Agriculture Reforms 2020: Good or bad?

The government is aiming to transform agriculture and to enhance the income of the farmers bypassing 3 significant bills from parliament which are:

➢ The Farmers (Empowerment and Protection) agreement on price assurance and farm services bill 2020

➢ The farming produces trade and commerce (promotion and facilitation) bill, 2020 ➢ The Essential commodities (amendment) bill, 2020.

 But there is a lot of controversies related to these bills and we will understand these reforms one by one and in detail.  

The Farmers (Empowerment and Protection) agreement on price assurance and farm services bill 2020 


From the name, it is easy to understand that this bill has something to do with the protection of farmer’s interests. So the government has made a legal agreement on the part of both business and farmers so that if a business owner wants to buy any product produced by the farmer then he has to get into a legal agreement with farmers and this legal agreement would be basically to protect the interest of the farmers. This bill also provides a dispute settlement mechanism between a farmer and a buyer by an established authority. This bill will attract private investors. Companies can help farmers in supplying inputs, assistance in land preparation, providing production advice, and transporting products to their premises.  


Let’s understand the context of the word Farm Services. It sounds like a buyer can specifically tell the farmer about the quality or grade and many more conditions related to product delivery, type, standards, etc. The agreement will outline conditions for the production of farm products and delivery to the buyer’s premises. Farmers are having a fear of getting dominated in the legal agreements by the big corporates. So there are chances a private company can exploit a farmer through legal documentation and based on these conditions.  

The Farming produce trade and commerce (promotion and facilitation) bill, 2020 


This bill is allowing farmers to trade farm goods outside the physical premises of Mandi or APMC yards. Earlier agricultural trade could be conducted only in the APMC yards like warehouses and cold storage but this new act will give farmers more freedom. We know that all the subjects in India are divided into 3 lists – Union list, State list, and Concurrent list so Agriculture is a part of the state list so therefore many states like Punjab and Haryana could lose a big source of State revenue. The bill is more beneficial for the big farmers as they can sell their farm goods outside the APMC mandi without being taxed by the government.  


This bill will hardly bring any change in the life of small farmers, they are anyhow selling their produce outside the mandir plus due to transportation and logistics costs, small farmers don’t have any privilege to go a long distance to sell the goods. There’s one more perspective from this bill. This bill is a way for the government to get out of the agricultural business. It will all be handled in a free market and the income of the farmers will depend upon the demand and supply coming from the market.  

The Essential commodities (amendment) bill, 2020 

This is not a new bill, it’s an amendment to the already existing bill for the essential commodities. This bill is a mechanism to control the production, supply, and distribution of certain commodities. Essential commodities are such things, suppose if you illegally store a commodity to create artificial demand and create black marketing for those commodities. It affects the life of normal people. For example certain essential foods, medicine, fuel petroleum, etc.  


With the help of this law, the central government can include new commodities as and when the need arises and vice versa. For example, there is a shortage of onion because it is being kept in storage to generate an artificial demand. When the demand will increase there will be a positive impact on the price of the onion too. Through this bill, the government will make sure that these things do not happen and corporates could not take illegal advantage of the people. 

We have seen a similar case in 2020 when the government has marked masks and hand sanitizer under essential commodities and has done a price cap that will ensure that these products could be made available to the general public at the right price and at right time. So in our case, the amendment that has been made is to remove certain commodities from being labeled as essential commodities. 

The government will only interfere in the price and supply of these goods only in case of WAR, Famine, high price rise, or natural calamities. These commodities which are removed are – cereals, pulses, potato, onion, edible oilseed, and oils. This will eventually impact the prices and boost the income of farmers.  


The government has included the daily essential commodities in the list like cereals, pulses, potatoes, and onion. So these are the basic consumption products and will create a high chance of hoarding. That is the prime reason which is creating the price of these all goods to get increased.  

Talking about the high price rise controlling by the government, there are few conditions to it. For the non-perishable goods, only a 50 % hike in the price will create government involvement in making a price cap. Whereas for the perishable goods, if the prices go up by 100% then the government will interfere. This whole ecosystem can create black marketing, hoardings, and monopoly for the few individuals over the prices of certain goods. It will in the end pinch the pocket of regular consumers like you and me by creating high prices.

We all know that agriculture as a subject comes under the state list. So opposition parties are saying that the bills are mainly to centralize the whole scenario of farming. But in my opinion, this is not true because there is very little being controlled by central and they are trying to take an exit from the agricultural business.  

-Deeptansh Sharma (Jaipuria Institute Of Management, Jaipur)

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