Farm package: Traders, exporters have better reasons to rejoice
News analysis

Farm package: Traders, exporters have better reasons to rejoice


Tough times that have come with Covid have added to the woes of farmers and the recent announcements as part of a stimulus package have been aimed to an extent to providing relief to this farming community that is the strength or mainstay of Indian economy.

It was on Wednesday that the Union Government set in motion its steps for significant reforms in the agriculture sector with the Union Cabinet clearing three Ordinances. The amendment of the Essential Commodities Act of 1956, the Farming Produce Trade and Commerce (Promotion and Facilitation) Ordinance and The Farmers (Empowerment and Protection) Agreement on Price Assurance and Farm Services Ordinance are the other two.

All these are aimed at doing away with long-imposed restrictions on sale of important agriculture produce like cereals, pulses, onion and potato, giving farmers freedom to sell these items directly outside the Agriculture Produce Marketing Committee (APMC) and mandis and also look at using e-trading platforms. It also looks at providing `barrier-free’ inter-state and intra-state trade and eliminating intermediaries.

These come over a fortnight after the reforms were first announced by Finance Minister Nirmala Sitharaman in her third tranche of the Union Government’s Covid economic stimulus package under the Atmanirbhar Bharat Abhiyan.

There is also the provision for helping farmers enter into agreement” with private sector players on pricing and purchase which can promote contract farming.

On the face of it, all these appear to be things that will bring big relief to farmers. The official version is: “Farmers in India suffer from various restrictions in marketing their produce. There are restrictions for farmers in selling agri-produce outside notified APMC market yards. The farmers are also restricted to sell the produce only to registered licensees of the state governments.”

“Further, barriers exist in free flow of agriculture produce between various states owing to the prevalence of various APMC legislations enacted by state governments." All such barriers would now go is the claim.

But vital issues remain and there is strength in the view that of agriculture experts that the whole set of reforms are for traders and certainly not for farmers.

It is a fact that authorities ever since the economy was opened up have been looking at reforms and the Covid trauma has come as a cover to push these reforms.

Post-liberalisation, reforms conforming to World Trade Organisation diktats have sowed disaster to farmers. In Kerala, spice and other plantation crop farmers have been nudged to disaster in the wake of major trade agreements under the guise of free trade.

Given the ground realities, it remains to be seen how far such reforms would have, but for the Covid cover, got approval as even the federal structure of the country is under threat. Attempts at creating `One Country’, be it through ration cards or such things, the authorities of the State would get diluted and the new ordinances have such an underlying pattern.

Agriculture still remains a State subject. But with the new laws, State governments would have little control over farming in future which will be another blow to federalism.

It still remains incomprehensible how the majority small and marginal farmers, several of them illiterate, would now go hunting for `distant markets’ and use the e-platform for better prices. They are still bound to remain in the clutches of traders and food processors and exporters for whom these reforms have been made. This makes better farmgate prices still remain a dream.

It is more in these Covid times that supply chain disruptions have come out clearer pointing to critical gaps in agricultural infrastructure and logistics systems.

Farmer organisations have pointed out that it is not the restrictions in marketing that is causing distress to farmers, but the absence of remunerative prices.

It is claimed that the amendments would help contract farming which has been a failure in the country, but for some niche products which have had high export potential.

Fragmented land which has been a bane of Indian agriculture will result in contract agencies having to negotiate with a vast number of farmers, making transactions more taxing.

In fact, the focus should have been expanding the network of APMC markets or mandis. This would also ensure that the farmers would at least get the Minimum Support Price which would be legally binding through a government agency.

The genesis of the APMC was to check monopoly powers of big traders and buyers. Unfortunately, this was not implemented effectively. Auctions were introduced to bring in competition which would help the farmer get a better price for his produce. However, political intervention coupled with that of traders made the whole concept of APMC a disaster, admitted farmer organisations.

What the Government should have focused on was to put an end to political interference in APMCs and remove blocks in mechanisms for the smooth functioning of these mandis or markets. The network of the APMC should have been expanded as by ignoring these mandis, it is literally giving the trader an upper hand.

During these Covid times, it was not reforms that the farmers wanted but relief. It is sad to note that while issues of migrant labourers still remain ignored to a great extent, the farming community has not had any direct relief during this pandemic.

Besides expanding the network of APMCs, the government should address the issues of farmers, especially the small and marginal ones who are the mainstay of Indian agriculture. Alongside some flexibility in time gap in repayment of loans and meagre cash transfers, the government needs to look at bolstering the employment guarantee under MNREGA by expanding its scope. With a lot of migrant labourers back home, there should be thrust in their involvement in agriculture activities as they are now jobless. This will not only result in ensuring wages but also boost demand for consumption. The procurement system should be strengthened and also farmers should be ensured of timely fertiliser and fodder supply. It is these basic issues that should be addressed immediately. Short-term measures are vital. Or else, it will be the same old tale of farmer distress which can be detrimental as the economy is in shambles.