The Undersold Promise of Indian Farm Reforms

Context: In the context of ongoing farmers protest, It is prudent for all the parties to find a midway where reformist agricultural laws are implemented in letter and spirit while ensuring that farmers interest is secured.

Entry of Market to help uplift India’s languishing agricultural sector

• Background: Prominent features of farm Acts:
  • Detailed provisions for contract farming.
  • Liberalizing the stockholding limits by axing governments control.
  • Ending the APMC monopoly: Opening trading in farm products by allowing farmers to sell their products outside APMCs striking better bargains.
• Associated fears:
  • Dismantling MSP mechanism in favour of market forces: discontinuation of MSP system and farmers would be left at the mercy of corporates.
  • Fear of cartelisation by private players leading to low prices of agricultural produce.
• Rational behind farm acts
  • More choices to farmers will result in more competition yielding better prices for farmers.
  • It will end the procurement biases in favour of few crops like Rice and Wheat, resulting in:
  • Diversification of crops.
  • Better groundwater management.
  • More sowing of protein rich crops, in line with changing dietary shifts of New India.
  • Lack of quality procurement capacity: as overstuffed central granaries can be compensated with private participation leaving more fiscal resources for the government.
  • Fiscal viability: by ending inefficient APMCs monopoly along with corrupt agents (act as middlemen)
  • Rivalry among buyers for the best crop could raise quality levels, bid up farmgate prices, and get investment ploughed in.
  • If farms turn responsive to market price signals, it would let resources be allocated more efficiently.

Way forward:

• Competition commission of India can play an active role eliminating fear of cartelisation by private players.

Conclusion: Government needs to win farmers confidence without yielding on reforms by giving a chance to market forces to help India’s languishing agricultural sector along with that clearer assurances could be made to the farming community that their interests will always trump.