1991 moment for agriculture

Context – Govt of India has carried out total 11 reforms in Agriculture, but 3 reforms are very important.

Essential Commodities Act 

• Origin – Roots in Defence of India Rules of 1943 when Country was ravaged by Famine. India had to accept PL-480 imports from USA and labelled as “ship to mouth” economy.
• It can put stock limits on any trader, processor or exporter. As a result, country lacks storage facilities. 
• Supply Glut ???? Price decrease and loss to Farmer. In the lean season, prices start flaring up for consumers.
• Current amendment will promote investment in storage facilities, bring price stability and reduce wastage of Agri-produce.

APMC Act

• Problem with APMC - Farmers suffer more in marketing their produce than during the production process. APMC markets have become monopsonistic with high intermediation costs.
• Proposed changes in APMC will bring greater competition amongst buyers, lower the mandi fee and commission for Arhatiyas and reduce cesses that many state govts have been imposing on APMC markets.
• It will remove barrier in inter-state trade and facilitate movement of Agri-goods.

Legal Environment for Contract Farming

• It will provide assurance of a price to the farmer at the time of sowing. As farmers look back at last year’s prices and take decision accordingly. New system will minimise the market risks.

Supplementary Reforms Suggested

• Creation of Farmer Producer Organisations (FPOs) will ensure uniform quality, lower transaction cost and improve the bargaining power of farmers and large buyers.