Reforms with the future and farming needs in mind

Context: Recently enacted Farms Acts, if implemented in the right spirit, will take Indian agriculture to new heights and usher in the transformation of the rural economy.

 Fears of the farmers:

• Withdrawal of Agricultural Produce Market Committees (APMC) and Minimum Support Price (MSP).
• Corporates will take over agriculture trade.

 Basis of the reforms:

• Rising income-gap: between farmer and a non-agriculture worker increased from ?25,398 in 1993–94 to ?1.42 lakh in 2011-12.
• Aggregate food demand is not rising in proportion to food production: leading to a fall in food prices and requires the promotion of Export of Agri-products.
  • Excess stocks: of 60 lakh tons of sugar and nearly 72 million tons of extra buffer stock of wheat and rice, causing a huge drain on fiscal resources.
• Unviable exports and attractive imports: due to high domestic prices in comparison to global prices.
• Market failure: hurting both consumers and producer, forcing farmers to look at the government for remunerative prices (like MSP).
• Poor fiscal capacity: of the government to support farmers through a guaranteed MSP system. Central government net revenue receipt is below 9% of GDP.

 Significance of the new Farming Acts:

• New trading Act has relaxed criteria: Only Permanent Account Number (PAN) card is required for registration as a trader; will help farmers and rural youth to become agribusiness entrepreneurs.
• New Contract Farming Act:
  • Prohibits the farming agreement to include the transfer or sale, lease, mortgage of the land or premises of the farmer.
  • Aims to insulate farmers from fluctuating prices and promote the cultivation of high- value crops with assured prices at the time of harvest.
  • Promotes diversification, quality production for a premium price, export and direct sale of produce, with desired attributes to interested consumers.
  • Will bring new capital and knowledge into agriculture and pave the way for farmers’ participation in the value chain.

 Conclusion:

• Government should ensure remunerative prices: for the farmers through increased competition for the sale of their produce, development of modern value chains, value addition, export, and processing as a part of rural economic revitalisation.
• Need to understand that APMC has nothing to do with MSP: The necessary and sufficient conditions for the MSP are procurement by the government, with or without the APMC.
  • Crops other than paddy, wheat and cotton are selling at prices below the MSP in the APMC mandis of Punjab on an almost regular basis.