Farmers' protest enters Day 10: A look at State amendments to Centre's laws and how they address producers' concerns

More than a month ago, in response to the initial protests by farmers against the new Central farm laws, three state assemblies — Chhattisgarh, Punjab, and Rajasthan — had passed Bills to address farmers’ concerns. While these Bills await the state Governors’ assent, protests against the Central farm laws have again gained momentum. In this post, we discuss the key amendments proposed by these states in response to the central farm laws.

Agricultural marketing in most states is regulated by the Agricultural Produce Marketing Committees (APMCs), set up under the state APMC Acts. The Central farm laws seek to facilitate multiple channels of marketing outside the existing APMC markets.

Many of these existing markets face issues such as a limited number of buyers restricting the entry of new players and undue deductions in the form of commission charges and market fees.

The Central laws introduced a liberalised agricultural marketing system with the aim of increasing the availability of buyers for farmers’ produce. It is expected that more buyers would lead to competition in the agri market, thus resulting in better prices for farmers.

The Central farm laws allow anyone with a PAN card to buy farmers’ produce in the ‘trade area’ outside the markets notified or run by the APMCs. Buyers do not need to get a license from the state government or APMC, or pay any tax to them for such purchase in the ‘trade area’.

These changes in regulations raised concerns regarding the kind of protection available to farmers in the ‘trade area’ outside APMC markets, particularly in terms of price discovery and payment. To address such concerns, the states of Chhattisgarh, Punjab, and Rajasthan, in varying forms, proposed amendments to the existing agricultural marketing laws.

Chhattisgarh passed a Bill to amend its APMC Act to allow the state government to notify structures outside APMC markets, such as godowns, cold storages, and e-trading platforms, as deemed markets. The central farm laws consider deemed markets under the states’ jurisdiction and thus, under the control of the APMCs. APMCs therefore can levy market fees on the sale of farmers’ produce in such deemed markets and require the buyer to have a licence.

Punjab and Rajasthan passed Bills to amend the Central farm Acts, especially the application of the three acts in the respective states. These state amendment Bills provide that they will override any other law currently in force and respective state APMC laws will continue to apply in these states. Some of the other key changes made by these state amendment Bills to the central Acts are:

Market fee: The Central Acts prohibit the state governments and APMCs from levying any market fee, cess, or any other charge on the trade of farmers’ produce outside the APMC markets. The Punjab and Rajasthan Bills empower the state governments to levy a fee on private traders and electronic trading platforms for trade outside the state APMC markets. Such fees collected will be utilised for the welfare of small and marginal farmers in Punjab and for running the APMCs and welfare of farmers in Rajasthan.

Minimum Support Price (MSP): The Central Acts provide a framework for a farming agreement prior to the production or rearing of any farm produce. This allows farmers to enter into an agreement with buyers before sowing, to sell the produce at a minimum pre-determined price. The state Bills provide that the predetermined prices for a crop under farming agreements should be at prices equal to or above the MSP (only for wheat and paddy in the case of Punjab). The Punjab Bill mandates MSP for any sale or purchase of wheat and paddy, even if it is not under any farming agreement.

The state Bills prescribe penalties if a buyer compels a farmer to sell farm produce at a price below MSP. In Punjab, such an offence will be penalised with imprisonment of at least three years and a fine. In Rajasthan, compelling farmers to sell below MSP and refusing to accept produce (under an agreement), within a week of intimation by the farmer, will attract imprisonment between three to seven years, or a fine of at least five lakh rupees, or both.

Imposition of stock limit: The Central Acts prohibit the imposition of stock limits on farming produce under a farming agreement. The Rajasthan Bill empowers the state government to impose stock limits, under certain conditions, on any farm produce under a farming agreement. These conditions are: (i) if there is a shortage of such farm produce in the state, or, (ii) if there is a 25 percent increase in prices of such produce beyond the maximum price which was prevailing in the market.

Essential commodities: The Essential Commodities (Amendment) Act, 2020, empowers the Central Government to regulate the supply of certain food items, including cereals, pulses, potato, and onions, only under extraordinary circumstances such as war, famine, extraordinary price rise, and natural calamity of grave nature. The state amendment Bills provide that the respective state governments will also have these powers under certain extraordinary circumstances such as famine, price rise, natural calamity, or any other situations.

Dispute Resolution Mechanism: The central Acts prohibit civil courts from adjudicating over disputes under the Acts. They provide that disputes between farmers and traders will be resolved through a Conciliation Board set up by the Sub-Divisional Magistrate (SDM). If the dispute remains unresolved, the SDM may be approached for resolution.

The Punjab Bill allows farmers to approach civil courts or avail other remedies under existing laws, in addition to the ones available under the Central Acts.

The Rajasthan Bill provides that the jurisdiction of civil courts over disputes will be as per the state APMC Act and rules under it.

The amendments proposed by states aim to address the concerns of farmers, but to a varying extent. The Bills have not come into force yet as they await the respective Governors’ assent. In addition, the Punjab and Rajasthan Bills also need the assent of the President as they seek to amend laws passed by the Parliament.

Meanwhile, amidst the ongoing protests, many farmers’ organisations are in talks with the Central Government to seek redressal of their grievances and appropriate changes in the central farm laws. It remains to be seen to what extent will such changes address the concerns of farmers.

The authors are analysts in the research team at PRS Legislative Research

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Suyash Tiwari and Prachi Kaur