Economic freedom in agriculture

Context: Being a developmental state, the central planning instinct of the government has been detrimental in solving the boom and bust of agriculture. Economic freedom in agriculture is thus necessary.

Problems in agriculture:

• Cobweb model: A good harvest is followed with a price crash, and then sowing goes down, which ten increases the prices, and then sowing goes up, this the cycle of pain continues.

• Hindered price discovery: This has led to discriminatory pricing of agri-produce which is independent of actual demand and supply.

Market economy as a Solution

• Focus on the three big decisions made by private persons: What to sow, how much money to invest in inputs, and what to store.

• When these decisions are made well, the food market works well, and vice versa.

Elements influencing these decisions

1. Ending government involvement: Replacing the existing PDS system with market-based warehousing, which helps in forecasting future shortages and stocking up goods in response.
2. Futures Market: it encourages private persons to study food economy and thus forecast prices. Removal of heavy-handed restrictions and integration with global futures market is needed.
3. International trade: Actions of private persons must determine what to import or export. Need to shift from capital-intensive products (wheat, rice) and engage in labour intensive and high value agri-exports.
4. Internal trade: Removing restriction in intra-India trade, utilizing the idea of Article 301 which states that commerce throughout India shall be free. Need to review administrative barriers.

Conclusion: Careful legal analysis is needed. And the boom and bust, and persistent low income, of Indian agriculture will be solved when we shift from state domination to individual freedom.