The farm reforms are good but there are other problems as well

The three farm reform bills are structured on the recommendations of a state agriculture ministers panel that submitted its report in 2013

V S Pandey

Farm sector reforms such as amending the Essential Commodities Act, liberalising the provisions of the Agriculture Produce Marketing Committee Acts and contract farming etc. have been debated for decades. After these reforms have been shaped into law, farmers are on the war path in several states to oppose them. Many opposition parties have come out in support of farmers and are demanding withdrawal of these steps.
The agriculture produce market regulation scheme has had a long history. It all started in the British period with the Berar Cotton and Grain Market act of 1887 in the Hyderabad Residency. This law marked the beginning of the agriculture marketing scene in the country which got support of the Royal Commission on Agriculture 1928 that recommended establishment of regulated markets and establishment of market yards. Later, the Government of India prepared a model bill and circulated it to all the states in 1938 but nothing much happened before Independence.

Once India gained freedom, most of the states during the sixties and seventies enacted the agriculture produce marketing laws. Over a period of time, several limitations and constraints of the present agricultural marketing system such as lack of sufficient markets and inadequate marketing infrastructure, high incidence of market fee/charges and lack of competition with a long chain of intermediaries became apparent. Accordingly, the Union agriculture ministry formulated a Model APMC Act/Rules on agricultural marketing in consultation with the state governments and circulated it to them for adoption in 2003 and 2007 respectively. Several States initiated steps to amend their APMC Acts/Rules, but there was variation in adoption of the contents and coverage of reforms to the APMC Acts/Rules across the States/UTs. Further, as per government of India documents, during discussions and consultations at various levels, there was a persistent demand for expediting reforms in agricultural marketing in order to facilitate private sector investment in this important area. To suggest measures to overcome the farm sector marketing issues, the UPA Government set up an empowered committee of state ministers in-charge of agricultural marketing on 2 March 2010 to persuade various States/UTs to implement the reforms in agriculture marketing through adoption of Model APMC Act and the Rules.

The committee submitted its interim report in 2011 to the then Union agriculture minister Sharad Pawar and the final report in January 2013, recommending reforms in agriculture marketing to ensure barrier-free marketing of the produce by farmers and participation of private players along with promoting contract farming. The three farm bills are along the lines recommended by this committee of state ministers in-charge of agriculture marketing.

Undoubtedly, nobody can oppose the idea that the farmers should have complete freedom to sell their produce to any one who offers them the highest price and they should not be compelled to sell their produce only in the designated mandi. Similarly, the “one nation one market” concept is an ideal, which needs to be pursued and implemented per se. The concept of contract farming is in vogue in cane-growing areas for decades so we have the experience to weigh the pros and cons of this initiative and ensure putting in place such a mechanism which can rule out any possibility of farmers being cheated or taken for a ride by private players.

But the distinction between the agriculture produce market and all other product markets has to be kept in mind while carrying out market reforms. It is to be understood that the agri-produce marketing is different from the marketing of manufactured commodities because of the special characteristics like perishability of the products and seasonality of production since they cannot be produced throughout the year. In the harvest season, prices have to fall due to demand and supply mismatch unlike the supply of manufactured products whose production can be adjusted as per demand .With the varying supply, the demand remaining almost constant, the prices of agricultural products crash during the harvest season. This is where the support of the government through minimum support price becomes extremely crucial to prevent distress sale of farm produce. So any kind of market reform and opening up of markets to private players has to be accompanied by effective implementation and continuation of minimum support price scheme for all kinds of agri-products. Looking at the prevailing scenario, no government can dare withdraw the MSP scheme. Hence, farmers need not worry on this count. The PM has also made it clear that the MSP scheme will continue.

But these legislations are not going to solve all other problems ailing the farm sector. The government has to take steps to urgently fix the problem of supply of uncertified and poor quality seeds, overuse of chemical fertilizers, corruption in fertilizer subsidy regime, dwindling irrigation potential across the country, lack of proper extension services, wide spread corruption in food crop procurement and storage operations, lack of cold chain facilities, shortages in storage capacity, lack of agro-based industries and fixing of remunerative procurement prices etc. Since nearly 60% of our population is dependent on agriculture, the time has come to turn the nation’s focus towards them. No empty promises but sincere actions are the need of the hour. (Courtesy: Hindustan Times)

(VS Pandey is a former IAS officer. He retired as secretary, department of fertilisers in the Government of India)

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