Why agri draft policy is not inclusive or progressive

THE draft National Policy Framework on Agricultural Marketing was circulated by the Centre to the states last month, inviting suggestions for its improvement. It has sparked a nationwide debate as well as apprehensions among different stakeholders. The draft accepts that small and marginal farmers are still not able to benefit from bumper production and growth in the agriculture sector. A significant gap still exists in rural and urban economies.

It admits that most farmers are struggling for optimum income due to highly fragmented landholdings, increasing cost of production, lack of demand-driven production, accessibility to good markets and optimum realisation of value for their produce.

The major marketing reforms proposed in the draft include permission to set up private wholesale markets and allow direct wholesale purchase from farm gate to organised retailers, processors, exporters and bulk buyers. It has also proposed for deregulation of perishables outside the market yard; declare cold storages, warehouses and silos as deemed market yards and permit establishment and operation of private e-trading platforms.

Other proposed reforms include single unified trading license and one-time levy of market fee across the state; rationalisation of market fee and commission charges and recognition of trading licenses of other states. It also provides for the exemption of market fees on direct sales by farmers’ or farmers producer organisations (FPOs) at processing units or factories and the exemption of market fees on produce brought from other states for processing.

The farmers are protesting for the enactment of a law that ensures a guaranteed minimum support price (MSP) for all crops. Such an assurance would protect their income and provide stability in agricultural markets. A legally binding MSP has also been recommended by the parliamentary panel on agriculture as a measure to provide financial stability to farmers. The MSP has to be the minimum benchmark to enable the farmers to realise a remunerative price for their produce. But the draft is silent on this issue and suggests ‘Futures trading and options trading’ as a price discovery and risk mitigating tool.

There are other apprehensions. Farmers are demanding India’s withdrawal from the World Trade Organisation and the imposition of a ban on all free trade agreements. The draft policy is also silent about a clear commitment to such trade-related decisions, which affect farmers’ income through highly unpredictable restrictions. These include export bans, stock restrictions and minimum export prices, imposed on exports from India. Duties are also lowered on import of products which are often highly subsidised by the exporting countries.

The draft policy provides to establish private markets to facilitate the visibility of trade transactions and enhanced competition. Farmers, however, feel that the elimination of government protections would make them vulnerable to big corporates. The draft framework provides for direct purchase from farm gates, at deemed market yards and proposed deregulated market yards for perishables. But in the event of deregulation, these multiple channels of marketing can be unfair and manipulative.

The draft does not specify what type of financial and other support the government will provide to bridge the gaps between marketing and auxiliary infrastructure and carry out institutional reforms.

Suggestion to roll out a ‘price insurance scheme’ to insure the farmers’ income at the time of sowing is apprehended to apply to contract farming by corporates or FPOs operated by them. What will be the basis for compensation — the MSP or contracted price and how the government will ensure it in a deregulated market? The experience of Pradhan Mantri Fasal Bima Yojana in this context has not been encouraging for the farmers. The process of making payments to the farmers is also not trustworthy in an unregulated market.

Given this background, the effectiveness of an ‘empowered agricultural marketing reform committee’ is dubious. This appears to be a mechanism where all BJP-ruled states will be forced to accept the government’s proposals so that any resistance at the national level due to genuine issues can be sidelined.

The draft envisages making intense efforts to bring all farmers under one or other farmers’ organisations i.e. cooperatives, FPOs, self-help groups, etc, to reduce their inaccessibility to market and price uncertainty. However, it has been observed that in many cases, the primary processing alone is not sufficient to enable the FPOs or other farmers groups to gain substantial income for their members. However, the provision related to value chain centric infrastructure (VCCI) does not commit firmly to providing all-out support to FPOs to set up the VCCI.

The ‘ease of doing agri-trade’ at the expense of protection of farmers’ interests and ‘promotion of contract farming’ again reek of revival of the earlier farm laws. A narrative is building up among the farmers and other stakeholders that the reintroduction of basics of the repealed laws by the government under a new guise should be resisted.

The farmers’ concerns about the weakening of the marketing infrastructure of markets, regulated by agricultural produce market committees (APMC) over time, are also not ill-founded. The policy draft suggests that the states consider allowing the buying of contracted produce outside the mandi yard and waive off the market fee when produce is bought for the purpose of processing and export to give impetus to these sectors. Organised retailers, processors, exporters and bulk buyers will be able to make direct purchases from the farm gate or at deemed market yards where they can initially offer higher prices to the farmers due to lower taxes. It will also affect the income of APMC markets due to lower arrivals. Thus, over time, these will become unviable.

Though the draft policy takes cognisance of the fact that agricultural marketing is a state subject under the Seventh Schedule in the Constitution, its mere glimpse brings out the government agenda of addressing the long-standing challenges in agricultural marketing through a unified national approach.

To allay the fears of farmers and to make it inclusive, the policy framework should be redrafted after public consultations with farmer unions and meaningful engagement with state governments and experts. Public investment in agro-processing and cold chains for supply and storage should be increased to strengthen the agricultural marketing infrastructure.

Indian agriculture is facing a series of crises — income crisis due to the falling or stagnant incomes; degradation of natural resources; adverse impact of climate change, and last but not the least the loss of interest of the younger generation in agriculture. An inclusive and progressive agricultural marketing policy can go a long way in meeting these challenges by addressing major issues like the MSP, higher public investment and a participatory quick response system for responding to changes in the international market.