Lord Linlithgow’s Stubble

Context: Indian agriculture is troubled by the nature in which the state intervention and structural factors impact the efficiency of food chains.

Challenges with Indian Agriculture:

• Problem with farm-to-fork: While developed countries like the United States (US) suffer from Food Waste, India, on the other hand, suffer from Food Loss.
  • Food waste is at the level of consumption, while food loss varies across kinds of crops and is at the level of production, postharvest processing and distribution.
  • Food loss, globally, is most for roots and tubers, then fruit and vegetables, then meat and animal products, and finally cereals and pulses.
  • Reducing both is part of the United Nations’ Sustainable Development Goals (SDG 12.3.1) framework for countries.
  • With increased incomes, food habits change even among the poor, and they consume more fish. Meat and vegetables, as borne out by the National Sample Survey (NSS).
• State intervention distorts resource allocation: Unrealistic prices for inputs like water and power will encourage the cultivation of water-intensive crops like rice in states that shouldn’t grow rice.
  • Under the Essential Commodities Act (ECA), equitable distribution of motor cars and scooters at fair prices was secured.
  • Antecedents of Agricultural Produce Market Committee (APMC) Acts hark back to 1886 and 1897.
    • The intention behind such legislation was to provide cheap cotton supplies to Lancashire and Manchester in Britain, and not to benefit Indian cotton farmers.
    • There was a Model APMC Bill in 1931, by Lord Linlithgow’s Royal Commission on Agriculture in 1926, aimed at providing cheap cotton supplies to Britain.
    • This led to a rise in the number of regulated markets from 146 in 1945 to 7,161 in 2001.
• Heterogenous nature of Indian farming: In the 2015-16 census, there were 146 million holdings.
  • In terms of the operated area, most holdings are in Rajasthan, Maharashtra, UP and MP.
  • In terms of the number of holdings, most are in UP, Bihar, Maharashtra and MP.
  • Bihar, Kerala, UP, MP, Gujarat and Karnataka gave up APMCs or never had them.
  • Many who own agricultural land and are legal ‘farmers’ don’t farm. This leads to a reluctance on transferring the Minimum Support Price (MSP) directly to the farmers.
• Lack of accessibility to the mandi: A 2018-19 Parliamentary Standing Committee report on agricultural marketing stated that a registered mandi should exist within 5 km, covering an area of 79 sq km.
  • According to the report, a mandi in Punjab covers 116 sq km, but in Himachal, it covers 994 sq km.
• High mandi fees: They are constrained because they must mandatorily sell in mandis and pay a mandi fee. The Economic Survey 2014-15 tabulated all fees. In Punjab, they were 14.5%.

Way Forward:

• India’s problem with farm-to-fork chain can be resolved through modernisation, investments and disintermediation. (moving away from the food grains/diversification)
  • Economies of scale and scope depend on what one does with the land. A smallholding may be unviable for rice but viable for horticulture.
• Digitisation of land titles: Definition of a ‘farmer’ is contingent on holding agricultural land; Hence, digitising land titles and having surveys is important.

Conclusion: If mandis render a worthwhile service, farmers will voluntarily pay the mandated mandi tax.