Corporate Review

Everything you need to know about the Farm Bill 2020

Everything you need to know about the Farm Bill 2020

On 14th September 2020, Farm Bill 2020, three bills namely, the Farmers’ Produce Trade and Commerce (Promotion and Facilitation) Bill, Farmers (Empowerment and Protection) Agreement on Price Assurance and Farm Services Bill and Essential Commodities (Amendment) Bill were introduced in the Parliament to replace the ordinances issued during the lockdown. 

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

Main provisions

  • Creation of an ecosystem where the farmers and traders enjoy freedom of choice of sale and purchase of agri-produce. 
  • Promoting barrier-free inter-state and intra-state trade and commerce outside the physical premises of markets notified under State Agricultural Produce Marketing legislations. 
  • No cess or levy for sale of produce and no transport costs. 
  • Introducing electronic trading in transaction platform for a seamless trade electronically. 
  • In addition to mandis, freedom to do trading at farmgate, cold storage, warehouse, processing units etc. 
  • Farmers will be able to engage in direct marketing thereby eliminating intermediaries resulting in full realization of price. 


  • Procurement at Minimum Support Price will stop 
  • If farm produce is sold outside APMC mandis, these will stop functioning 
  • What will be the future of government electronic trading portal like e-NAM 


  • Procurement at Minimum Support Price will continue, farmers can sell their produce at MSP rates, the MSP for Rabi season will be announced next week 
  • 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 
  • The e-NAM trading system will also continue in the mandis 
  • Trading in farm produce will increase on electronic platforms. It will result in greater transparency and time saving 

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

Main provisions 

  • Empowering farmers for engaging with processors, wholesalers, aggregators, wholesalers, large retailers, exporters etc., on a level playing field. Price assurance to farmers even before sowing of crops. In case of higher market price, farmers will be entitled to this price over and above the minimum price. 
  • Transferring the risk of market unpredictability from the farmer to the sponsor. Due to prior price determination, farmers will be shielded from the rise and fall of market prices. 
  • Enabling the farmer to access modern technology, better seed and other inputs. 
  • Reducing cost of marketing and improve income of farmers. 
  • Effective dispute resolution mechanism has been provided for with clear timelines for redressal. 
  • Impetus to research and new technology in agriculture sector. 


  • 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 will shy away from them 
  • The new system will be a problem for farmers 
  • In case of dispute, big companies will be at an advantage 


  • The farmer will have full power in the contract to fix a sale price of his choice for the produce. They will receive payment within maximum 3 days. 
  • 10000 Farmer Producer organizations are being formed throughout the country. These FPOs will bring together small farmers and work to ensure remunerative pricing for farm produce 
  • After signing contract, farmer will not have seek out traders. The purchasing consumer will pick up the produce directly from the farm 
  • In case of dispute, there will be no need to go to court repeatedly. There will be local dispute redressal mechanism. 

The Essential Commodities (Amendment) Bill, 2020

It seeks to remove commodities like cereals, pulses, oilseeds, edible oils, onion and potatoes from the list of essential commodities.

This will remove fears of private investors of excessive regulatory interference in their business operations.

The freedom to produce, hold, move, distribute and supply will lead to harnessing of economies of scale and attract private sector/foreign direct investment into agriculture sector. 

Speaking about the Bills, Shri Narendra Singh Tomar said that the Government under Prime Minister Shri Narendra Modi has taken several landmark decisions in last six years to ensure that farmers get remunerative prices for their produce, and for raising farmers’ incomes and livelihood status.

He again clarified that the procurement at Minimum Support Price will continue, assurance for this has been given by Hon’ble Prime Minister himself, rate of MSP has been increased considerably during 2014-2020 and MSP for coming Rabi season will be announced in the coming week.

The Union Agriculture Minister said that full protection has been ensured to farmers in these legislations. 

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