Ease of Farming needs Common Agricultural Market
by Ashok B Sharma on 23 Feb 2020 6 Comments

It’s a shame that even 73 years after Independence nothing substantial has been done for agriculture. Governments have come and gone but none of them have been able to understand the real problem of the farmers; suicides continue unabated. Prime Minister Narendra Modi has announced doubling of farmers’ income by 2022. But has he drawn up a blueprint for doing so? Has he understood the real problem of the farmers?


In Union Budget 2020-21, finance minister Nirmala Sitharaman laid down three pillars for ensuring growth for achieving $5 trillion economy in due course: Aspirational India, Economic Development and Caring Society. In the last, agriculture, rural development, water and sanitation find mention. By default there is an admission, “Prosperity to farmers can be ensured by making farming competitive. Farm markets need to be liberalized.” What does it mean? Instead of taking up the onus, the Union Government has thrown the ball in the court of State governments to liberalise farm markets through a plethora of model Acts floated by it from time to time.


Why can’t the Union government directly take up this challenge? If the Union government can sign the Agreement on Agriculture at WTO without consulting the States, to facilitate global trade in agriculture, why can’t it liberalise internal trade in agriculture? Of course, agriculture is under the States List. Many indirect taxes were under States List. In the name of a common market, the Union government, through appropriate legislations, brought many such taxes in the general pool for revenues to be distributed among the Union and States. That is how the Goods and Services Taxes (GST) was born. Why cannot such a route be taken for internal agriculture marketing?


A high level committee headed by CEO of National Rainfed Area Authority, Ashok Dalwai, way back in 2017 recommended placing agricultural marketing in the Concurrent List in the Seventh Schedule of the Constitution for setting up a common unified agricultural market in the country. Article 307 of the Constitution mandates Parliament to legislate appropriate laws and appoint an Authority for ensuring free trade in agricultural commodities across the country.


Item 42 of the Union List can be used for setting up a common unified agricultural market across the country. Since the model APMC Act was floated after 1955, it is not protected by Article 305. Though Article 303 and 304 talk of restrictions to be imposed, Article 301 talks of “Freedom of trade, commerce and intercourse: Subject to the other provisions of this Part, trade, commerce and intercourse throughout the territory of India shall be free.” Thus the spirit of the Constitution is clear. It empowers Parliament to legislate and paves the way for free trade in agricultural commodities across the country.


Agriculture is the only sector where the producer (farmer) is not able to decide the price of his produce. He has no holding capacity to store and decide the price he wants and has to make distress sales at times of excess production. After suffering from excess production, he limits his production, causing shortage in the market and consumers suffer. How long can this evil cycle be allowed to continue?


The Union Budget talks of viability gap funding for setting up efficient warehouses at block / taluka levels. A village storage scheme is proposed to be run by self-help groups (SHGs). But how long must we wait for warehousing facilities and seamless cold supply chains and refrigerated transport in village clusters? Why doesn’t the Union government take the onus on itself and directly fund Zilla Parishads to do the job in blocks / talukas and village clusters? Zilla Parishads, an elected body, should be on board.


The Union government has given huge fiscal sops and incentives to corporate houses and exporters, foregoing a revenue collection of about Rs 4,00,000 million, according to some analysts, with a view to attract investments and foreign exchange earnings for achieving the target of $5 trillion economy. But who stands to benefit if India becomes a $5 trillion economy? To benefit the common man, it is the GDP per capita that matters. GDP, in dollars or rupees, has to be divided by the total population to arrive at GDP per capita.


India with $2.7 trillion economy has GDP per capita at $2,015 only, per 2018 World Bank data. It is behind Indonesia (GDP per capita $3,893) and China (GDP per capita $9,770) but ahead of Bangladesh (GDP per capita $1,698). Hence, aiming at $5 trillion economy is not sufficient. India needs inclusive growth and more financial inclusion. If the government can vouch for Ease of Doing Business, Ease of Living, why not Ease of Farming?


The plethora of model agricultural marketing Acts floated by the Centre from time to time, urging States to modify their respective APMC Act, has caused asymmetry in agricultural trade across the country. Bihar has scrapped APMC Act without providing adequate laws to protect farmers’ interests. Some States have delisted fruits and vegetables from the purview of APMC Act without making adequate provisions in their laws whereby the farmer can get adequate returns from sales.


Contract farming has become an instrument for corporate houses act as commission agents or arthiyas, imposing their terms and conditions. The e-trading and E-NAM has not benefitted the majority of farmers as many are not computer literate. The Bhavantar Bhukhtan Yojana designed to pay the difference if prices fall below the Minimum Support Price (MSP) has not befitted the majority of farmers.


In this era of globalization of trade, the policy approach of the government should be to make every farmer an entrepreneur and computer literate; they should not only be cultivating crops but also undertaking grading and quality assessment or they will continue to be exploited by processors, exporters and retail chains. Some Farmer Producer Organisations (FPOs) are doing good work.


Finally, the need of the hour is for policy intervention to facilitate Ease of Farming by setting up a common unified agricultural market across the country with a designated authority to ensure free and fair trade. Adequate warehouses and cold storages with refrigerated transport system should be made available in cluster of villages so that farmers can store their produce and bargain for sale.   

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