In September 2020, Parliament passed three Acts intended to reshape agricultural marketing. Broadly, they sought to permit trade outside notified mandi yards, create a national framework for contract farming, and ease stock limits under essential commodities law. In November 2021, the government announced their repeal, completed through the Farm Laws Repeal Act. Between those dates lay a prolonged farmer mobilisation, most visible on the borders of Delhi.
The episode is usually narrated in one of two ways. In the first, necessary reforms were defeated by entrenched interests and misinformation. In the second, a government attempted to dismantle farmer protections without consent and was rightly forced to retreat. Both narratives contain elements of truth, and both miss what may be the more durable lesson.
Design and legitimacy are different tests
A reform can be defended on its design — the economic logic of wider buyer choice, private investment in supply chains, freedom to contract. Many agricultural economists had long argued for change in this direction, and some states had already moved partway along it. But a reform must also pass a separate test of legitimacy: whether those it affects believe they were consulted, whether their concerns were heard, and whether the institutions that protect them will survive the transition.
The two tests are independent. A well-designed reform can fail the second; a poorly designed one can pass it. The farm laws debate became, in large part, a contest over legitimacy conducted in the language of design.
Several features of process shaped how the laws were received:
- Consultation. The measures first arrived as ordinances, and critics argued that they were then passed without the committee scrutiny or public deliberation that structural change of this kind usually warrants. That fed a perception that farmers were being acted upon rather than engaged.
- Federalism. States have a central role in agricultural marketing. Legislating from the centre raised constitutional and political questions, and states with deep investment in mandi systems and procurement saw their own institutions at stake.
- Credibility of assurances. The laws did not abolish minimum support prices, but many farmers feared that weaker mandis would erode procurement over time. Assurances were weighed against demands for a statutory guarantee that the government did not concede.
Trust as an asset
The insight worth drawing is that trust functions like infrastructure. It is built slowly, through repeated experience of promises kept. It lowers the cost of every subsequent transaction between farmers and the state. And once damaged, it raises the price of future reform — including reforms that farmers might otherwise welcome. Farmers do not evaluate a reform only by its text; they evaluate it by what they expect to happen next.
Farmers do not evaluate a reform only by its text; they evaluate it by what they expect to happen next.
Nor did repeal settle the underlying questions. The problems the laws were meant to address — thin markets, limited buyer competition, weak private investment in post-harvest value chains — remain. So do the concerns of their opponents about bargaining power, the durability of procurement and the capacity of small farmers to enforce contracts against large firms.
For those who favour market reform, the lesson is that sequencing, consultation and credible safeguards are not concessions that dilute reform but conditions for it to endure. For those who opposed these laws, the lesson is that defending existing institutions does not by itself resolve the problems that prompted the attempt. The next effort at agricultural market reform, whatever shape it takes, will be judged on the credibility of its process long before anyone reads the merits of its text.