India’s Agricultural Market Acts of 2020: Implications for (small) farmers with special reference to Punjab

Abstract

Agricultural markets are key to ensuring higher farmer incomes, but in India, agricultural market reforms have been stuck for almost two decades as agriculture is a state subject. The Union Ministry of Agriculture and Farmer Welfare (MoAFW) framed two new Acts on agricultural produce wholesale markets and contract farming (besides amending the Essential Commodities Act, 1955) in 2020 to allow and encourage new market channels in terms of buying from or working directly with farmers. These were parallel to state governments changing their APMC Acts, following the Model APMC Acts suggested by the Union MoAFW. This paper assesses the rationale and benefits of the 2020 Acts, and their implications for farmers and other stakeholders. It also examines the major provisions of the new Acts, i.e. APMC mandi bypass Act, 2020, which creates a new trade area outside the purview of the APMCs, and the Contract Farming Act, 2020, besides the amendments to these Union Acts by the state government of Punjab (2020), as informed by research studies on various marketing channels used by farmers and their experience of the same. The paper highlights some major lacunae of the 2020 Acts, in the context of Punjab agriculture, and examines the utility of the Punjab’s amendments to the Central Acts. The paper highlights the need for legal provisions to protect smallholder interests and leverage new channels for their development.