Agri Bill of India

1. Understanding India's
Farm Laws
India's farm laws consist of three major bills - Trade and
Commerce Law, Contract Farming Act and Essential
Commodities Amendment Act. The government claims
these laws aim to improve the economic condition of
farmers.

2. India's agriculture sector
employs nearly 60% of the
population. The government
has implemented three new
farm laws aimed at reforming
the industry and promoting
growth.
The laws have been met with
protests farmers who fear that
they will hurt their livelihoods
and give more power to
corporations.
The laws represent a major shift in
India's agricultural policies and have
highlighted tensions between
agricultural interests and the
government.
Agriculture Sector Overview Social and Political Context
Current Controversy
Current Controversy

3. Overview of Microeconomics Concepts Relevant to
Farm Laws
1 Market Equilibrium
The laws affect supply and demand in the agriculture
sector and thus impact market equilibrium. Changes
in equilibrium can lead to changes in prices and
output.
2
Market Structures
The market structures in Indian agriculture, such as
the existence of small farmers and large corporations,
affect competition and pricing. The laws aim to
change the existing structures to promote efficiency
and innovation.
3 Externalities
Externalities, such as the health impacts of
pesticides, are often ignored in the agricultural
market. The laws aim to address these externalities
and promote environmentally sustainable practices.

4. The Promised Benefits to the
Farmers
1 Increased Income 💰
The government believes
that the new laws will lead to
an increase in income for
farmers by removing
middlemen and allowing
them to sell directly to
buyers.
2 Flexible Market 📈
According to the government,
the new laws encourage
competition and provide
farmers with an alternate
market outside the
Agricultural Produce Market
Committee (APMC).
3 Contract Farming 💼
The laws help promote contract farming by allowing farmers to enter
into agreements with private players, giving them greater stability and
certainty with respect to future prices.

5. Concerns of the Farmers on the Farm Bill
Lack of MSP 🙁
The absence of Minimum
Support Price (MSP) in the
new laws worries farmers
because they fear that it will
lead to an increase in prices of
fertilizers and seeds, but not an
increase in crop prices.
Corporate Control
😧
Many farmers believe that the
government's move to allow
contract farming and remove
APMCs will ultimately favor
large agribusinesses over
small farmers.
Weakening APMC
📉
Initially, the government
claimed that the APMC would
continue to operate, but the
new laws propose to build
alternate e-marketplaces,
which will eventually erode the
importance of APMCs.

6. Supply and Demand Analysis in Indian Agriculture
Supply Analysis
India's agricultural supply is highly fragmented due to the
presence of small farmers. The new laws aim to increase
supply by providing better infrastructure and marketing
options for farmers.
Demand Analysis
The demand for agricultural products in India is driven by
population growth, changing food habits, and industrial
demand for raw materials. The laws aim to increase demand
by promoting exports and value addition in agriculture.

7. Impact of Farm Laws on
Government Policies
1 Reshaping the
Economy
The farm laws are part of a
larger effort by the Indian
government to modernize
the economy, attract foreign
investment, and reduce
government intervention in
markets.
2 Political Ramifications
The protests over the farm
laws have led to tensions
between the central
government and state
governments, many of which
oppose the laws due to their
potential impact on local
farmers.

8. Crops Covered under MSP
Rice 🌾
The MSP for paddy varieties of rice ranges from
INR 2040 to INR 2060 per quintal, depending
on the quality.
Wheat 🌾
The MSP for wheat is INR 2015 per quintal.
Cotton 🌾
For medium-staple cotton, the MSP is INR
6080 per quintal, whereas it's INR 6380 per
quintal for long-staple cotton.
Mustard 🌾
The MSP for mustard seed is INR 5050 per
quintal.

9. Major Challenges on the Current
Infrastructure of APMC
1 Highly Fragmented
Market 🔄
The APMC market
operates in a highly
fragmented and
decentralized structure,
which leads to a lack of
standard pricing.
2 Inefficient Supply
Chain 📉
The supply chain from
farmers to consumers is a
multi-level process with
intermediaries, causing
delays and affecting the
quality of the produce.
3 Limited Storage
Facilities 🏭
There's a lack of
adequate and efficient
storage facilities in place,
leading to losses of grains
and other products.

10. Loss of Grains Due to Lack of Storage
Infrastructure
Current Grain Storage
India's current storage capacity
is only sufficient for 15% of its
total grain production, leading to
the loss of grains and poor-
quality produce.
New Grain Storage
technology
New storage technology like
Integrated Bulk Grain
Management System (IBGMS)
can help manage both pre and
post-harvest losses and improve
food grain quality.
Providing Employment
Opportunities 👷
Establishing new and advancing
technologies for storage facilities
would lead to providing
employment opportunities to
many individuals.

11. Economic Analysis of Commodities
Under MSP
Commodity Cost of Production (INR per
Quintal)
MSP (INR per Quintal)
Rice (Grade A) 1,211 1,888
Wheat (Lokwan) 817 1,975

12. MSP Prices Over the Last 10 Years, in
Comparison to Market Prices
1
2010
MSP prices increased by 6%
compared to the market
prices.
2
2012
MSP prices increased by
7.5%, whereas the market
prices saw a decline of 10%.
3
2015
MSP prices increased by
3%, and the market was
stagnant as well.
4
2018
MSP prices increased by
4.5%, while the market
prices saw a decline of 6%.
5
2020
The MSP prices were hiked
by 2-3%, but the market
prices fell sharply by 25-
30%, reducing farmer's
income.

13. Factors Determining the
Prices
1 Supply & Demand 🔄
Supply and demand play an
important role in determining
prices. An increase in supply
coupled with a decrease in
demand can lead to a fall in
prices and vice versa.
2 Weather 🌤️
Weather plays a crucial role
in determining prices of
commodities. Unpredictable
weather patterns can lead to
a shortfall in production,
leading to a rise in prices.
3 Cost of Production 💲
The cost of production directly affects the prices. A rise in production
cost can increase the final prices.

14. Conclusion: Prospects and Challenges of Indian
Farm Law Reforms
Prospects
• Increase market efficiency and innovation
• Improve infrastructure for farmers by more scope of profit
• Promote environmentally sustainable practices
• Technological upgradation
Challenges
• Resistance from farmers and state governments
• Risks of increased corporate control
• Uncertainty over the impact on small farmers