More Reform Needed

Context:  Recently, the farmer started their agitation against reforms in agriculture.

Significance of agricultural reforms:

• Ends the monopoly of Agricultural Produce Marketing Committees: Resulted in an increase in out-of-mandi transactions.
• Strengthened the supply chain: This will help in curbing food inflation, improving agricultural productivity, increasing infrastructure investment and farmer incomes.

Reasons for the farmer agitation

• Vested interests: Introduction of market factors into the supply chain and the destruction of monopolies will result in loss of power for some having vested interests.
• Fear of corporatisation: of the agricultural marketing system.
• The spread of misinformation about the fate of the minimum support price (MSP): Farmers are being misinformed that the MSP will be removed. But it seems that the government has no such intention.
• Concerns about nature of support: available to farmers during difficult times.
• Political parties are influencing farmers: for their political gains.
• Failure of government to introduce healing measures: since the government failed to anticipate the objections to the reforms.

Way forward:

• Design and publicise alternate mechanisms of support: Support systems without undermining the new agricultural marketing laws.
• Design new forms of price support: That does not distort the market or violates India’s international trade obligations.
• For e.g. an all-India income support plan, price compensation schemes to make up for the difference between market prices and MSP.
• Take steps to avoid distress sales: by using warehouse receipts as recommended by the Commission for Agricultural Costs and Prices (CACP).