As part of the Atmanirbhar Bharat Abhiyan, the Centre announced a set of agricultural marketing reforms.
Significantly, the Centre would deregulate the sale of six types of agricultural produce by amending the Essential Commodities Act, 1955.
What is the reform proposal made?
It was decided to remove restrictions and facilitate enhanced marketing freedom for agri-commodities.
These include amendments to the Essential Commodities Act, 1955.
The move would deregulate cereals, pulses, oilseeds, edible oils, onions and potato.
Stock limits will not be imposed on these commodities.
This is except in case of national calamity or famine or an extraordinary surge in prices.
Even these stock limits would not apply to processors and exporters.
What is the rationale?
The Essential Commodities Act was enacted at a time of food scarcity.
It now needs to reflect the different concerns of the present times.
Now, farmers are producing, and there is an abundance of crops.
Honest exporters would have paid a fair price to the farmer and stocked produce for shipment overseas.
There are sometimes issues with this because they would want to export, and the Act does not permit it.
At some other times, the consumers also suffer.
The Economic Survey, in January 2020, had also recommended abandoning the “anachronistic” Act altogether.
[The law has nonetheless remained a vital tool.
It protected consumers from irrational volatility in the prices of essentials by constraining black marketers and hoarders.]
What are the concerns though?
Despite the said reasons, total deregulation for foodgrains is fraught with the risk of future inflationary food price spikes.
Besides these, plans were underway to bring in a facilitative legal framework to oversee contract farming.
This would provide farmers with assured sale prices and quantities even before the crop is sown.
It would also allow private players to invest in inputs and technology in the agricultural sector.
Another proposal aims at bypassing the APMC regime through a central law that would allow farmers the freedom to sell across State borders.
[Mandi closures during the lockdown had highlighted the urgent need for multiple channels to sell produce.]
Both these changes, once enacted, could privilege market forces but without necessarily safeguarding food security.
This is also the time for relief, which should have been prioritised over reform.
There is an urgent need to map farmers’ current needs and provide relief.
So, alongside the reforms, the government could consider increasing income support to Rs. 10,000 from the current Rs. 6000 per year under the PM-KISAN scheme, at least for this year.
What are the other decisions made?
Infrastructure - There is currently a noticeable lack of adequate cold-storage facilities.
This continues to extract a high price on farmers and the agrarian economy.
Post-harvest losses, especially in perishables, are a major concern.
Given this, Rs. 1-lakh crore fund to finance agriculture infrastructure projects at the farm gate and produce aggregation points was announced.
The decision to channel the funds to agricultural cooperatives, farmer producer organisations, rural entrepreneurs and start-ups is encouraging.
It lays the onus of creating the appropriate infrastructure or logistics solution largely on the principal beneficiaries, the farmers themselves.
The move addressed the needs of fishworkers, livestock farmers, vegetable growers, beekeepers and related activities.
Enterprises - A Rs. 10,000 crore scheme to promote the formalisation of micro food enterprises was also unveiled.
A cluster approach focused in different regions on signature produce was suggested.
The goal is to assist unorganised enterprises in scaling up food safety standards to earn the products certification and build brand value.
Inter-State trade - The Centre has been attempting to reform agricultural marketing through a model Act, for the States to adopt.
However, it now intends to enact a central law to allow farmers to sell produce at attractive prices beyond the current mandi system.
This is intended at facilitating barrier-free inter-State trade and e-trading.
While agricultural marketing remains on the State list, inter-State trade falls in the central list. And so, the Centre enacting a law on the latter was justified.
Overall, the reform package may be more beneficial in the longer term.
However, it may not provide any immediate relief from the lockdown-driven distress in the rural hinterland.
