Nov , 2021, Volume : 2 Article : 4

New Farm Bills of 2020: Opportunities, Challenges and Way Ahead

Author : Seedari Ujwala Rani


There are many conflicts raised between farmers and the government due to decision of implementation of new agricultural farm bills in 2020. There are speculations that on one hand, these Bills will encourage free interstate trade without any restrictions but on another hand, it may weaken the APMC mandis in the state. There is a conflict of interest between farmers and government with uncertainty of intervention and dominance by private players in the agriculture sector. While at the same time, we can also notice about our smaller number of storage structures, warehouses, inadequate technologies facilities in our country which makes surplus storage by farmers gets wastage during its post-harvest process which leads them to distress condition of sale. This implementation of laws will be beneficial to farming community in view of private investment in the agricultural sector but at the same time, we need to be vigilant about private dominancy in agricultural sector which will be harmful to farmers.

Keywords: Agricultural reforms, Farm bills, APMC, Private investment

Agriculture, Industry, Services are the three main sectors in India. The majority of the people depend upon the agriculture sector for their livelihood either by engaging in crop production or marketing aspects (OECD, 2019). First five-year plan has given utmost importance for agriculture growth and in early 1960s major marketing reforms has emerged. The concept of regulated market arises in India during 1960s, which ensure the farmer to sell their produce in the markets with reliable prices in restricted market areas. This concept was again remodified as Model APMC Act in the year 2003 with rectifying drawbacks of previous reforms with modification of no restriction of sale for farmers, which he can sell outside of the restricted market area. APMC act became a clear way, which protects the farmers` interest and fair play of both producers and traders in the market for agreed prices. Due to lack of infrastructure facilities like storage structures and warehouses, the post-harvest losses increased annually which made government to feel a necessary step for encouraging private players to invest in the building of cold storages in the country.  At all-India level, farmers are unable to sell about 40 percent of the total fruits and vegetables produced in the market and lose around `63,000 crore every year for not being able to sell their produce (Pandey, 2018). and also noticed that the losses in post-harvest sector are estimated to be from 10 to 25 per cent in durables, semi-perishables and products like milk, meat, fish and eggs and estimated losses in fruits and vegetables are higher which range from 30 to 40 per cent (Sharma, 2011). 

        Even though agriculture is a state subject, sometimes the centre interferes to set the limits, rules and regulations to take it in the right path and direction. By considering all the facts, centre has taken a step to implement agricultural farm bills on 14th September 2020 to replace ordinances that came on 5th June 2020. In order to foster and ease the commercial activities, the centre has passed the ordinance of 3 bills in 2020 but due to farmers protest against farm bills, Supreme Court had stayed bills in January 2021

 APMC Model & e-NAM in the state

The total APMC mandis in India were 6,946. Each state APMC works independently from other state APMC. Commercial activity through e-NAM in APMC maintains clear transparency in price discovery between actual supply and demand. The platform of e-NAM, launched in 2016 to create a network of existing mandis on a common online market platform as `One Nation, One Market` for agricultural commodities. It has 1,000 mandis located in 21 states and union territories.

 Cold chain Capacity in India

      There are 6 zones in India, in which zone-2, zone-3, zone-6 requires an extra capacity of the cold chain (as shown in Fig 2). There is a need to set up more warehouses and cold storage structures to increase cold chain capacity in India, which reduces post-harvest losses.

 Three New Farm Bills 2020: Agriculture Act 2020

i) The Farmers` Produce Trade and Commerce (Promotion and Facilitation) Bill, 2020 

      FPTC bill mainly aims at liberalizing the trade activities within and among the states in the nation. It states that farmers have the freedom to sell their commodities outside of notified market areas. As the mandis are less and unavailable in some villages, the farmer can be permitted to sell to traders and dictate their prices.

Table 1: Zonal wise cold chain capacity in India


States/Union territories

Installed Cold chain capacity (MT)

Capacity Requirement (MT)

Zone I

Uttar Pradesh, Punjab, Haryana, Delhi, Uttarkannda, Jammu & Kashmir, Himachal Pradesh



Zone II

West Bengal, Bihar, Odisha, Jharkand



Zone III

Gujarat, Mahrastra, Rajasthan, Goa



Zone IV

Madhya Pradesh, Chatiisgarh



Zone V

Andhra Pradesh, Karnataka, Tamil Nadu, Kerala



Zone VI

Assam, Tripura, Meghalaya, Nagaland, Arunachal Pradesh, Mizoram, Manipur, Sikkim



Source: NCCD, 2015.

Predictable uncertainty: But some issues need to be considered that even the law stick to some points of MSP existence for commodities, available of mandis to farmers still after implementation of this bill, there may be negative impact in long run. By liberalising the trade and commerce rules, there is a chance of private traders procuring the commodities lower than MSP fixed rates which will lead to distress sale of surplus on farmer’s view.


ii) The Farmers (Empowerment and Protection) Agreement of Price Assurance and Farm Services Bill, 2020

       This bill mainly considers the issues of price assurance, contract farming and farmer income. It encourages farmers to have contract farming with private companies. Through the mutual agreement of contract farming by two parties i.e farmer and company, the farmer may be empowered with assured price as it is predefined and pre-agreed commitments. The company provides various farm services like seeds, fertilizers, technology to enhance their crop production. The government also had given clarity about the presence of a dispute settlement body to solve if any dispute or grievance occurs between two parties.


Predictable uncertainty: There may be a chance of delaying of payment or less payment to farmers from private companies and also may lead to shifting of crop production towards commercial cash crops by leaving staple crops which disturbs the local field crops.


iii) Essential Commodities Act (Amendment) Act, 2020

    Essential commodities consist of cereals, pulses, edible oils, oilseeds, onions, potatoes for which there is a purchasing limit for buyers according to the essential commodities act 1955. But this 2020 farm bill tries to relax the ceiling limit for buyers. This eventually encourages the private sector to procure more and may lead to the set-up building of warehouses, storage structures to store the excess product. The government also clarified that, it will involve in when there are natural calamities, wars, disasters in the nation. It also mentioned that, if the prices rise 100 percent for horticulture produce or 50 percent for non-perishable produce, then the government tries to rationalise the prices in unforeseen conditions of price rise.


Predictable uncertainty: But the problem may occur with the private traders as they procure in bulk quantities, stored for long times which may lead to hoarding and create artificial scarcity. Artificial scarcity may create a price rise of commodities which ultimately hurts the interest of consumers. There are opportunities for investments but the threat from the private sector should be carefully reconsidered and reviewed in this farm bill to avoid future uncertainties.

SWOT Analysis of New Farm Bills 2020


·     No restriction of trade for the sale of commodities across different states.

·     Private companies can support farmers by supplying farm inputs for cultivation

·     More number of storage structures can be set up at grassroot level


·     Dominate role of the Private sector and neglect APMC Mandis in the state

·     As majority of farmers are illiterate, they may not understand the concept of written contract agreements with private companies.


·    Market accessibility for product sale and purchase across the states.

·    Farmer can fix the price


·  Chances of Artificial scarcity and hoarding to increase the price rise of commodities in the market

·  Private traders may purchase agricultural commodities below the fixed MSP which hurts the farmers` interest


       All three bills are with familiar concepts of APMC, electronic trading, contract farming and Essential commodities act. Whatever the rules, regulations, reforms laid down by the government, it always has the intention to protect the interests of producer and consumer. But, in long run, there is also a smaller percentage of exploitation which may be done by private traders with profit motive by not purchasing produce from farmers at MSP rates, irregular payment through contract farming and black marketing which leads to price rise of commodities. This issue needs to be addressed thoroughly before passing the bills.


Policy recommendation

     All the three bills will be successful if it is strictly monitored by the vigilance committee, set up more public agri start-ups, involving SAU, KVKs to reduce the chance of exploitation of farmers and consumers. Involving a group of farmers from each state in decision making process will help in building the trust between farmers and government while implementing agricultural policies.



Reddy, A. (2018). Electronic national agricultural markets: the way forward. Current Science,115(5), 826-837

NCCD, 2015. National centre for cold chain Development.

OECD. (2019). Report on Covid 19 and the food and agricultural sector: Issues and policy response, pp-1-11

Pandey, K., (2018). Poor Post-harvest Storage, Transportation Facilities to Cost Farmers Dearly. Published in Down to earth on 5 July 2018.

Sharma, G. and Singh, S.P. (2011). Economic Analysis of Post-harvest Losses in Marketing of Vegetables in Uttarakhand. Agricultural Economics Research Review, 24 (2) 309-315.

Standing Committee on Agriculture. (2019). Agriculture Marketing and Role of Weekly Gramin Haats’, Lok Sabha,

The Essential Commodities (Amendment) Ordinance, 2020, Ministry of Consumer Affairs, Food and Public Distribution.

The Gazette of India. (2020). No. 35, New Delhi, Friday, June 5, 2020/Jyaishtha 15, 1942 (Saka). Retrieved from

  1. N/A