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Reforms will accelerate Agricultural Growth & Create Employment Opportunities to boost Indian Economy

The Farmers' Produce Trade and Commerce (Promotion and Facilitation) Bill, 2020 and The Farmers (Empowerment and Protection) Agreement of Price Assurance and Farm Services Bill, 2020 is now passed in both the house.

Pritam Kashyap

The Farmers' Produce Trade and Commerce (Promotion and Facilitation) Bill, 2020 and The Farmers (Empowerment and Protection) Agreement of Price Assurance and Farm Services Bill, 2020 has been approved in both the house. 

The Bills was introduced in Lok Sabha by Union Minister of Agriculture & Farmers’ Welfare, Rural Development & Panchayati Raj, Narendra Singh Tomar, to replace ordinances promulgated on June 5, 2020. 

Speaking to the discussion on the Bills Tomar said, “Prime Minister Narendra Modi is fully committed to the welfare of Gaon-Garib-Kisan and has reassured emphatically that while farmers will now be freed from the restrictions of having to sell their produce at designated places. The procurement at Minimum Support Price (MSP) will continue and mandis established under State laws will also continue to operate.” 

He said, “These legislations will bring about revolutionary transformation and transparency in the agriculture sector as the electronic trading will increase & there will be accelerated agricultural growth as the private investment will be attracted in building supply chains. Agricultural infrastructure, new employment opportunities will also be created and rural economy will get a boost, that will in turn help to strengthen the national economy.” 

The Farmers' Produce Trade & Commerce (Promotion and Facilitation) Bill, 2020 Highlights: 

  • It seeks to provide for creation of an ecosystem where farmers & traders enjoy the freedom of choice relating to sale and purchase of farmers' produce & also to promote efficiency, transparency in the system.

  • Barrier-free inter-State and intra-State trade & commerce of farmers' produce outside physical premises of markets or deemed markets notified under different State agricultural produce market legislations.

  • To provide a facilitative framework for electronic trading & for matters connected therewith.

Now the major doubt is that does the procurement at Minimum Support Price will stop forever? If farm produce is sold outside APMC mandis, these will stop functioning & what will be the future of the government electronic trading portal like e-NAM etc.? 

Union Agriculture Minister to this told that the procurement at MSP would continue so that the farmers can sell their produce at MSP rates. The MSP for Rabi season will be announced next week. He said that the mandis will not stop functioning, trading will continue here as before. Under the new system, farmers will have the option to sell their produce at other places in addition to the mandis and the e-NAM trading system will also continue in the mandis.  

Farmers in India suffered from various restrictions in marketing their products for farmers in selling agri-produce outside the notified APMC market yards. The farmers were also restricted to sell the product only to registered licensees of the State Governments and even the barriers existed in a free flow of agriculture produce between various States owing to the prevalence of various APMC legislation enacted by the State Governments. 


The new legislation will create an ecosystem where the farmers and traders will enjoy the freedom of choice of sale and purchase of agri-produce. It will also promote barrier-free inter-state and intra-state trade and commerce outside the physical premises of markets notified under State Agricultural Produce Marketing legislations and it will be a historic-step in unlocking the vastly regulated agriculture markets in the nation. 

It will open more choices for the farmer, reduce marketing costs for the farmers and help them in getting better prices. It will also help farmers of regions with surplus produce to get better prices and consumers of regions with shortages, lower prices. The Bill also proposes electronic trading in transaction platform for ensuring a seamless trade electronically.  

The Bill basically aims at creating additional trading opportunities outside the APMC market yards to help farmers get remunerative prices due to additional competition. This will supplement the existing MSP procurement system which is providing stable income to the farmer and will pave the way for creating “One India, One Agriculture Market.” 

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

  • It seeks to provide for a national framework on farming agreements that protects and empowers farmers to engage with agri-business firms, processors, wholesalers, exporters or large retailers for farm services.

  • Sale of future farming produces at a mutually agreed remunerative price framework in a fair and transparent manner and for matters connected therewith.

Since the Indian Agriculture is characterized by fragmentation due to smallholding sizes and has certain weaknesses such as weather dependence, production uncertainties and market unpredictability so, this makes agriculture risky and inefficient in respect of both input & output management. 

The new legislation will empower farmers for engaging with processors, wholesalers, aggregators, wholesalers, large retailers, exporters etc., on a level playing field without any fear of exploitation. It will transfer the risk of market unpredictability from the farmer to the sponsor and also enable the farmer to access modern technology and better inputs and will also reduce the cost of marketing and improve the income of farmers. 

Now the major doubt is that the under contract farming, farmers will be under pressure and they will not be able to determine prices. How will small farmers be able to practice contract farming, sponsors and will shy away from them plus the new system will be a problem for farmers in case of dispute, big companies will be at an advantage?  

The Minister clarified saying that the farmer will have full power in the contract to fix a sale price of his choice for the production and will receive a payment within a maximum 3 days. 10000 Farmer Producer organizations (FPOs) are being formed throughout the nation and these FPOs will bring together small farmers and work to ensure remunerative pricing for farm produce after signing the contract; farmer will not have sought out traders. In case of dispute, there will be no need to go to court repeatedly and there will be a local dispute redressal mechanism. 

Source - PIB

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