Farm Laws 2020: Consequences and Implications

What are these laws?

The farm bills 2020 were combination of three farm bills that were brought by the central government as Ordinances in the early half 2020 with an aim of improving the dilapidated condition of the agriculture industry.

These were later passed by the Parliament of the country (which remains another contentious issue) and became a law by the assent of the President towards the end of the 2020 and are being protested against at large.

The three bills and the provisions are as follows:

  1. Essential Commodities Amendment Bill 2020


This Bill states that there will be no regulations imposed on the stock limits until there is either 100% increase in the price of horticulture produce or 50% increase in the retail price of nonperishable agricultural items.


It is aimed at maximizing the number of cold store facilities and silos by involving the private players to store essential food commodities in the facilities available with them since the government alone cannot take care of the huge produce across the country in the limited spaces available.

Disadvantages and their feared consequences and implications

The biggest issue that is associated with the Bill is that there is a possibility hoarding by the large buyers thereby leading to an artificial scarcity and thus resulting in inflation (which any nation can ill afford).

  • The Farmers’ Produce, Trade and Commerce Bill 2020


This is the most elaborate Bill amongst the three Bills that were tabled, it has provisions regarding the setting up of an electronic market, the contact farming that can be done only between a farmer and a sponsor, the methods of redressal, the setting up of a parallel market to the APMC markets independent of state interference and taxation, interstate trade and removal of all barriers and setting up of an “Price Information and Market Intelligence System”.


The aim of bringing this to the floor of the House was to increase competitiveness, removal of the middle men, shortening of the supply chains and proving the farmers with an alternative market structure which is tax free to help them sell and get better prices.

Disadvantages and their feared consequences and implications

The farmers and the workers of the APMC system fear that since a parallel market will be created with better benefits; their market may crash in a few years leaving the stakeholders at the mercy of the big corporate houses who will later exploit them by being the price makers, the natural death of APMC markets will not be responsibility of any government thereby rendering the people involved jobless, the state revenue will be majorly hit since the new market structure will not give them revenue as the provision of the tax has been ruled out( already the GST system has hit the state revenues), the small farmers will be still forced to sell at the Mandis because they do not have the capacity and finance to do interstate trade hence only the big farmers stand to benefit from this system.

  • Farmers’ (Empowerment and Protection) Agreement on Price Assurance and Farm Services 2020


This Bill elaborately explains the provision of the contact farming, between whom can it be done, the terms of trade to be mentioned, the methods of redressal, etc.

Disadvantages and their feared consequences and implications

The most controversial provision is regarding the redressal where no civil court will have a say in the settling of the disputes between the parties involved in the contact farming. The settlement has a three-tier set up where first the Conciliation Board, then the Sub Divisional Authority and then the Collector will settle the disputes if none of the three work out only a Joint Secretary of the Government of India will be then able to have a final verdict. The farmers fear that the bureaucratic structure may not listen to them as they have less bargaining power, etc. The small traders will also risk themselves when entering into the contract as they will have to comply with all the rules and will be slapped with heavier penalties if they are at fault.

Advantages of the laws

The advantages are where the farmers cannot sign the contracts between themselves saving the small peasants working on the lands of big landlords from being exploited, in any circumstance the farmers’ land cannot be leased out to the sponsor if the farmer fails to fulfil the terms of the contract and is unable to pay the punishment fee.


In conclusion if we look at the larger picture then the major stakeholders like small and marginal farmers, the states, the small traders all stand to lose out in this process making this law non inclusive. The ills of the existing system of agriculture can be done away simply by making no changes in the familiar existing structure of the Mandis and setting up of a parallel market instead. The foremost step that the government should have taken was to change the structure such as facilitate irrigation, stop the overuse of groundwater for crops like paddy in water scarce areas of Punjab and Haryana, stop the burning of stalks by introducing scientific methods of clearing them to make the soil productive and fertile in natural ways, set up agricultural banks to facilitate the credit and set up agri schools for farmers to learn to increase the productivity and the capacity of production, implement the existing laws properly in the states(Bihar and Madhya Pradesh being some of the many) where the APMCs do not function and the contract farming takes place in order to set a good precedent which can eradicate the fears regarding the laws and the consequences and implications of them.