third, i.e, The EC Act, seeks to remove the current limits on warehousing of essential commodities like wheat, oil, pulses & fruits– given the fact that India is self-sufficient & net exporter of agricultural produces. This Act is not facing major challenges from farmers… however their only fear is that it might lead to hoarding and price manipulation by big players.

Probable Solution

Recently, on the 71st Republic Day, everyone witnessed how some anti-social elements are trying to highjack the entire farmer-protest agenda by resorting to violence. But I think we all will agree that violence is never the solution—history is proof. It just dilutes the attention to the main agenda/mudda.

While this is beyond doubt that agricultural sector needs major reforms so as to bring new money, innovation and technology into farming—it should not be done at the cost of marginalized farmers– who struggle to meet their day to day requirements.

One possible solution could be allowing an Agriculture Produce company to be incorporated. It could function in a manner such that farmers of a particular area can come together and they will have to deal with corporates as an entity, instead of individual farmers having to deal with them. This will give them a better position to negotiate.

Based on my understanding, government should not take back the three acts in entirety as demanded by farmers. Rather, the aim should be to understand the concern of farmers and bring about necessary change in consultation by taking a middle path. Both parties may be right in their own claims, but that need not result in violence and ultimate failure of the goal.

I hope the protests/agitation come to an end for once and wish it ultimately works in favor of the farmers– given 42% of our work force is dependent on Agriculture. We as a nation stand by our farmer-brothers, and wish the government handle this issue delicately and reach an amicable solution, soon in the near future.

Jai Hind, Jai Jawan, Jai Kisaan

Thanks for Reading

Anurag Sharma

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  1. Actually, you are right sir. One needs to be an informed citizen. Today, I have come across this blog so I came to know the pros and cons of the reforms. Otherwise, I wouldn’t have spent the time to know about it. Thank you very much, sir. We expect more such blogs from you.

  2. This comment was edited.

    Sir, I think there must be sort of body who”ll look after farmers, they listen to their greviances, their concerns if any mishappening happens with them. As here the minority one are farmers only & they can easily be foul played, manipulated, pressurized & the main thing – counter party risk are high on their part. So govt must take some sort of initiatives in order to protect their interest & definitely whatever govt is doing in in line with improving/increasing GDP growth which I think will be high enough in coming years & also I think we will be reaching/ touching sooner than expected with the growth rate of developed nations & I can say this by looking every kind of reforms, every kind of institutional changes which the modi government is in line with the developed nations like US,UK, Europe & others. This act is perfectly fine according to me.

  3. Entire rice /food industry has been under the ED/CBI observation after they committed a lot of NPAs, money laundering and promoters absconded from India.
    Sukhbir Agro

    REI AGRO – 7000 CRORES
    KRBL – AUGUSTA WESTLAND Money Laundering Rs. 5000 crores.

    There is a clear nexus of the agro-industry and the Congress crony capitalism which has resulted in liberal sanctions of loans to these companies between 2005 to 2014 and now the owners/promoters are absconding/fugitives and CBI has opened an investigation against them. The congress led rot was prevalent all across the Food eco-system /food processing industries/public distribution/Ration shops/food corporation of India/ Sukhbir Agro and not surprisingly their fiefdom and money-making machines have been impacted adversely by the introduction of Farm Laws. That is why protest drama.

    Search on these companies and all CBI investigations against them will be listed.

  4. Elegantly written and conveyed your opinions with us Sir.
    Thank you so much!!

  5. Liked your solutions… Hope we will see such sort of solutions being implemented soon.

  6. It was a great read with problems of each Bill highlighted in particular! The sheer arrogance of this Govt., and the way it works for the few is completely insane.. With those barricading and stuff do you think GOI is even trying to address them.. Feel so helpless as we can’t do anything and be a mere spectator.. It is very well understood why was the violence created on 26/1/2021 and who did it.. Even with no positive outlook left towards the GOI let’s hope for the best!!

  7. FPO point was raised by sadhguru as well in his video.

  8. Haryana and Punjab population (approx 60-70%) depends on agriculture-mainly Paddy and wheat.
    From last 6-7 years Paddy rate is 2000-2200, whereas it was 4400-4600 during UPA tenure(last 2 year of UPA tenure). Modi govt. Said we will double income of farmers upto 2022,where as revenue decrease by 100% and all input cost gets doubled(for ex diesel and fertiliser). From last 6-7 years farmers was doing farming completely in loss. That’s why farmers completely lost there trust in BJP govt And now farmers are against 3 farm bills. Agr MSP hai jab yhaa situation h, agr MSP htaa diye tab kya Hoga.

    • This comment was edited.

      Yes, because UPA was paying taxpayers money to farmers and not market rates based on supply and demand. These farm laws are the need of the hour for Indian farming. Everywhere in the developed world (US/UK/Western Europe/Canada etc..), there are similar laws and similar type of so-called contract farming. This benefits all stakeholders. In India, these laws solve the issues of black-market, corruption, hoarding in godowns of politically funded businesses. Reduces the losses due to middlemen, so the farmers and consumers get the best price based on supply and demand. It obviously makes the market competitive, which will force the farming sector in India to innovate and become more efficient. These laws will also allow the government to disassociate from the farming sector, which in the long term is very good. And why should the government pay MSP to farmers? If it is unprofitable to grow a crop then farmers should innovate and become more efficient? We Indians want the govt to do everything for us, we have to wake to the reality of the globalised and competitive world we live in. MSP is paid from all the taxes that people like us pay.

      • MSP is paid from taxes that people like us pay?
        Is Farmer are not paying indirect taxes?
        Because of MSP govt. is incurring loss – 1-2 rupee per kg selling to Backward class, Is profitable to govt. ? Why govt. Should not stopped that?
        Agr baat utilisation of taxation fund ki hai – In that case on one stage you will feel that salary of president in current situation and salary of all politicians is also wastage of taxation fund.
        Govt. Shall first stopped that all expense and afterwards say to farmers that we will not provide You MSP.
        Is farmers are getting any benefit from these bills? – No
        So, Why farmers accept these bill.

        • How do you say that farmers are getting no benefits from these bills? Do you have any facts to prove it? Farmers will get direct benefits from these bills, in terms of higher purchase price direct from private players. Today or tomorrow contract farming will come to India whether you like it or not. This will have many indirect benefits to everyone in society including professionals like you and me. It will be easy for innovative entrepreneurs to get into farming, as with a structure in place (contracts from private players) it would be easier to borrow, and it will be easier for banks to lend as they will know that there are legally binding contracts in place. In my humble opinion, people have to think practically (not get carried away by the protest) and look at the best farming practices that have been successful around the world, which have made farmers prosperous. Contract farming will also mean that there are good controls on the quality of the produce. We live in a capitalist society, probably that’s why most of us are doing CFA to reap the benefits of this capitalism. And in a capitalist society, you have to be efficient/competitive or you perish. Imagine, if McDonald’s can directly deal with a potato farmer or a group of potato farmers and agree on a price. And in the contract, all risks are mentioned and covered by means of insurance. This way everyone benefits.

    • Agree with you Praveen. Govt should do something to ensure fair price is provided to farm and work towards making agriculture a future prospects for youth

      • Sorry, but I disagree. Like every other thing/commodity, the rates the farmers get should be based on supply and demand. The most efficient farmer should get the best rates. And if farming is not a profitable profession then youth should opt for other professions. The law of supply and demand will act and will result in less competition in farming and more profits in farming, hence the youth after some time will re-enter farming as it will become profitable. The problem in India is over democracy, the farm laws may not be perfect, but it is the first step in cleaning a very corrupt industry which not only includes farmers, but also includes corrupt middlemen, and wholesalers.

    • This comment was edited.


      They were many things to share but keeping in mind limited attention span & time of readers, didn’t make it longer

      • Sir please share.. I am desperate to know what the citizens think about the current situation in the country but can’t as you rightly said The Media, be it main stream( except a few) or the Social media has lost its credibility. You see people avoid these conversations in the normal parlance.. In Support or not there are names for everyone.. I am a CA Final student and havey exams in May, but with all this I am just not able to concentrate.. cut off bhi nahi ho pa raha hai in sab se.. hell disturbed!! I read about all this even though I control myself not to, but.. just to know what’s right and what’s wrong.. please do share your thoughts, it would be of great help and learning..

        • Hi,

          We should have ur priority set now that u r preparing for CA final ur whole focus should on clearing the exam and everything thing else can always follow

          I’m not suggesting you should not care but at the same time don’t let these things affect you

          All the very best with ur preparation n we can discussion I’m details after ur exams

          Until then study hard and enjoy ur self

  9. Thank you sir for a wonderful article. I also hope that the protest end soon.