Wednesday, October 5th, 2022 13:03:05

Farmers’ Agitation Myth and Truth

By Dr. Alok Chakrawal
Updated: December 18, 2020 1:49 pm

The seeds of agriculture produce price control were shown during the British rules. India was the largest cotton producing country in the world in eighteen and nineteen centuries. As a matter of fact, India is still the largest cotton producing country in the world leaving behind China, United States, Brazil, Pakistan and many more other leading agriculture-based economies. Indian cotton was considered as one best quality around the world in those days. Manchester was the textile manufacturing hub of the world since 17th century. Initially, most of the textile factories were using woolen yarns but later cotton took over and become more popular. The main source of cotton supply to the Manchester textile factories was India.

Raw cotton was the first farm produce to attract the attention of the British Rulers to the anxiety to make available the supplies of pure cotton at reasonable prices to the textile mills of Manchester (UK). “Consequently, India’s first regulated market (Karanja) was established in 1886 under the Hyderabad Residency Order, with the first legislation being the Berar Cotton and Grain Market Act of 1887, which empowered British residents to declare any place in the assigned district a market for sale and purchase of agricultural produce and constitute a committee to supervise the regulated markets. This Act became the model for enactment in other parts of the country.” On the recommendations of Royal Commission on Agriculture of 1928, British Ruled India prepared a Model Bill in 1938 and circulated it to all states; however, not much headway was made until India’s independence.

Most of the Indian states enacted Agricultural Produce Markets Regulation (APMR) Acts during sixties and seventies. All primary wholesale assembling markets were brought under the ambit of these Acts. Well laid out market yards and sub-yards were constructed and, for each market area, an Agricultural Produce Market Committee (APMC) was constituted to frame the rules and enforce them. In a way it was the beginning of organized agricultural produce marketing through such regulated markets. However, most of these markets are under the influence sizeable commission agents and middlemen who capable of affecting the price of agricultural produce. Another fact about Agriculture Produce Market Committee (APMC) is that farmer is not allowed to sell his agricultural produce outside of the mandi. A farmer is supposed to pay the levies of mandi even if he is dealing outside.

The National Commission on Farmers, chaired by Prof. M. S. Swaminathan, submitted five reports through the period December 2004 – October 2006 to address the miserable conditions of farmers in India. Considering recommendations of the Swaminathan Commission Reports, the Union Budget proposed to create a United National Agriculture Market with the help of state governments and NITI Ayog in the year 2015. Consequently, the Government of India passed the following acts in the month of September 2020 to bring revolutionary reforms in the Indian Agriculture Sector:

  1. the Farmers’ Produce Trade and Commerce (Promotion and Facilitation) Act
  2. the Farmers (Empowerment and Protection) Agreement on Price Assurance and Farm Services Act; and
  3. the Essential Commodities Amendment Act.

The biggest shock of these reform acts was seen on not only opposition parties but allies of National Democratic Alliance (NDA) were also shattered. Harsimrat Kaur Badal of Shiromani Akali Dal (SAD), the then Union Cabinet Minister of Food Processing Industries in the Government of India, immediately resigned from her ministerial position in protest of these acts. Later SAD announced parting ways from NAD to join farmers agitation against the Central Government. Of course, main opposition party Indian National Congress and other major parties viz. NCP, CPI, CPM, TMC, SP, BSP and others are against these bills as usual. It is interesting to note that the same opposition parties favored such bills when they were in power for ten years, from 2004 to 2014, under the umbrella of United Progressive Alliance (UPA).

Major Provisions of these Acts

Let us see some provisions of the act for a better understanding about the facts of the law.

  •  It allows intra-state and inter-state trade of farmers’ produce beyond the physical premises of APMC markets.  State governments are prohibited from levying any market fee, cess or levy outside APMC areas. Such trade can be conducted in an ‘outside trade area’, i.e., any place of production, collection, and aggregation of farmers’ produce including: (i) farm gates, (ii) factory premises, (iii) warehouses, (iv) silos, and (v) cold storages.
  •  It permits the electronic trading of scheduled farmers’ produce (agricultural produce regulated under any state APMC Act) in the specified trade area.  An electronic trading and transaction platform may be set up to facilitate the direct and online buying and selling of such produce through electronic devices and internet.  The following entities may establish and operate such platforms: (i) companies, partnership firms, or registered societies, having permanent account number under the Income Tax Act, 1961 or any other document notified by the central government, and (ii) a farmer producer organization or agricultural cooperative society.
  • The Farmers Agreement Ordinance creates a framework for contract farming through an agreement between a farmer and a buyer prior to the production or rearing of any farm produce.  It provides for a three-level dispute settlement mechanism: the conciliation board, Sub-Divisional Magistrate and Appellate Authority.
  • The price of farming produce should be mentioned in the agreement.  For prices subjected to variation, a guaranteed price for the produce and a clear reference for any additional amount above the guaranteed price must be specified in the agreement.  Further, the process of price determination must be mentioned in the agreement.

  • It allows the central government to regulate the supply of certain food items only under extraordinary circumstances (such as war and famine).  Stock limits may be imposed on agricultural produce only if there is a steep price rise.
  •  The Essential Commodities Act, 1955 empowers the central government to designate certain commodities (such as food items, fertilizers, and petroleum products) as essential commodities.  The central government may regulate or prohibit the production, supply, distribution, trade, and commerce of such essential commodities.  The Ordinance provides that the central government may regulate the supply of certain food items including cereals, pulses, potatoes, onions, edible oilseeds, and oils, only under extraordinary circumstances.   These include: (i) war, (ii) famine, (iii) extraordinary price rise and (iv) natural calamity of grave nature.
  • It requires that imposition of any stock limit on agricultural produce must be based on price rise.  A stock limit may be imposed only if there is: (i) a 100% increase in retail price of horticultural produce; and (ii) a 50% increase in the retail price of non-perishable agricultural food items.   The increase will be calculated over the price prevailing immediately preceding twelve months, or the average retail price of the last five years, whichever is lower.


Even a layman can interpret these provisions easily in favour of a marginal farmer. Farmers will get an opportunity to explore better prices for their agricultural produce beyond the limits of APMCs and state borders. Farmers are free to sell out their produce anywhere at an agreed price without any restrictions of any registered or unregistered bodies. There are as many as 22,000 Gramin Haats across the country working as local market for sale and purchase of agricultural produce but APMCs are always building pressure on farmers not to deal in these Haats. These acts are permitting farmers to sell their produce anywhere in the country, that means they can sell it in the nearby Haats also. In a way it’s a recognition to these Haats for regular trading of agricultural produce. This will save a big burden of transportation cost from poor farmers.

A leading politician of opposition party alleged the Central Government that in the name of contract farming the Government is going to handover agricultural affairs of Rs. 25 lakh crores in the hands of five business families. This really sounds funny. Yes of course, it provides an opportunity to farmers to get into an agreement for contract farming on an agreed price of the future yield. There are all sorts of provisions including price determination mechanism, price escalation clause, and other unexplained uncertainties. There is long history of undocumented contract farming in India even prior to the existence of this law. Such undocumented contract farming is just a type of exploitation of famers by big landlords and indigenous money lenders.

Further, there is a lot of hue and cry on Minimum Support Price (MSP) for inclusion in the said acts. Let us understand it clearly that there is not MSP is a practice of the Government which is continued for years without any legal binding. The Central Government nowhere claimed that it is going to withdraw MSP practices. Moreover, only 8% of the total agricultural produce is procured by the Government through MSP mechanism; and, hence, 92% agricultural produce is sold out through APMCs or elsewhere without MSP.

It is quite disheartening to see that anti national and anti-social elements are using the platform of the farmers’ agitation to achieve their oblique targets. Even those who have nothing to do with agriculture and farming business are seen at the site of the protest. Slogans for demanding Khalistan have been heard during 17 days long agitation. There are people trying to mishandle and damage public property under the veil of farmers’ protest.

The most positive thing about the Government’s approach is that it has always been open for talks with the farmers’ leaders. The entire Government machinery is on foot to handle any situation. It has been tough time for the Union Minister Narendra Singh Tomar during this turmoil but he always appeared cool and composed, ready to discuss any matter regarding the Farmers Bill.

There might be some lacking in terms of groundwork from the bureaucratic and ministerial staff but that does not mean the entire nation should be hijacked by just a group of people. Prime Minister P V Narsimha Rao had also faced severe protest when he introduced Liberalization, Privatization and Globalization policy during 1991 to 1996. Rajiv Gandhi was criticized for introducing computer-based ticketing in Railways during his tenure of 1985 to 1989.

We must grow as nation by now. Protesting just for the sake of protest is not a mature behavior. A democratic country like India has already number of issues to be addressed properly. Stalling economic activities just because you are not in the power is not a welcoming approach; and that too when not only the nation but the entire nation is facing economic crisis due to pandemic COVID -19. Let the legislature do its work properly and see the implementation of these acts in real perspective. Yes, one must protest if the law is not in the interest of the farmers but for that we need to first read and understand it well.


By Dr. Alok Chakrawal

(The writer is a Professor, Saurashtra University, Rajkot, Gujarat)

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