Farm gate in focus

Context: Recently introduced farm sector reforms with amendments to the Essential Commodities Act might be fraught with risks.

Recent Farm Sector Reforms:

• Rs 1 lakh crore to finance agriculture infrastructure projects: a welcome step as lack of adequate cold-storage facilities extract a high price on the agrarian economy in way of post-harvest losses. 

• Channeling funds to agricultural cooperatives, FPO, rural entrepreneurs and start-ups: lays the onus of creating the infrastructure or logistics solution on the principal beneficiaries

• Formalization of micro food enterprises: goal of scaling up food safety standards to earn product certifications and building brand value.
• Amending Essential Commodities Act: Better price realization through deregulation of cereals, pulses, oilseeds, onions, and potato.

Risks with deregulation: While the Economic Survey had recommended jettisoning the “anachronistic Act”, it is still vital for protecting consumers. Deregulation may lead to:

• Irrational volatility in prices 

• Hoarding and black-marketing 

• Future inflation in food prices.

More concerns: Market forces vs Food Security.

• Other reforms like bypassing APMC and proposal of pre-sowing contract farming could privilege market forces and may bring better price discovery for farmers, but it skips a thought about food security.