Three new farm laws to be repealed, PM Narendra Modi says

The prime minister said that the laws will be repealed by the end of the month in the Winter Session of Parliament.

Prime Minister Narendra Modi on Friday announced that the Union government will repeal the three new farm laws that had faced vociferous protests for over a year.

Modi, in an address to the nation on the occasion of Guru Parab, said that the laws will be repealed by the end of the month in the Winter Session of Parliament.

Protesting farmers at Ghazipur border celebrate repeal of farm laws

Farmers not to end protests just yet: Tikait

Bharatiya Kisan Union (BKU) leader Rakesh Tikait on Friday said the ongoing anti-farm laws protest will be withdrawn only after the contentious legislations are repealed in Parliament. He also stressed that the government should talk to farmers over the issue of minimum support price (MSP) of crops and other matters.

The three farm acts: Key highlights

1. Farmer’s Produce Trade and Commerce (Promotion and Facilitation) Act, 2020

This act allows farmers to engage in trade of their agricultural produce outside the physical markets notified under various state Agricultural Produce Marketing Committee laws (APMC acts). Also known as the ‘APMC Bypass Bill’, it will override all the state-level APMC acts.

  • Promotes barrier-free intra-state and inter-state trade of farmer’s produce.
  • Proposes an electronic trading platform for direct and online trading of produce. Entities that can establish such platforms include companies, partnership firms, or societies.
  • Allows farmers the freedom to trade anywhere outside state-notified APMC markets, and this includes allowing trade at farm gates, warehouses, cold storages, and so on.
  • Prohibits state governments or APMCs from levying fees, cess, or any other charge on farmers produce.

2. Farmers (Empowerment and Protection) Agreement of Price Assurance and Farm Services Act, 2020

The acts seeks to provide farmers with a framework to engage in contract farming, where farmers can enter into a direct agreement with a buyer (before sowing season) to sell the produce to them at pre-determined prices.

  • Entities that may strike agreements with farmers to buy agricultural produce are defined as “sponsors’’ and can include individuals, companies, partnership firms, limited liability groups, and societies.
  • The act provides for setting up farming agreements between farmers and sponsors. Any third parties involved in the transaction (like aggregators) will have to be explicitly mentioned in the agreement. Registration authorities can be established by state governments to provide for electronic registry of farming agreements.
  • Agreements can cover mutually agreed terms between farmers and sponsors, and the terms can cover supply, quality, standards, price, as well as farm services. These include supply of seeds, feed, fodder, agro-chemicals, machinery and technology, non-chemical agro-inputs, and other farming inputs.
  • Agreements must have a minimum duration of one cropping season, or one production cycle of livestock. The maximum duration can be five years. For production cycles beyond five years, the period of agreement can be mutually decided by the farmer and sponsor.
  • Purchase price of the farming produce—including the methods of determining price—may be added in the agreement. In case the price is subject to variations, the agreement must include a guaranteed price to be paid as well as clear references for any additional amounts the farmer may receive, like bonus or premium.
  • There is no mention of minimum support price (MSP) that buyers need to offer to farmers.
  • Delivery of farmers’ produce may be undertaken by either parties within the agreed time frame. Sponsors are liable to inspect the quality of products as per the agreement, otherwise they will be deemed to have inspected the produce and have to accept the delivery within the agreed time frame.
  • In case of seed production, sponsors are required to pay at least two-thirds of the agreed amount at the time of delivery, and the remaining amount to be paid after due certification within 30 days of date of delivery. Regarding all other cases, the entire amount must be paid at the time of delivery and a receipt slip must be issued with the details of the sale.
  • Produce generated under farming agreements are exempt from any state acts aimed at regulating the sale and purchase of farming produce, therefore leaving no room for states to impose MSPs on such produce. Such agreements also exempt the sponsor from any stock-limit obligations applicable under the Essential Commodities Act, 1955. Stock-limits are a method of preventing hoarding of agricultural produce.
  • Provides for a three-level dispute settlement mechanism: the conciliation board—comprising representatives of parties to the agreement, the sub-divisional magistrate, and appellate authority.

3. Essential Commodities (Amendment) Act, 2020

An amendment to the Essential Commodities Act, 1955, this act seeks to restrict the powers of the government with respect to production, supply, and distribution of certain key commodities.

  • The act removes cereals, pulses, oilseeds, edible oils, onion, and potatoes from the list of essential commodities.
  • Government can impose stock holding limits and regulate the prices for the above commodities—under the Essential Commodities, 1955—only under exceptional circumstances. These include war, famine, extraordinary price rise, and natural calamity of grave nature.
  • Stock limits on farming produce to be based on price rise in the market.  They may be imposed only if there is: (i) a 100 percent increase in retail price of horticultural produce, and (ii) a 50 percent increase in the retail price of non-perishable agricultural food items. The increase is to be calculated over the price prevailing during the preceding twelve months, or the average retail price over the last five years, whichever is lower.
  • The act aims at removing fears of private investors of regulatory influence in their business operations.
  • Gives freedom to produce, hold, move, distribute, and supply produce, leading to harnessing private sector/foreign direct investment in agricultural infrastructure.

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