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Legislative comment on The Farmers’ Produce Trade and Commerce (Promotion and Facilitation) Act, 2020

It Permits intra-state and inter-state trade of farmers’ produce beyond the physical premises of Agricultural Produce Market Committee (APMC) markets and other markets notified under the state APMC Acts.


The Farmers’ Produce Trade and Commerce (Promotion and Facilitation) Ordinance, 2020 along with the Farmers (Empowerment and Protection) Agreement on Price Assurance and Farm Services Ordinance, 2020 was promulgated by the Union Cabinet on 5 June 2020. The Lok Sabha approved the bills on 17 September 2020 and Rajya Sabha on 20 September 2020


It allows trading in an “outside trade area” like farm gates, factory premises, warehouses, silos, and cold storages. Earlier, agricultural trade could be conducted only in the APMC yards/ Mandis.

It will also facilitate lucrative prices for the farmers through competitive alternative trading channels to promote barrier-free inter-state and intra-state trade of agriculture goods.

The Act also permits the electronic trading of farmers’ produce in the specified trade area. It will facilitate direct and online buying and selling of such produce through electronic devices and internet.

The act prohibits state governments from levying any market fee or cess on farmers, traders and electronic trading platforms for trading farmers’ produce in an ‘outside trade area’.


On September 14, 2020, three bills “aimed at transformation of agriculture in the country and raising farmers’ income” were introduced in the Lok Sabha – the Farmers’ Produce Trade and Commerce (Promotion and Facilitation) Bill, 2020; the Farmers (Empowerment and Protection) Agreement of Price Assurance and Farm Services Bill, 2020; and the Essential Commodities (Amendment) Bill, 2020.The first of these listed here, the Farmers’ Produce Trade and Commerce (Promotion and Facilitation) Bill was introduced by Narendra Singh Tomar, Minister of Agriculture and Farmers Welfare, Rural Development, Panchayati Raj, and Food Processing Industries. It became an Act on September 27, 2020.This Act provides for the creation of an “ecosystem” where farmers and traders have ‘freedom of choice’ in the sale and purchase of farmers’ produce “…which facilitates remunerative prices through competitive alternative trading channels.” The Act aims to promote ‘efficient, transparent and barrier-free’ inter-state and intra-state trade and commerce of farmers’ produce outside the physical premises of markets notified under various state legislations, and to provide a ‘facilitative framework’ for electronic trading and ‘for matters connected therewith’.There have been nationwide protests by farmers – especially in Haryana, Punjab and western Uttar Pradesh – against the three bills, which, the government states, will open up the agricultural sector to private investors and global markets.

The act bypasses the Agricultural produce market committee altogether, creating a separate structure of trading. Earlier, states levied taxes for agricultural produce bought outside the designated APMC mandi, this act prohibits this and creates incentive for buyer to purchase produce outside the regulated APMC mandi.

Dilip Mohite Patil, president of the Maharashtra Rajya Bazaar Samiti Sangh, a federation of the 306 APMCs in the state, claimed that around 100-125 market committees in Vidarbha and Marathwada regions have reported almost no business and are on the verge of closure after the central Ordinance was announced.

Food Processing Industries Minister Harsimrat Kaur Badal of Shiromani Akali Dal resigned from her post in protest against the bills. Farmers all over the country held protests against the bills.
It removes barriers to inter-State trade and provides a framework for electronic trading of agricultural produce.

It also prohibits State governments from collecting market fee, cess or levy for trade outside the APMC markets.

The 3 acts are revolutionary if the government addresses the loopholes of these acts. The loopholes of these acts are quite concerning and the government should discuss the same with farmers to be more efficient and effective. The government should form a proper mechanism for contract farming so no farmer is exploited by big greedy corporates. To solve disputes between farmers and traders. The government should establish a different regulatory body rather than Sub-Divisional Magistrate. The MSP system is flawed and even though the government recently said that they are not repealing MSP but still they need to address the fact that only 6% of Farmers are getting benefits. The government should implement this scheme more effectively by spreading awareness with the help of Gram panchayat so that the smallest of farmers will know about this and will get the benefit. Farmers in our country are not united. Just like AMUL or National Egg Coordination Committee Farmers should form a nationwide group or local groups to deal with big traders.

Effective implementation is necessary. Right now, India is going through a food surplus still people are going to sleep hungry. Why is that? Because of the mismanagement of the government.


Rahil Amin Mir ,Law student at Central University kashmir