[PDF] THE FARMERS (EMPOWERMENT AND PROTECTION) AGREEMENT ON PRICE ASSURANCE AND FARM SERVICES BILL, 2020

THE FARMERS (EMPOWERMENT AND PROTECTION) AGREEMENT ON PRICE ASSURANCE AND FARM SERVICES BILL, 2020

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AS INTRODUCED IN LOK SABHA

Bill No. 112 of 2020

THE FARMERS (EMPOWERMENT AND PROTECTION) AGREEMENT ON PRICE ASSURANCE AND

FARM SERVICES BILL, 2020

———— ARRANGEMENT OF CLAUSES

———— CHAPTER I PRELIMINARY

CLAUSES

1.  Short title and commencement.

2.  Definitions.

CHAPTER II

FARMING AGREEMENT

3.  Farming agreement and its period.

4.  Quality, grade and standards of farming produce.

5. Pricing of farming produce.

6.  Sale or purchase of farming produce.

7. Exemptions with respect to farming produce.

8. Sponsor prohibited from acquiring ownership rights or making permanent modifications on farmer's 

land or premises.

9.  Linkage of farming agreement with insurance or credit.

10. Other parties to farming agreement.

11. Alteration or termination of farming agreement.

12. Establishment of Registration Authority.

CHAPTER III DISPUTE SETTLEMENT

13. Conciliation board for dispute settlement.

14.   Mechanism for dispute resolution.

15. No action for recovery of dues against farmer's land.

CHAPTER IV MISCELLANEOUS

16. Power of Central Government to give directions.

17. Authorities under Act to be public servants.

18. Protection of action taken in good faith.

19. Bar of jurisdiction of civil court.

(ii)

CLAUSES

20. Act to have an overriding effect.

21. Act not to apply to stock exchanges and clearing corporations.

22. Power of Central Government to make rules.

23. Power of State Government to make rules.

24. Power to remove difficulties.

25. Repeal and savings.

Bill No. 112 of 2020

THE FARMERS (EMPOWERMENT AND PROTECTION) AGREEMENT ON PRICE ASSURANCE AND

FARM SERVICES BILL, 2020

A

BILL

to provide for a national framework on farming agreements that protects and 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 price framework in a 

fair and transparent manner and for matters connected therewith or incidental thereto.

BE it enacted by Parliament in the Seventy-first Year of the Republic of India as follows:—

CHAPTER I PRELIMINARY

5             1. (1) This Act may be called the Farmers (Empowerment and Protection) Agreement on 

Price Assurance and Farm Services Act, 2020.

(2) It shall be deemed to have come into force on the 5th June, 2020.

Definitions.

2

2. In this Act, unless the context otherwise requires,—

(a) "APMC yard" means the physical premises covering Agriculture Produce Market Committee Yard, by 

whatever name called, established for regulating markets and trade in farming produce under any 

State Act;

(b) "company" means a company as defined in clause (20) of section 2 of the Companies Act, 2013;

(c) "electronic trading and transaction platform" means a platform set up to facilitate direct and 

online buying  and selling for conduct of trade and commerce of farming produce through a network 

of electronic devices and internet applications;

(d) "farm services" includes supply of seed, feed, fodder, agro-chemicals, machinery and 

technology, advice, non-chemical agro-inputs and such other inputs for farming;

(e) "farmer" means an individual engaged in the production of farming produce by self or by hired 

labour or otherwise, and includes the Farmer Producer Organisation;

(f) "Farmer Producer Organisation" means an association or group of farmers, by whatever name 

called,—

(i) registered under any law for the time being in force; or

(ii) promoted under a scheme or programme sponsored by the Central Government or the State 

Government;

(g) "farming agreement" means a written agreement entered into between a farmer and a Sponsor, or a 

farmer, a Sponsor and any third party, prior to the production or rearing of any farming produce of 

a predetermined quality, in which the Sponsor agrees to purchase such farming produce from the 

farmer and to provide farm services.

Explanation.—For the purposes of this clause, the term "farming agreement" may include—

(i) "trade and commerce agreement", where the ownership of commodity remains with the farmer during 

production and he gets the price of produce on its delivery as per the agreed terms with the 

Sponsor;

(ii) "production agreement", where the Sponsor agrees to provide farm services, either fully or 

partially and to bear the risk of output, but agrees to make payment to the farmer for the services 

rendered by such  farmer; and

(iii)  such  other  agreements or  a  combination of agreements specified above;

(h) "farming produce" includes—

(i) foodstuffs, including edible oilseeds and oils, all kinds of cereals like wheat,  rice  or  

other  coarse grains, pulses, vegetables, fruits, nuts, spices, sugarcane and products of poultry, 

piggery, goatery, fishery and dairy, intended for human consumption in its natural or processed 

form;

(ii) cattle fodder, including oilcakes and other concentrates;

(iii) raw cotton, whether ginned or unginned;

(iv) cotton seeds and raw jute;

(i) "firm" means a firm as defined in section 4 of the Indian Partnership Act, 1932;

(j) "force majeure" means any unforeseen external event, including flood, drought, bad weather, 

earthquake, epidemic outbreak of disease, insect-pests and such other events, which is unavoidable 

and beyond the control of parties entering into a farming agreement;

3

(k) "notification" means a notification published by the Central Government or the State 

Government, as the case may be, in the Official Gazette and the expression "notified" shall be 

construed accordingly;

(l) "person" includes—

5                                (i) an individual;

(ii) a partnership firm;

(iii) a company;

(iv) a limited liability partnership;

(v) a co-operative society;

10                           (vi) a society; or

(vii) any association or body of persons duly incorporated or recognised as a group under any 

ongoing programmes of the Central Government or the State Government;

(m) "prescribed" means prescribed by rules made under this Act;

15                  (n) "Registration Authority" means an authority notified as such by the State 

Government    under section 12;

(o) "Sponsor" means a person who has entered into a farming agreement with the farmer to purchase a 

farming produce;

(p) "State" includes Union territory.

20                                                      CHAPTER II

FARMING AGREEMENT

3. (1) A farmer may enter into a written farming agreement in respect of any farming produce and 

such agreement may provide for—

(a) the terms and conditions for supply of such produce, including the time of

25          supply, quality, grade, standards, price and such other matters; and

(b) the terms related to supply of farm services:

Provided that the responsibility for compliance of any legal requirement for providing such farm 

services shall be with the Sponsor or the farm service provider, as the case may be.

30           (2) No farming agreement shall be entered into by a farmer under this section in 

derogation of       any rights of a share cropper.

Explanation.—For the purposes of this sub-section, the term "share cropper" means a tiller or 

occupier of a farm land who formally or informally agrees to give fixed share of crop or to pay 

fixed amount to the land owner for growing or rearing of farming produce.

35    (3) The minimum period of the farming agreement shall be for one crop season or one 

production cycle of livestock, as the case may be, and the maximum period shall be   five years:

Farming agreement its period.

Provided that where the production cycle of any farming produce is longer and may go beyond five 

years, in such case, the maximum period of farming agreement may be

40 mutually decided by the farmer and the Sponsor and explicitly mentioned in the farming 

agreement.

(4) For the purposes of facilitating farmers to enter into written farming agreements, the Central 

Government may issue necessary guidelines alongwith model farming agreements, in such manner, as it 

deems fit.

10 of 1955.    5

10 

15 

20 

25 

30 

35 

40 

5

7. (1) Where a farming agreement has been entered into in respect of any farming produce under this 

Act, such produce shall be exempt from the application of any State Act, by whatever name called, 

established for the purpose of regulation of sale and purchase of such farming produce.

(2) Notwithstanding anything contained in the Essential Commodities Act, 1955 or in any control 

order issued thereunder or in any other law for the time being in force, any obligation related to 

stock limit shall not be applicable to such quantities of farming produce as are purchased under a 

farming agreement entered into in accordance with the provisions of this Act.

8. No farming agreement shall be entered into for the purpose of—

(a) any transfer, including sale, lease and mortgage of the land or premises of the farmer; or

(b) raising any permanent structure or making any modification on the land or premises of the 

farmer, unless the Sponsor agrees to remove such structure or to restore the land to its original 

condition, at his cost, on the conclusion of the agreement or expiry of the agreement period, as 

the case may be:

Provided that where such structure is not removed as agreed by the Sponsor, the ownership of such 

structure shall vest with the farmer after conclusion of the agreement or expiry of the agreement 

period, as the case may be.

9. A farming agreement may be linked with insurance or credit instrument under any scheme of the 

Central Government or the State Government or any financial service provider to ensure risk 

mitigation and flow of credit to farmer or Sponsor or both.

10. Save as otherwise provided in this Act, an aggregator or farm service provider may become a 

party to the farming agreement and in such case, the role and services of such aggregator or farm 

service provider shall be explicitly mentioned in such farming agreement.

Explanation.—For the purposes of this section,—

(i) "aggregator" means any person, including a Farmer Producer Organisation, who acts as an 

intermediary between a farmer or a group of farmers and a Sponsor and provides aggregation related 

services to both farmers and Sponsor;

(ii) "farm service provider" means any person who provides farm services.

11. At any time after entering into a farming agreement, the parties to such agreement may, with 

mutual consent, alter or terminate such agreement for any reasonable cause.

12. (1) AState Government may notify a Registration Authority to provide for electronic registry 

for that State  that provides facilitative framework for registration of     farming agreements.

(2) The constitution, composition, powers and functions of the Registration Authority and the 

procedure for registration shall be such as may be prescribed by the State Government.

CHAPTER III DISPUTE SETTLEMENT

13. (1) Every farming agreement shall explicitly provide for a conciliation process and formation 

of a conciliation board consisting of representatives of parties to the agreement:

Provided that representation of parties in such conciliation board shall be fair and balanced.

Exemptions with respect to farming produce.

Sponsor prohibited from acquiring ownership rights or making permanent modifications on farmer’s 

land or premises.

Linkage of farming agreement with insurance or credit.

Other parties to farming agreement.

Alteration or termination of farming agreement.

Establishment of Registration Authority.

Conciliation board for dispute settlement.

Mechanism for dispute resolution.

6

(2) A dispute arising from any farming agreement shall be first referred to the conciliation board 

formed as per the provisions of the farming agreement and every endeavour shall be made by such 

board to bring about settlement of such dispute.

(3) Where, in respect of any dispute, a settlement is arrived during the course of conciliation 

proceeding, a memorandum of settlement shall be drawn accordingly and signed 5 by the parties to 

such dispute and such settlement shall be binding on the parties.

14. (1) Where, the farming agreement does not provide for conciliation process as required under 

sub-section (1) of section 13, or the parties to the farming agreement fail to settle their dispute 

under that section within a period of thirty days, then, any such party may approach the concerned 

Sub-Divisional Magistrate who shall be the Sub-Divisional Authority 10 for deciding the disputes 

under farming agreements.

(2) On receipt of a dispute under sub-section (1), the Sub-Divisional Authority may,

if—

(a) the farming agreement did not provide for conciliation process, constitute a conciliation board 

for bringing about settlement of such dispute; or                              15 

(b) the parties failed to settle their dispute through conciliation process, decide the dispute in 

a summary manner within thirty days from the date of receipt of such dispute, after giving the 

parties a reasonable opportunity of being heard and pass an order for recovery of the amount under 

dispute, with such penalty and interest, as it

deems fit, subject to the following conditions, namely:—                                            

  20 

(i) where the Sponsor fails to make payment of the amount due to the farmer, such penalty may 

extend to one and half times the amount due;

(ii) where the order is against the farmer for recovery of the amount due to the Sponsor on account 

of any advance payment or cost of inputs, as per terms

of farming agreement, such amount shall not exceed the actual cost incurred by   25 

the Sponsor;

(iii) where the farming agreement in dispute is in contravention of the provisions of this Act, or 

default by the farmer is due to force majeure, then, no order for recovery of amount shall be 

passed against the farmer.

(3) Every order passed by the Sub-Divisional Authority under this section shall have  30 

same force as a decree of a civil court and be enforceable in the same manner as that of a decree 

under the Code of Civil Procedure,  1908,  unless  an  appeal  is  preferred under sub-section (4).

(4) Any party aggrieved by the order of the Sub-Divisional Authority may prefer an appeal to the 

Appellate Authority, which shall be presided over by the Collector or Additional Collector 

nominated by the Collector, within thirty days from the date of such order.

(5) The Appellate Authority shall dispose of the appeal within thirty days.

(6) Every order passed by the Appellant Authority under this section shall have same force as a 

decree of a civil court and be enforceable in the same manner as that of a decree under the Code of 

Civil Procedure, 1908.

(7) The amount payable under any order passed by the Sub-Divisional Authority or the Appellant 

Authority, as the case may be, may be recovered as arrears of land revenue.

(8) The Sub-Divisional Authority or the Appellate Authority shall, while deciding disputes under 

this section, have  all the powers of a civil court for the purposes of taking evidence on oath, 

enforcing the attendance of witnesses, compelling the discovery and production of documents and 

material objects and for such other purposes as may be prescribed by the Central Government.

5  of 1908.

35 

40     5  of 1908.

45 

5

10 

45 of 1860.

15 

20 

25 

30 

42  of 1956.

35 

40 

45 

7

(9) The manner and procedure for filing a petition or an application before the Sub-Divisional 

Authority and an appeal before the Appellate Authority shall be such as may be prescribed by the 

Central Government.

15. Notwithstanding anything contained in section 14, no action for recovery of any amount due in 

pursuance of an order passed under that section, shall be initiated against the agricultural land 

of the farmer.

CHAPTER IV MISCELLANEOUS

16. The Central Government may, from time to time, give such directions, as it may consider 

necessary, to the State Governments for effective implementation of the provisions of this Act and 

the State Governments shall comply with such directions.

17. All authorities, including Registration Authority, Sub-Divisional Authority and Appellate 

Authority, constituted or prescribed under this Act, shall be deemed to be public servants within 

the meaning of section 21 of the Indian Penal Code.

18. No suit,  prosecution  or  other  legal  proceeding  shall  lie  against  the  Central 

Government, the State Government, the Registration Authority, the Sub-Divisional Authority, the 

Appellate Authority or any other person for anything which is in good faith done or intended to be 

done under the provisions of this Act or any rule made thereunder.

19. No civil Court shall have jurisdiction to entertain any suit or proceedings in respect of any 

dispute which a Sub-Divisional Authority or the Appellate Authority is empowered by or under this 

Act to decide and no injunction shall be granted by any court or other authority in respect of any 

action taken or to be taken in pursuance of any power conferred by or under this Act or any rules 

made thereunder.

20. The provisions of this Act shall have effect notwithstanding anything inconsistent therewith 

contained in any State law for the time being in force or in any instrument having effect by virtue 

of any such law other than this Act:

Provided that a farming agreement or such contract entered into under any State law for the time 

being in force, or any rules made thereunder, before the date of coming into force of this Act, 

shall continue to be valid for the period of such agreement or contract.

21. Nothing contained in this Act shall be applicable to the stock exchanges and clearing 

corporations recognised under the Securities Contracts (Regulation) Act, 1956 and   the 

transactions undertaken therein.

22. (1) The Central Government may, by notification in the Official Gazette, make rules for 

carrying out the provisions of this Act.

(2) In particular, and without prejudice to the generality of the foregoing power, such rules may 

provide for all or any of the following matters, namely:—

(a) other purposes for which the Sub-Divisional Authority or the Appellate Authority shall have the 

powers   of civil court under sub-section (8) of section 14;

(b) the manner and procedure for filing petition or application before the Sub-Divisional 

Authority,  and      an  appeal  before  the Appellate Authority,  under sub-section (9) of section 

14;

(c) any other matter which is to be, or may be, prescribed, or in respect of which provision is to 

be made, by rules, by the Central Government.

(3) Every rule made by the Central Government under this Act shall be laid, as soon as may be after 

it is made, before each House of Parliament, while it is in session, for a total

No action for recovery of dues against farmer’s land.

Power of Central Government to give directions.

Authorities under Act to be public servants.

Protection of action taken in good faith.

Bar of jurisdiction of civil court.

Act to have an overriding effect.

Act not to apply to stock exchanges and clearing corporations.

Power of Central Government to make rules.

Power of State Government to make rules.

Power to remove difficulties.

Repeal and savings.

8

period of thirty days which may be comprised in one session or in two or more successive sessions, 

and if,  before the expiry of the session immediately following the session or the successive 

sessions aforesaid, both Houses agree in making any modification in the rule or both Houses agree 

that the rule should not be made, the rule shall thereafter have effect only in such modified form 

or be of no effect, as the case may be; so, however, that any such modification or annulment shall 

be without prejudice to the validity of anything previously done under that rule.

23. (1) The State Government may, by notification in the Official Gazette, make rules for carrying 

out the provisions of this Act.

(2) In particular, and without prejudice to the generality of the foregoing power, such rules may 

provide for all or any of the following matters, namely:—

(a) the mode and manner of payment to the farmer under sub-section (4) of section 6;

(b) the constitution, composition, powers and functions of the Registration Authority, and the 

procedure for registration under sub-section (2) of section 12;

(c) any other matter which is to be, or may be, prescribed, or in respect of which provision is to 

be made, by rules, by the State Government.

(3) Every rule made by the State Government under this Act shall be laid, as soon as may be after 

it is made, before each House of the State Legislature where it consists of two Houses, or where 

such Legislature consists of one House, before that House.

24. (1) If any difficulty arises in giving effect to the provisions of this Act, the Central 

Government may, by order published in the Official Gazette, make such provisions, not inconsistent 

with the provisions of this Act, as may appear to it to be necessary for removing the difficulty.

(2) Every order made under this section shall be laid, as soon as may be after it is made, before 

each House of Parliament.

25. (1) The Farmers (Empowerment and Protection) Agreement on Price Assurance and Farm Services 

Ordinance, 2020 is hereby repealed.

(2) Notwithstanding such repeal, anything done or any action taken under the Farmers (Empowerment 

and Protection) Agreement on Price Assurance and Farm Services Ordinance, 2020 shall be deemed to 

have been done or taken under the corresponding provisions of this Act.

5

10 

15 

20 

25 

Ord. 11 of 2020.

30 

Ord. 11 of 2020.

STATEMENT OF OBJECTS AND REASONS

Indian Agriculture is characterised by fragmentation due to small holdings and has certain 

weaknesses such as dependence on weather, uncertainties in production and unpredictable market. 

This makes agriculture risky and inefficient in respect of both input and output management. These 

challenges needed to be addressed by way of realising higher productivity, cost effective 

production and efficient monetisation of the produce to increase the farmers' income. It was felt 

that promotion of agreements for farming produce may strengthen the process of monetisation whose 

primary objective is to de-risk agriculture at various stages, enable scaling of investment by 

industry for production and processing of high value agriculture produces, give fillip to exports 

and help farmers to enjoy the additional benefits of operational efficiency.

2. The COVID-19 pandemic and resultant lockdown also threw up challenges for agriculture and 

impacted the livelihood of farmers. As agriculture sector has immense potential to make significant 

contribution to the economic growth, there was a need to find long term solutions for farmers and 

for agriculture as a whole. Therefore, to achieve these objectives and to mitigate risks for 

farmers, enhance their income, put in place an effective and conducive policy regime for agreements 

and for holistic development of the agriculture sector, there was a need for immediate legislation.

3. As the Parliament was not in session and there was an immediate need for legislation in this 

regard, the Farmers (Empowerment and Protection) Agreement on Price Assurance and Farm Services 

Ordinance, 2020 was promulgated by the President of India on the   5th June, 2020 under clause (1) 

of article 123 of the Constitution.

4. The Farmers (Empowerment and Protection) Agreement on Price Assurance and Farm Services Bill, 

2020 which seeks to replace the Farmers (Empowerment and Protection) Agreement on Price Assurance 

and Farm Services Ordinance, 2020 (Ord. 11 of 2020) provides for—

(a) facilitating written farming agreement to be entered into in respect of a farming produce, 

except where such agreement derogates the rights of a share cropper;

(b) the conditions for performance of farming agreement, including compliance with mutually 

acceptable quality, grade and standards of farming produce;

(c)  the pricing of farming produce;

(d) the manner of delivery of farming produce;

(e) exempting the farming produce under a farming agreement from the application of a State Act 

regulating the sale and purchase of such farming produce and also from the provisions of the 

Essential Commodities Act, 1955 (10 of 1955) and the control orders made thereunder;

(f) prohibiting the Sponsor from acquiring ownership rights or making permanent modification on 

farmers' land or premises;

(g) the Sponsor to ensure timely acceptance of delivery and payment for such farming produce;

(h) linkage of farming agreement with insurance or credit instrument;

(i) establishment of Registration Authority to provide for e-registry and for registration of 

farming agreements;

9

10

(j) conciliation and dispute settlement mechanism for settlement of disputes under the farming 

agreement.

5. The Bill seeks to replace the aforesaid Ordinance.

NEW DELHI;                                                                            NARENDRA 

SINGH TOMAR.

The 26th August, 2020.

MEMORANDUM REGARDING DELEGATED LEGISLATION

Clause 22 of the Bill empowers the Central Government to make rules by notification in the Official 

Gazette, inter alia, in respect of matters relating to (i) other purposes for which the 

Sub-Divisional Authority or the Appellate Authority shall have the powers of civil court;

(ii) the manner and procedure for filing petition or application before the Sub-Divisional 

Authority, and an appeal before the Appellate Authority; (iii) any other matter in respect of which 

provision is to be made by rules by the Central Government.

2. Clause 23 of the Bill empowers the State Government to make rules by notification in the 

Official Gazette, inter alia, in respect of matters relating to (i) the mode and manner of payment 

to the farmer; (ii) the constitution, composition, powers and functions of the Registration 

Authority, and the procedure for registration; (iii) any other matter in respect of which provision 

is to be made by rules by the State Government.

3. The matters in respect of which rules may be made are matters of procedure and administrative 

detail and it is not practicable to provide for them in the Bill itself. The delegation of 

legislative power is, therefore, of a normal character.

LOK SABHA

————

A

BILL

to provide for a national framework on farming agreements that protects and 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 price framework in a 

fair and transparent manner and for

matters connected therewith or incidental  thereto.

————

(Shri Narendra Singh Tomar, Minister of Agriculture and Farmers  Welfare)

MGIPMRND—344LS—07.09.2020.

LOK SABHA

------    CORRIGENDUM

to

THE FARMERS (EMPOWERMENT AND PROTECTION) AGREEMENT ON PRICE ASSURANCE AND FARM SERVICES BILL, 2020

[To be/As introduced in Lok Sabha]

1.       Page 4, line 8,-

for “any agency of the State Government of the Central Government”

read “any agency of the Central Government or the State Government”

NEW DELHI;

9 September, 2020