ANALYSIS OF FARMERS’ ACTS, 2020

By Parth Mahajan, B.A. Llb (H)

Vivekananda Institute of Professional Studies (VSLLS)

 

INTRODUCTION

Recent times saw mass protests in the capital city of India, soon after the passing of the Farmers’ Act, 2020. There were massive gatherings by farmers and politicians’, gathering support for their own respective cause, despite the new social distancing norm in vogue due to the ongoing pandemic. Not only this, there was an incident of the so-called seizing of the Red Fort on Republic Day, 2021, which the social media saw to be similar to the Capitol incident in the United States on 6th January 2021.

The above starting in this apolitical and neutral blog has been made on such a note because of the irony in the society, that parliament legislates a lot many laws, but only those are highlighted which initiate controversy.

Here, the term “Farmers’ Act, 2020” include 3 parliamentary legislations, namely, Farmers’ Produce Trade and Commerce (Promotion and Facilitation) Act, 2020, Farmers (Empowerment and Protection) Agreement on Price Assurance and Farm Services Act, 2020, and Essential Commodities (Amendment) Act, 2020. All these three laws were initially promulgated as an ordinance by the President on 5th June 2020.

Not being influenced by the political and other opinions, the present blog aims to cover the legal aspects of the Farmers’ Act, 2020. First, the three laws have been discussed individually, this will be followed by the study of the culminating effect of these laws. For covering the subject to the maximum extent, the concerns raised by protesting farmers have also been recorded. Later, the challenge to the constitutionality and the current status of Farmers’ Laws has been discussed as it will aid in the analysis and will provide an update on the recent happenings in the subject.

Farmers (Empowerment and Protection) Agreement on Price Assurance and Farm Services Act, 2020                                                                                                                                     This law falls under the Ministry of Agriculture and Farmers Welfare, headed by Hon’ble Minister Naresh Singh Tomar. This act was passed by Lok Sabha and Rajya Sabha on 17th September 2020 and 20th September 2020, respectively. It received President’s assent on 24th September 2020. This statute is Act No. 20 of 2020.

This law aims to provide for a national framework on farming agreements, by means of which farmers will be able to enter into a farming agreement with prospective buyers of their produce. The person who enters in an agreement to buy the farm produce is called a sponsor.

The framework that this act provides, includes many aspects like duration of the agreement, pricing mechanism, settlement of disputes, and other such aspects incidental thereto.

For the duration of the farming agreement, it is stated that the minimum period must be one crop produce or one production cycle of livestock, whereas the maximum period can be up to 5 years. In case, the production cycle is such that it goes beyond 5 years, then the duration of the farming agreement can exceed 5 years, which has to be decided mutually by the farmer and the sponsor and has to be expressly stated in the agreement. This has been provided in s. 3 of the act.

The quality, grade, and standard as well as the price of the crop has to be mutually decided by the parties and it has to be stated in the agreement, as provided in s. 4 and s. 5 of the act. In case, the price to be paid is variable, then two things must be stated as per the want of s. 5: a) a guaranteed price to be paid for such products; b) a clear price reference for the amount to be paid over and above the guaranteed price.

When these essential aspects of the farming agreement will be mutually decided and noted down, then the chances of disputes arising will be less.

Now, in case there arises any dispute out of the farming agreement, this act provides for a conciliation clause, which must be explicitly added in the farming agreement as per s. 13 of the act. If the dispute is resolved by conciliation, then a memorandum of the settlement must be drawn, which shall be signed by both parties.

If there is no conciliation clause in the farming agreement, or no settlement could be arrived out of the conciliation agreement, then the concerned party must approach the sub-divisional magistrate u/s. 14(1) of the act. As per s. 14(3), every order passed by a sub-divisional magistrate would have the same effect as that of the order of a civil court.

The appeal against the order of sub-divisional magistrate would lie to Collector or Additional-Collector, as nominated by the Collector, u/s. 14(4) of the act. As per s. 14(5), the appeal has to decide within 30 days and as per Section 14(6), the order will be enforceable just like an order of a civil court. Both, the sub-divisional magistrate and the Collector have been given the power of a civil court for this purpose, u/s. 14(8) of the Act.

The aim of such a dispute redressal mechanism is to provide an easy and speedy process for dispute resolution. The conciliation part also suggests that there is an attempt to make an environment where the disputes can be resolved by the parties amongst themselves.

Other notable features include that the sponsor is prohibited u/s. 8, from acquiring ownership of the land or making permanent changes in the land. S. 15 bars any action against the land of the farmer for recovery of any dues with respect to orders passed u/s. 14. Both these provisions will save the interest of the farmers in their land.

Section 12 provides that a registration authority be set up by the state government for registration of farming agreement. Once the agreements will be duly registered, the chances of fraud will be reduced. S. 19 bars the jurisdiction of civil courts in respect of any dispute which is to be decided by sub-divisional magistrate or the Collector. Lastly, s. 20 provides an overriding effect to the act. Thus, the overall attempt is to make the act progressive as well as farmer friendly.

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

This law also falls under the Ministry of Agriculture and Farmers Welfare. This act was passed by Lok Sabha and Rajya Sabha on 17th September 2020 and 20th September, 2020, respectively. It received President’s assent on 24th September, 2020. This statute is Act No. 21 of 2020.

This act aims to make an ecosystem, where farmers and producers can have freedom of choice relating to sale and purchase of farmers produce. It also promotes efficient, transparent and barrier-free inter-state and intra-state commerce of Farmers’ produce.

Section 3 of the act provides freedom to traders, farmers and electronic trading and transaction platform to carry on intra-state and inter-state commerce in farmers produce.

One of the best introductions of this act is the creation of electronic trading and transaction platform u/s. 5 of the act. This will connect even the farmers having his farm in the remotest part of the country to the biggest markets and traders. Also, when the prices will be determined by bidding, in a competitive environment, the farmers will get the benefit of high returns. This will end the dependency of the farmers on a particular individual living nearby, who used to take benefit of farmers’ plight and would offer merge rates for their produce.

Section 6 also is a great move as it abolishes any kind of market fee or cess or levy being imposed on farmer, trader or electronic trading and transaction platform for trading in scheduled farmers’ produce in a trade area. This will provide relief to all the farmers as well as traders.

This act also has dispute redressal mechanism. This act envisages two kinds of disputes. The first kind of dispute is any dispute arising out of s. 4 of this act. In such a dispute, the adjudication mechanism is provided in s. 8 of this act. It states that the dispute must be taken to sub-divisional magistrate, who shall refer the case to a conciliation board. In case the dispute is resolved by conciliation, then a memorandum of settlement must be drafted, which must be signed by both the parties. In case there is no settlement, then the sub-divisional magistrate must decide the matter by himself. An appeal against the order of sub-divisional magistrate would lie to the Collector or Additional Collector, nominated by the Collector, u/s. 8(8) of the act. This mechanism is akin to the mechanism in the above statute.

The second kind of dispute that can arise is a dispute with any electronic trading and transaction platform. In case there exists any contravention of s. 7 of this act by and electronic trading and transaction platform, established u/s. 5 of this act, the Agricultural Marketing Advisor, who is Director of Marketing and Inspection under Government of India or any officer of State Government on whom Central Government has vested such power, may either on his own motion, or on a petition or reference by any Government Agency, take cognizance of the matter and pass an order within 60 days.

An appeal against the abovementioned order, as per s. 10 of this act, lies to an officer, not below the rank of Joint Secretary, appointed by the Central Government for this purpose.

This thinking that there can be breach on the part of the electronic trading and transaction platform and establishing a separate adjudicatory authority for the same for speedy redressal is a laudable move.

Essential Commodities (Amendment) Act, 2020                                                                                   Unlike the previous two laws, this act falls under the ambit of Ministry of Consumer Affairs and Food Distribution, headed by Hon’ble Minister Piyush Goyal. This act is Act No. 10 of 1995. This amendment act was passed by Lok Sabha and Rajya Sabha on 15th September, 2020 and 22nd September, 2020, respectively. It received President’s assent on 26th September, 2020.

The Essential Commodities Act, 1955 has been amended by virtue of this act by adding s. 1A in it. The Essential Commodities Act, 1955 was enacted by the Parliament for the benefit of the citizens. By means of this act, certain commodities like drugs, foodstuff, fuel etc. have been declared as essential commodities. The aim of the Parliament here is that these commodities are essential in life and in case they are black marketed, hoarded or sold at a very high price, then it would cause inconvenience to the masses. Thus, the Government can fix the Maximum Retail Price of such commodities and it can also fix an upper limit which can be held in stock so as to counter hoarding and black marketing.

With this amendment, certain items have been brought under the ambit of the act. These are cereals, pulses, onion, potato, oils and edible oilseeds. The government can regulate price and stock these commodities, only in case of war, feminine, natural calamity of grave nature or extra ordinary price rise.

The imposition of stock limit is to be based on the price rise, which must be at least: i) 100% increase in case of horticulture produce; ii) 50% increase in case of non-perishable agricultural foodstuff. This has to be calculated over the price prevailing immediately preceding twelve months, or average retail price of past 5 years, whichever is lower, as the base.

This provision will not apply on Public Distribution System as well as a processor or a value chain participant. But, in case of processor or value chain participant, the stock must not be more than their total capacity.

Cumulative effect of all the three laws

The net effect which comes is that Farmers (Empowerment and Protection) Agreement on Price Assurance and Farm Services Act, 2020 provides for farming agreement which makes it possible for farmers to enter into agreement for sale of his produce, even before harvesting. Farmers’ Produce Trade and Commerce (Promotion and Facilitation) Act, 2020 expands the reach of farmers by establishing electronic trading and transaction platform. Also, the abolition of any kind of market fee on both, farmers and traders is laudable. Additionally, a dispute adjudication mechanism has been provided in both the statutes, so as to ensure timely adjudication of disputes. The parliament has also amended The Essential Commodities Act, 1955 as a safety valve, by including certain foodstuff so that the government can regulate the price of these commodities in hard situations, which will act as a relief for the citizens.

Concerns of protesting farmers

Many farmers are lauding the Farmers’ Acts, 2020, but there are some who do not subscribe to these laws. Those farmers who are opposing these laws cite two main reasons. First, they feel that in the new laws there is no statutory provision for Minimum Support Price (MSP). Thus, there is a fear that the government might do away with MSP and, hence, they oppose these laws. The second reason is that there exists a fear that if farmers have to deal directly with big corporate entities, then they will be exploited by them. Thus, due to these two main reasons, there are protests by some farmers who demand these laws to be repealed.

Challenge in the Supreme Court

Many Writ Petitions have been filed in the Supreme Court, which challenge the constitutional validity of the Farmers Acts, 2020. The ground on which the petitioners challenge the acts is that they claim that the pith and substance of these laws is agriculture, agriculture land and market which is a subject matter of the state list, under entries 14, 18 and 28. Thus, the Parliament could not legislate on this subject matter.

The government is defending its laws on the ground that the pith and substance of these laws is not agriculture, but trade and commerce, which is entry 33 of the concurrent list. Thus, the Parliament is competent to enact these legislations.

Current Status

In the order dated 12th January, 2020, the Hon’ble Supreme Court stayed the implementation of Farmers’ Acts, 2020 until further orders. The Attorney General opposed it by stating that it is a well settled principle of law that the Courts cannot impose a stay on any legislation in absence of any emergency. But, the court said that it feels it important to stay the implementation of these laws so as to create a conducive atmosphere for talk and deliberation with the protesting farmers. The bench noted in its order that as an outcome of its “extraordinary” order, it expects the protesting farmers to return to their livelihood and not risk their and others’ lives in this pandemic.

The court also appointed a four-member committee comprising of Bhupinder Singh Mann, National President, Bhartiya Kisan Union, and All India Kisan Coordination Committee; Ashok Gulati, Agricultural Economist and Former Chairman of the Commission for Agricultural Costs and Prices; Pramod Kumar Joshi, Agricultural Economist and Director of South Asia, International Food Policy Research and Anil Ghanwat, President, Shetkari Sanghatan. The duty of the committee was to hear the concerns of the protesting farmers and the government and, pursuant to that submit a report to the court.

This committee had submitted its report to the court on 19th March 2020 in sealed covers. This report will be made public on the next date of hearing, which is yet to come.

Conclusion

Law is not limited only to law books; its effect is felt in society. The same was seen in this case. The Parliament in its view brought three laws to uplift the situation of farmers, but its attempt was accepted by some and not by others. And of course, in a democracy, everyone has the right to express themselves. Now, the challenge to the act is sub judice and now it is the outcome of the case which will decide the future of the Farmers’ Acts, 2020.

References

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

Farmers (Empowerment and Protection) Agreement on Price Assurance and Farm Services Act, 2020

Essential Commodities (Amendment) Act, 2020

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