7 PM Editorial |Making Agricultural Market Reforms Successful|27th August 2020

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Making Agricultural Market Reforms Successful

Introduction:

As part of Atmanirbhar Bharat Abhiyan, the government has introduced far reaching reforms in agricultural marketing with the vision of Doubling Farmers incomes by 2022.

Major reforms include:

  • 3 farm ordinances liberalizing Essential commodities Act(ECA); liberalizing agri products sale beyond APMCs and enabling contract farming
  • Creation of 10000 FPOs scheme with NABARD as implementation agency
  • e-NAM with warehouse based trading modules
  • 1 lakh crore AIF(Agriculture Infrastructure Fund)

These reforms encourage marketing freedom to farmers, private investment in agriculture, contract farming and interstate trade of agricultural goods.

Yet the success of these reforms need other steps.

Consistency in central policy:

Centre must adopt a consistent policy in promoting a market based approach to generate confidence in private investors.

Following actions shows inconsistency of vacillating policy between market based and public procurement based marketing:

  • e-NAM introduced in 2016 for efficient market based price discovery by farmers. It needed state amendments to APMC acts for a single licence across the State, a singlepoint levy of the market fee and electronic auctioning in all the markets.
    • This was not adopted by many states
  • PM AASHAwas introduced in 2018 with 3 mechanisms of Public procurement, deficiency payments and private procurement. Objective was to ensure 50% return to farmers over cost of cultivation
    • Yet this was underfunded and confined to oilseeds and pulses
    • Only public procurement was done. Deficiency payments were not implemented except in pilot projects in Madhya Pradesh. Private procurements were not even undertaken as pilots.
  • 2model acts for contract farming and agricultural marketing were formulated in 2018 and 2017.
    • But these were not adopted by the majority of states.
  • PM KISANwas introduced in 2019 to provide income support.
  • After COVID 19, market based mechanisms were focused on againby introducing reforms through farm ordinances, e-NAMs new features etc.

These frequent changes in policy focus will lead to investors adopting a wait and watch approach. Hence there is a need for consistency in government policy.

Centre – State coordination:

Implementation of reforms need centre-state and inter state collaboration. Contract farming, inter state trade, creation of agri infrastructure need collaboration. Hence a consultative approach is needed to ensure effective implementation.

Reforms in access to inputs and land:

Many small and marginal farmers(86% of total farmers) depend on traders/middlemen for credit during production, harvest and supply. Hence without improving access to formal credit and insurance, this dependence will continue.

Land leasing is predominantly informal due to restrictions in many states. This leads to inefficient production scales and exclusion from government schemes. Lease markets must be liberalized for effective large scale production.

Conclusion:

While marketing reforms are a step in the right direction, consistency in policy, collaborative approach and complementary input access reforms are necessary for success.

Source: The Hindu

Mains questions:
  1. Agricultural marketing reforms under atma nirbhar bharat abhiyan are a watershed moment in Indian agriculture. Critically discuss? [15 marks, 250 words]
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