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

Introduction

The Farmers’ Produce Trade and Commerce (Promotion and Facilitation) Act, 2020, commonly known as the APMC Bypass Act, was one of the three controversial farm laws passed by the Government of India in September 2020. This Act aimed to liberalize agricultural trade by allowing farmers to sell their produce outside the Agricultural Produce Market Committee (APMC) mandis.

The law was intended to create a free and competitive agricultural market, but it faced massive protests from farmers, particularly in Punjab, Haryana, and Western Uttar Pradesh. Eventually, the Act was repealed in November 2021 after sustained opposition and protests.

Full Text of the Act: Click Here

---

Objectives of the Act

• To allow farmers to sell their produce anywhere in India, beyond APMC mandis.
• To encourage private trade, contract farming, and direct farmer-to-buyer transactions.
• To promote “One Nation, One Market”, integrating the agricultural market across states.
• To remove restrictions on inter-state and intra-state trade of farm produce.
• To attract private investment in agriculture and infrastructure.

---

Key Features of the Act

1. Free Trade Outside APMC Mandis

• Farmers were allowed to sell their produce outside state-regulated mandis.
• This included private markets, warehouses, cold storages, and online platforms.
• No state taxes or fees were applicable on such transactions.

2. Inter-State and Intra-State Trade

• Farmers could engage in direct transactions with wholesalers, exporters, retailers, and agribusinesses.
• The Act removed restrictions on the movement of agricultural produce across state borders.

3. Establishment of Electronic Trading Platforms

• The law encouraged electronic platforms such as e-NAM (National Agricultural Market).
• Farmers could trade their produce digitally without middlemen.

4. No Market Fees or Levies

• Unlike APMC markets, where market fees and commissions were charged, sales outside APMCs were free from state levies.
• This was expected to reduce financial burden on farmers and buyers.

5. Dispute Resolution Mechanism

• Any disputes related to trade could be resolved through Sub-Divisional Magistrates (SDMs).
• No civil court had jurisdiction over such matters.

---

Benefits of the Act

Benefit	Explanation
Freedom to Sell Anywhere	Farmers could sell directly to buyers outside APMC markets.
Better Price Discovery	With increased competition, farmers had the potential to get better prices.
Elimination of Middlemen	Direct transactions meant farmers retained higher profits.
No Market Fees & Taxes	Unlike APMC-regulated trade, there were no additional charges.
Encouragement of Private Investment	The law aimed to bring private sector players into agriculture.

---

Challenges & Criticism of the Act

1. Threat to APMC Mandis

• Farmers feared that allowing trade outside APMCs would weaken the mandi system, leading to their eventual closure.
• This could have left small farmers vulnerable to exploitation by large corporations.

2. Lack of MSP Guarantee

• The Act did not mention Minimum Support Price (MSP), which farmers depend on for price stability.
• Farmers feared that private buyers might offer lower prices over time.

3. Dispute Resolution Issues

• The Act barred civil courts from hearing disputes and placed dispute resolution with bureaucrats (SDMs & Collectors).
• Farmers argued that this system favored corporate buyers over them.

4. Unequal Bargaining Power

• Small farmers lacked bargaining power against large companies.
• Without APMC oversight, farmers had no legal protection against unfair contracts.

5. State Revenue Loss

• States like Punjab and Haryana collected taxes from APMC mandis, which funded rural development.
• The Act removed these taxes, leading to revenue losses for state governments.

---

Farmers’ Protests & Repeal of the Act

Farmers’ Protests (2020-2021)

• Mass protests erupted in Punjab, Haryana, and Western Uttar Pradesh.
• Farmers blocked highways and camped at Delhi’s borders for over a year.
• They demanded a complete repeal of the law and a legal guarantee for MSP.

Key Developments in Protests

• November 2020: Protests intensified as farmers marched to Delhi.
• January 2021: Talks with the government failed; Supreme Court stayed the implementation of the law.
• November 2021: The government announced repeal of the farm laws.
• December 2021: The laws were officially repealed by Parliament.

Reasons for Repeal

• Massive public opposition and political pressure.
• Concerns over corporate control and farmer vulnerability.
• Lack of consensus between central and state governments.
• Threat to rural economy and state revenues.

---

Case Laws on the Act

1. Rakesh Vaishnav v. Union of India (2021)

• Issue: Farmers challenged the constitutionality of the farm laws.
• Judgment: The Supreme Court stayed the implementation of the Act, citing lack of proper consultation.

2. All India Kisan Sabha v. Union of India (2021)

• Issue: Farmers argued that the law violated federalism by bypassing state APMC laws.
• Judgment: The case was rendered moot after repeal of the laws.

3. Punjab Mandi Board v. Union of India (2021)

• Issue: Punjab’s APMC board challenged loss of mandi revenue due to the Act.
• Judgment: The court acknowledged revenue concerns but did not issue a ruling due to the repeal.

---

Impact of the Act on Farmers & Markets

Positive Impact	Negative Impact
Allowed farmers to sell anywhere	Weakened APMC mandis
Removed middlemen	No MSP guarantee
Encouraged private investment	Favored large corporations over small farmers
Reduced state taxes & fees	States lost mandi revenue

---

Future of Agricultural Market Reforms

Even though the Farm Laws were repealed, agricultural reforms remain a key issue. The government and stakeholders are now considering:

• Strengthening APMC Mandis while allowing alternative sales platforms.
• Legal backing for MSP to assure farmers of a minimum price.
• Digital trade platforms (e-NAM) for better price discovery.
• Encouraging Farmer Producer Organizations (FPOs) to improve bargaining power.
• Private investment in storage and logistics, ensuring better farm-to-market supply chains.

---

Conclusion

The Farmers’ Produce Trade and Commerce (Promotion and Facilitation) Act, 2020 was introduced to liberalize agricultural trade, but it faced strong opposition due to concerns over corporate dominance, loss of MSP, and weakening of APMC mandis. The widespread farmers’ protests led to its eventual repeal in 2021.

Despite the repeal, the debate on agricultural reforms continues. India needs balanced policies that provide market freedom to farmers while protecting their economic interests through MSP guarantees, strong APMC infrastructure, and farmer-friendly regulations.