Opinion

More reforms required to unlock farm sector; ordinances welcome

Supriya Bhaskar | June 08, 2020 02:38 PM

CHANDIGARH: The Union Cabinet has approved amendments to the Essential Commodities Act, 1955 to benefit farm sector and also two new ordinances aimed at freeing farm- trade from restrictions and put in place a legal framework to protect farmers’ interests when it comes to selling of their produce. These are: The Farmers’ Produce Trade and Commerce (Promotion and Facilitation) Ordinance, 2020 and The Farmers (Empowerment and Protection) Agreement on Price Assurance and Farm Services Ordinance, 2020.

These approvals, a sequel to Prime Minister’s Rs 20 lakh crore socio-economic stimulus packages, are a step toward farm-cum-rural transformation.

These reforms offer hope for sustainable farming, profitable returns to the farmers and steer agriculture toward corporatization or privatization or contract farming systems. So far, the existing government-supported MSP - minimum support price - system has given farmers confidence of assured procurement and price. Despite the Commission for Agricultural Costs and Prices recommendation to phase out MSP, this system is unlikely to be entirely given up. MSP has proved to be a pre-requisite for nation’s food security.

However, the ordinances have caused some ripples. In Punjab, for instance, some political parties has voiced concerns over any attempts to dilute federalism.

Seemingly, as the government begins farm-cum-rural transformation process, it has public-private entrepreneurship in mind. With multinational companies and private players expected to step in with investment - capital and technology - the government has assured protection of economic interests of small and marginal farmers, as well. They constitute 85 -87 per cent of the farming community, across the country. Ordinances mark the beginning of farm-cum- rural development journey. The intention, obviously, is to sync new initiatives with the slew of existing pro-Kisan programmes to double farmers’ income by 2022.

Rural sector, so far, has been untouched by coronavirus pandemic. As India gradually moves to unlock to put economy back on the track, medical vigilance and corona surveillance in rural India would have to be stepped up. In the past weeks migrants have returned to home states. They are the backbone of farms and industry. Their contribution to economy cannot be overlooked. Their health is important to keep the wheels of progress running.

Taking an overview, the ordinances are slated to empower farmers to engage with processors, aggregators, wholesalers, large retailers, exporters to get appropriate remuneration for their produce, and profitable returns. This will help transfer the risk of market unpredictability from the farmer to the sponsor and also enable the farmer to access modern technology and better inputs. This will also reduce cost of marketing and improve incomes of farmers.

With the opening up of the farm sector, multi-national companies and Indian corporate, business houses dealing in agricultural and food businesses will show interest. As long-term acquisition of agricultural land and mechanization is on the cards, the inbuilt legal frame-work in the ordinance, for pre-purchase of produce from farmers, will act as a safety-valve. Yet, information, education and communication will need to be strengthened, as also farmers assured their interests are safe with government standing guard.

 Amendment to the Essential Commodities Act was necessary because the county had become surplus in most agri-commodities, farmers were unable to get better prices due to lack of investment in cold storage, processing and export, as the entrepreneurial spirit got dampened due to this Act. With production, procurement, processing, storage facilities being managed by private sector, farmers are expected not to suffer losses when there is bumper harvest of perishable commodities. This will also reduce wastages. And, both producer and consumer would benefit.

 As to barrier-free trade in agriculture produce, the ordinance is slated to be of help. As of now, there are restrictions for farmers in selling agri-produce outside the notified APMCs- Agricultural Produce Marketing Committees. They are restricted to sell the produce only to registered licensees or Ahrtiyas. Each state government has its own mandi infrastructure and operational rules, regulations. Since barriers also exist in free flow of agriculture produce between states owing to the prevalence of various APMC legislations, the Act will do away with such restrictions.

APMC Act was framed in 1961 for a different purpose. Across time it had become a facilitator for the Ahrtiyas to recover their dues from farmers, rather than facilitating farmers. There has been a demand for direct payment to farmers rather than through Ahrtiyas. 

However, what is still awaited is immediate relief which would go a long way to mitigate rural distress and provide a breather to debt-ridden farmers. These measures, alongside improving the socio-economic conditions of farmers, farm labour will reduce farm suicides. Greater government investment in terms of capital and technology to upgrade agricultural teaching, research and extension education in the farm universities is equally important.

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