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‘In three ordinances, the provisions that bother protesting farmers’

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  • Published
    22nd Sep, 2020


  • Farmers in Punjab and Haryana have been protesting against three ordinances promulgated by the Centre.

Three ordinances and the reasons for the protest

  • The government has introduced three Bills to replace these ordinances. Lok Sabha passed one of these recently and the other two are listed for consideration and passing during the current session.
  • They are called:
  1. The Farmers Produce Trade and Commerce (Promotion and Facilitation) Ordinance, 2020;
  2. The Farmers (Empowerment and Protection) Agreement on Price Assurance and Farm Services Ordinance, 2020; and
  3. The Essential Commodities (Amendment) Ordinance, 2020.
  • It is the Bill replacing the third that has been passed in Lok Sabha.
  • While farmers are protesting against all three ordinances, their objections are mostly against the provisions of the first.
  • And while there is no uniform demand among the protesters or a unified leadership, it emerges that their concerns are mainly about sections relating to “trade area”, “trader”, “dispute resolution” and “market fee” in the first ordinance. A look at these sections, one by one:


Ordinance is the special legislative power conferred upon the President of India to formulate a legislation when at least one of the Houses of the Parliament are not in session.

Article 123 of the Indian Constitution

(1) If at any time, except when both Houses of Parliament are in session, the President is satisfied that circumstances exist which render it necessary for him to take immediate action, he may promulgate such Ordinances as the circumstances appear to him to require.

(2) An Ordinance promulgated under this article shall have the same force and effect as an Act of Parliament, but every such Ordinance-

(a) shall be laid before both Houses of Parliament and shall cease to operate at the expiration of six weeks from the reassembly of Parliament, or, if before the expiration of that period resolutions disapproving it are passed by both Houses, upon the passing of the second of those resolutions; and

(b) may be withdrawn at any time by the President

Trade area:

  • Section 2(m) of The Farmers Produce Trade and Commerce (Promotion and Facilitation) Ordinance, 2020 defines “trade area” as any area or location, place of production, collection and aggregation including (a) farm gates; (b) factory premises; (c) warehouses; (d) silos; (e) cold storages; or (f) any other structures or places, from where trade of farmers’ produce may be undertaken in the territory of India.
  • The definition does not, however, include “the premises, enclosures and structures constituting (i) physical boundaries of principal market yards, sub-market yards and market sub-yards managed and run by the market committees formed under each state APMC (Agricultural Produce Market Committee) Act”.
  • It also excludes “private market yards, private market sub-yards, direct marketing collection centres, and private farmer-consumer market yards managed by persons holding licences or any warehouses, silos, cold storages or other structures notified as markets or deemed markets under each State APMC Act in force in India”.
  • In effect, existing mandis established under APMC Acts have been excluded from the definition of trade area under the new legislation. The government says the creation of an additional trade area outside of mandis will provide farmers the freedom of choice to conduct trade in their produce.
  • The protesters say this provision will confine APMC mandis to their physical boundaries and give a free hand to big corporate buyers.

Trader and its link to the protests

  • Section 2(n) of the first ordinance defines a “trader” as “a person who buys farmers’ produce by way of inter-State trade or intra-State trade or a combination thereof, either for self or on behalf of one or more persons for the purpose of wholesale trade, retail, end-use, value addition, processing, manufacturing, export, consumption or for such other purpose”. Thus, it includes processor, exporter, wholesaler, miller, and retailer.
  • According to the Ministry of the Agriculture and Farmers’ Welfare, “Any trader with a PAN card can buy the farmers’ produce in the trade area.”
  • A trader can operate in both an APMC mandi and a trade area. However, for trading in the mandi, the trader would require a licence/registration as provided for in the State APMC Act. In the present mandi system, arhatiyas (commission agents) have to get a licence to trade in a mandi.
  • The protesters say arhatiyas have credibility as their financial status is verified during the licence approval process. This also explains why the protests have mostly been concentrated in Punjab and Haryana. The arhatiya system is more influential in these two states than in other states, agriculture experts said.

Reasons for the provision on ‘market fee’ that worry protesters

  • Section 6 states that “no market fee or cess or levy, by whatever name called, under any State APMC Act or any other State law, shall be levied on any farmer or trader or electronic trading and transaction platform for trade and commerce in scheduled farmers’ produces in a trade area”. Government officials say this provision will reduce the cost of transaction and will benefit both the farmers and the traders.
  • Under the existing system, such charges in states like Punjab come to around 8.5% — a market fee of 3%, a rural development charge of 3% and the arhatiya’s commission of about 2.5%.
  • The protesters say that by removing the fee on trade, the government is indirectly incentivising big corporates. They said this provision does not provide a level playing field to APMC mandis.
  • A government official, on the other hand, questioned why the states do not make transactions in mandis cost-efficient.

Objection against dispute resolution

  • The protesters say that the provision on dispute resolution under Section 8 does not sufficiently safeguard farmers’ interests. It provides that in case of a dispute arising out of a transaction between the farmer and a trader, the parties may seek a mutually acceptable solution through conciliation by filing an application to the Sub-Divisional Magistrate, who shall refer such dispute to a Conciliation Board to be appointed by him for facilitating the binding settlement of the dispute.
  • Farmers fear the proposed system of conciliation can be misused against them. They say the ordinance does not allow farmers to approach a civil court.


Agricultural markets are over-strained by a web of outdated laws that were codified with a food scarcity mindset. State intervention at every step is not a smart idea and can often be counter-productive. There is need to protect the interest of farmers that are protesting. At the same time, there is need to remove many restrictions on trade in agricultural commodities so as to stabilise food markets and help agricultural growth.


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