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AGRICULTURE: Structural reforms amidst pandemic
6/5/2020 11:40:21 PM

Dr. Parveen Kumar, Dr. R. K. Arora

Financial Times, the world’s leading global business publication in one of its editorials wrote, ‘Radical reforms reversing the policy direction of the last four decades will need to be put on the table.’ After four decades of following a policy direction that relies extensively on free markets, all it took is a brutal assault by the corona virus pandemic for the world to realize that it wasn’t working well. The Financial Times further adds that reversing the policy direction of the past four decades is an urgent necessity. It requires bold decision making along with the courage to redraw a new development pathway. It also requires immense political backing to thwart the lobbying pressure from the market players, both in the media as well as academia. It requires an exceptional ability to challenge the dominant economic thinking, to disband the model of economic growth which has relied solely on wealth creation. The model that has sucked income from the bottom to the top enabling the rich to become richer and the poor to become poorer, a model that has witnessed debt traps amongst the farming community and where farm suicides have put a blot on this very noble profession.
Agriculture accounts for 16.5% of India’s gross domestic product (GDP), nearly half the population in the country depends on a farm-based income, underscoring the sector’s importance for livelihoods. The present dispensation under the leadership of Hon’ble Primeminister Sh. Narendra Modi also came up with a number of agricultural reforms in the country. The pandemic pressurized the farm incomes and disrupted the farm-to-fork supply chain, brought to the limelight severe lacunas in our marketing structure and exposed the vulnerability of the farming community. This was despite the fact that full exemptions were given to the farm sector even during lockdown. The situation called for structural reforms which were large overdue. The reforms in agriculture marketing, management of marketable surplus, access of farmers to institutional credit and freeing agriculture sector of various restrictions were already the priority area of the Hon’ble PM. These reforms were necessary and are a part of preparations for a new normal post COVID-19.
The farming community faces so many restrictions in marketing of their produce. The APMC act that ushered in during the 1960s saw most of the states having its own law which require farmers to only sell to licensed middlemen in notified markets, usually in the same area as the farmer, rather than directly to buyers elsewhere. Although the APMC act was brought to protect the farming community from being forced into distress selling, yet over the years, it has
proved to be a breeding ground for layers of intermediaries, spanning the farm-to-fork supply chain. This resulted in a ‘large price spread’ or the fragmentation of profit shares due to the presence of many middlemen. To provide adequate choices to farmer to sell produce at an attractive price and for barrier-free interstate trade, the cabinet has also approved ‘The farming produce trade and commerce (promotion and facilitation) ordinance 2020’. It will also set up the framework for e-trading of agriculture produce. The move is aim to end fragmentation of markets available to farmers who are currently forced to sell only to licensed APMC marketers. It will help create an ecosystem where the farmers and traders will enjoy freedom of choice of sale and purchase of their produce of both interstate as well as intrastate..
The government has also brought in amendments to Essential Commodities Act to enable better price realization for farmers which will result in the deregulation of prices for foodstuffs including cereals, edible oils, oilseeds, pulses, onions and potato. It would also help in attracting investments and making agriculture sector competitive. The stock limits, another feature of the old act is now to be imposed under very exceptional circumstances like during national calamities like famine that see a surge in prices.
By this ordinance the government wants the farming community to engage with processors, aggregators, large retailers and exporters with a level playing field and without fear of any sort of exploitation. This will ultimately transfer the risk of market unpredictability from the earner to the sponsor and enable the farmers to have access to better technology and better inputs. It will act as a catalyst to bring private sector human investment in creating value chains of their produce to global markets
A scheme with a budget of rupees 10,000 crore for the formalization of Micro Food Enterprises (MFE) under ‘Vocal for Local with Global outreach’ vision as shown by the prime minister has also been approved. This will help 2 lakh MFEs attain technical up-gradation, FSSAI food standards, build brands and marketing
A one lakh crore Agri Infrastructure Fund for farm-gate infrastructure for farmers for projects at farm-gate and aggregation points, primary agricultural cooperative societies, farmers producer organizations, agriculture entrepreneurs, startups, etc.
Besides, the government has also brought in many other programmes under the Primeminister special package of rupees twenty lakh crore during pandemic. Separate budget have been provided for fishermen through Pradhan Mantri Matsya Sampada Yojana (PMMSY). An amount of rupees 13,343 has been reserved for National Animal Disease Control Programme for foot and mouth disease (FMD) and brucellosis launched. An Animal Husbandry Infrastructure Development Fund worth Rs 15,000 crore with the aim to support private investment in dairy processing, value addition and cattle feed infrastructure. Herbal cultivation with a fund of Rs 4,000 crore to cover 10, 00, 000 hectare land in the next two years has been provided. A sum of rupees 500 crores for beekeeping and rupees 500 crore have been kept for ‘Operation Green’ to prevent distress sale leading to a reduction in the price of perishable fruits and vegetables at the farm level. Besides the above structural reforms, through the PMKISAN, over 9.25 crore families have been benefitted and an amount of rupees 18, 517 crores has been disbursed so far during the lock down period. Similarly under PM Fasal Bima Yojana (PMFBY), total claims amounting to rupees 6003.6 crore have been paid during lockdown period.
Dr. Arora is Associate Director Extension, SKUAST-J and Dr. Parveen is scientist at SKUAST-K; can be reached at pkumar6674@gmail.com
The fault lines are clearly visible. Now that the avalanche of migrant workers returning home has struck a strong visual in our minds of the large number of agricultural refugees walking home, Covid-19 provides an opportunity to re-imagine a New Normal — where agriculture becomes economically viable and sustainable, where farming is not stifled to prepare a workforce for the industry, where agriculture becomes the pivot of the economy, providing the rightful income into the hands of farmers. This will only be possible if along with public health and education, revival of agriculture too receives a priority in policy planning. A regenerating agriculture alone has the ability to reboot the economy, protect nature, bring back birds and butterflies, and save the planet from the catastrophic effects of climate change that awaits us.
Concessional credit flow to strengthen agriculture infrastructure, special Kisan Credit Card saturation drive for PM-Kisan beneficiaries and facilitating inter and intra-state trade of agriculture produce to ensure fairest return to farmers were some of the other important areas covered, the statement said.
Developing eNAM or the National Agriculture Market into a "platform of platforms" to enable e-commerce was one of the important topics of discussion on Saturday.
Discussions also emanated on the possibilities of a uniform statutory framework in the country to facilitate new ways for farming which will infuse capital and technology in the agrarian economy.
The challenges of the Model Agricultural Land Leasing Act, 2016 and how to protect the interest of small and marginal farmers was discussed in detail in the meeting attended by Union Home Minister Amit Shah, Union Agriculture Minister Narendra Singh Tomar and Union Finance Minister Nirmala Sitharaman.
Ways to make the Essential Commodities Act compatible with present times so that large-scale private investment in post-production agriculture infrastructure is incentivised, and how it has a positive effect on commodity derivative markets, was also discussed.
Developing "Brand India", creation of commodity specific boards/councils and promotion of agri-clusters or contract farming are some of the interventions that were deliberated to boost agriculture commodity export.
The use of technology in the agriculture sector is of paramount importance as it has the potential to unlock the entire value chain for the benefit of farmers.
PM Modi emphasised on the dissemination of technology till the last mile and making farmers more competitive in the global value chain.
It was decided to further strengthen the role of Farmers Producer Organisations (FPOs) to bring vibrancy in the agrarian economy, transparency in agriculture trade and enable maximum benefits to the farmers.
Overall emphasis was on revisiting the existing laws governing the market for better price realisation and freedom of choice to the farmers, the statement said.
Taking to Twitter, the prime minister said the meeting reviewed aspects relating to agriculture reform.
ONE NATION, ONE MARKET: The government also is going for a massive scaling up of a federal e-commerce platform for farmers and traders, known as the Electronic National Agricultural Markets or the e-NAM app. According to Sh. Narendra Tomar, Minister of Agriculture and Farmers’ Welfare, Government of India, already more than 166000 registered farmers across the country are now selling their produce by transacting from home and practicing social distancing, with nearly half of the country’s 1500 major farm-end commodity markets now going online. This is the first time wholesale food markets in large states, such as Uttar Pradesh and Karnataka, have joined the digital supply chain. Farmers on the e-NAM app can strike deals for their harvests remotely by first uploading pictures of their samples and then getting these samples scientifically checked for quality by remote assayers, without having to move entire truck loads to physical markets. The e-NAM platform now has a total of 785 markets online. The government is also considering a ‘single mandi tax for the country’ and ‘removal of levies’ charged to traders and farmers when farm goods are sold from one state to another also known as interstate mandi tax.
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