The recent Agriculture Reforms –A boon or a bane for farmers Industry Perspective

Mr Abhijit Barooah

The recent reforms in the farm sector are part of larger set of coordinated and comprehensive initiatives that have been taken by the government, focused on the input side, introducing risk mitigation measures, reducing post-harvest losses and augmenting market and income opportunities for farmers. This is one of the most transformative reforms in Agriculture post- Independence giving freedom to farmers from the control of APMC. Agriculture Reforms are happening after 74 years of independence and this is for the first time that the farmers will be free from the clutches of middlemen.  The use of Digital Technology and Artificial Intelligence will transform market intelligence and make every farmer accessible to any good market. However, some genuine shortcomings, farmers should have right to approach court of law in case of dispute which should be addressed at the apex level.

There is a clear need to develop competitive agri value chains to support enhanced value addition and exports. With demand shifting to high value commodities, focus on supply chain initiatives is gaining center stage and the need of efficient post-harvest handling, seamless supply chain connectivity and access to competitive markets is further amplified. Recognizing the need, steps have been taken by Government of India towards aggregation for bringing scale, bridging infrastructure gaps and improving market access, demonstrating a significant shift to a demand driven ecosystem.

The Agriculture Infrastructure Fund of INR one lakh crores is a step in the direction towards creating sustainable farm infrastructure. Further, to enhance farmers competitiveness and provide them the advantage of scale through aggregation, the Government has announced around formation of 10,000 Farmer Producer Organizations.

For improving market access and overcoming the inefficiencies, over the past two decades, the Government of India brought out several model Acts. However, the uptake at state level has been limited. Going forward, Government of India has announced progressive agri marketing reforms aimed towards ‘Moving to One Nation, One Market’. This is a significant step and CII believes that the reforms will benefit the sector and more importantly will help augment farmers’ incomes.

To begin with“The Farming Produce Trade and Commerce (Promotion and Facilitation) Act,

2020towards freeing up agricultural markets fundamentally alters the agriculture marketing landscape in the country in several positive ways.

The Act provides for -

    Creation of an additional ecosystem where the farmers and traders enjoy the freedom of choice relating to sale and purchase of farmers’ produce which facilitates remunerative prices through competitive alternative trading channels.

 

    Transparent and barrier-free inter-State and intra-State trade and commerce of farmers’ produce outside the physical premises of markets or deemed markets notified under various State agricultural produce market legislations.

 

    To facilitate timely payment, the Act specifies that payment to farmers should be made on the same day or within maximum three working days if procedurally so required.

    While competition will bring in transparent price discovery, the Act also provides for

developing a Price Information and Market Intelligence System for farmers’ produce

and a framework for dissemination of the information.

 

    An efficient and detailed mechanism for dispute resolution is also outlined to prevent any kind of exploitation of farmers.

 

Key areas of concerns and clarifications on the same

 

a.  There are farmer concerns primarily around the future of Minimum Support Price as MSP can be enforced only through Government intervention.

What needs to be understood is MSP is not a function of the APMC Act or the APLM Act.

Minimum support price is announced for 23 commodities, it is recommended by Commission of Agricultural Costs & Prices (CACP) and the Cabinet Committee on Economic Affairs (CCEA) of the Union government takes a final decision on the level of MSPs and other recommendations made by the CACP. The Food Corporation of India (FCI), along with other State Agencies undertakes procurement of crops. Mandis only provide the physical infrastructure for facilitating the procurement operations and they will continue to do so for farmers that come to the APMC market.

While the farmers’ in Punjab and Haryana are largely dependent on the MSP regime , it

needs to be understood the reform does not intent to demolish the MSP system but towards getting the markets at a large right. Additionally, the Governme nt has offered a written assurance that the existing system of MSP will not be tampered with.

 

b.  The law will gradually end the mandi system and with businesses moving to deregulated markets farmers will be exploited

What needs to be understood is that the reform does not intent to demolish existing APMC

system. It only provides additional market option to the farmers which was not available earlier and the farmer has a choice to make.

Further the government has offered to put deregulated markets and notified markets on a level-playing field in terms of taxes and fees so there is no disadvantage to anyone. It is

proposed to give states the freedom to impose taxes and fees in private mandis (wholesale

markets), a move aimed at maintaining a level playing field between private and state regulated markets.

 

c.  Dispute resolution mechanism

Under the Act it was proposed that dispute resolution will be within the powers of the

district authorities such as the sub-divisional magistrate. However, the Government has now proposed that that farmers can approach civil courts in case of any trade -related dispute.

 

These reforms coupled  with other policy interventions around Farmer Producer Organization, Agro clusters and Agri Infrastructure Fund etc. set the stage for deeper long term engagement between the farmers and the value chain participants (compared to the one-transaction-at-time type APMC system) to make Indian agriculture more competitive.

Confederation of Indian Industry (CII) believes the Agriculture Marketing reforms, certainly herald a new era for agriculture and have taken care of a lot of the long-standing reform agenda. The

reforms will create the right enabling environment for market and investment led agricultural growth, and increased income generation opportunities for farmers. The reforms will also give great impetus to investment in extension services to the farmers to further improve productivity and returns.

The private sector has been partnering with farmers over decades for enhancing production and productivity leveraging technology, enhancing farmer capabilities through introduction of improved varieties and good agricultural practices, providing market linkages as well as farmer friendly post-harvest management solutions thus creating avenues for enhanced farmers’ incomes. CII believes the reform process initiated will help establish a competitive marketing ecosystem where farmers enjoy the freedom of choice relating to sale of agri produce through competitive alternative trading channels creating more income augmentation opportunities for farmers. This will also create opportunities for collaboration between farmers and buyers like food processors and retailers from pre-planting to post-harvest stage creating an opportunity for scaling these models further.

 

(Mr Abhijit Barooah is the Chairman, CII North East Council& Managing Director, Premier

Cryogenics Ltd)