Reforms That Miss the Point

Context: Indian agricultural sector is in the dire need of structural reforms.

Factors demanding Structural Reforms in Agriculture Sector

• Rising urban/rural ratio:  in terms of monthly per capita expenditures.
• Post-1991 policies have been tilted more: towards industries and services sector.
• Inadequate measures are taken: Liberalising agriculture by amending Agriculture Produce and Marketing Committee Act (APMC) and the Essential Commodities Act (ECA) is not sufficient.

Arguments against the APMC Act 

• Restricts free-market operation: by denying farmers the opportunity to determine the prices of crops in the marketplace. 
• Only 6% of farmers get MSP and 94% face the whims of the market.  – Shanta Kumar Committee.
• Only 22 crops are procured under MSP. 
• Procurement in mandis/agriculture markets depends on the stocks required by the state.
• Inadequate infrastructure: only an estimated 7,000 APMC mandis across India.

Argument in Favour of the APMC Act 

• Contained urban/rural divide: CACP added a 10% mark-up over the MSP to account for entrepreneurial costs (such practices eroded post-1991).
• Build-up of food stocks: as a result of procurement done through the APMC Act.
• Already been reformed to a great extent: since agriculture is a state subject, the Act has been modified in 17 states. 

• • • State initiatives: Tamil Nadu (Uzhavar Sandhai), Andhra Pradesh (Rythu Bazaar), Punjab (Apni Mandi) and Karnataka (Raitha Santhe).

• Proliferation of private unregulated markets: as a result of dilution of the APMC act.

 Structural Reforms in Agriculture Sector

• Avoid subsidy concentration: in favour of few crops, as it results in environmental degradation (groundwater depletion and monocultures) and industrialisation of agriculture.

• Only three crops receive more than 60% of the fertiliser subsidy.

• Preference to locally-produced, ecologically-sustainable inputs: instead of depending on chemical fertilisers. 
• Biodiverse nature of agro-ecological system of farming will provide a safety net for farmers in case of contingencies.
• Increase investment in agriculture: and follow recommendations of M S Swaminathan committee, to bridge the urban-rural divide.

Conclusion: It’s time for preferring sustainable agriculture over liberalisation through state intervention for better pricing, investments in water harvesting and an agroecological transition.