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Lok Sabha Passes Farmers Bills For Inter-State Trade, Contract Farming [Read Bills]

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Lok Sabha passes two agricultural sector bills for Inter-State Trade, Contract Farming. Lok Sabha passes 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 to transform agriculture in the country and raise farmers’ income.

The reforms will accelerate agricultural growth through private sector investment in building agricultural infrastructure and supply chains for Indian farm produce in national and global markets, create employment opportunities and strengthen the economy.

The Bill will replace the Farmers’ Produce Trade and Commerce (Promotion and Facilitation) Ordinance, 2020 promulgated by the President on June 5th this year.

Brief of the Bills:

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

The Farmers’ Produce Trade and Commerce (Promotion And Facilitation) Bill, 2020 essentially provides a system for farmers to sell their products aside from the designated mandis with no threat to the existing structure. This bill allows sale and purchase of farmer’s produce at remunerative prices through competitive alternative trading channels to promote efficient, transparent interstate and intra state trade of farmer’s produce outside physical premises of markets notified under various state legislations.

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

The  Farmers (Empowerment and Protection) Agreement on Price Assurance and Farm Services Bill provides the farmer a chance to go into contractual agreements with buyers’ entities. This Bill seeks to provide for national framework on framing agreements that empowers farmers to engage with agri-business firms, processors, wholesalers, exporters or large retailers for farm services and sale of future farming produce at a mutually agreed ‘remunerative prices’.


Agricultural markets in India are mainly regulated by State Agriculture Produce Marketing Committee (APMC) laws.  APMCs were set up with the objective of ensuring fair trade between buyers and sellers for effective price discovery of farmers’ produce.

APMCs can: 

regulate the trade of farmers’ produce by providing licenses to buyers, commission agents, and private markets,

levy market fees or any other charges on such trade, and 

provide necessary infrastructure within their markets to facilitate the trade.

There were restrictions 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. Barriers existed in the free flow of agriculture produce between various States owing to the prevalence of various APMC legislation enacted by the State Governments.

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