The monsoon session of Parliament began on Monday under extraordinary conditions due to the pandemic. Twenty-five MPs were found to be corona-positive and turned away to quarantine at home or hospital. The dispersed seating arrangement, in which every inch of space available was used curbed somewhat the capacity of MPs to create pandemonium. It did tone down the decibel levels. Yet, they managed to create some noise, all right.
As expected, the Government used the first available opportunity to remove the misgivings of the farming community about the proposed reforms in the farming sector. Clarifications by the Union Minister for Agriculture Narendra Singh Tomar should help counter the wild propaganda by vested interests which was behind the ongoing farmers’ stir in Haryana and Punjab. The proposed reforms in the farm sector seek to break the monopoly of the middlemen under the aegis of the Agriculture Produce Marketing Committees and hold promise of higher prices for farm produce. Middlemen and commission agents in mandis are misleading the farming community against the proposed changes contemplated by the Centre.
The Minister categorically stated there was no move to do away with the system of fixing minimum support price for crops or for their procurement by various state agencies. A mischievous rumour was spread by vested interests that the objective behind the proposed reforms was to stop the fixing of MSP and food grain procurement. Tomar’s clarifications came while he introduced The Farmers’ Produce Trade and Commerce (Promotion and Facilitation) Bill, The Farmers (Empowerment and Protection) Agreement on Price Assurance and Farm Services Bill and the Essential Commodities (Amendment) Bill. The laws would replace the ordinances issued during the inter-session period.
Given that growers are unable to sell their produce outside the specified mandis, which now operate virtually as cartels of traders and dalals giving the actual growers a small fraction of the price at which their products are actually retailed, the proposed law aims to address the grievance. For example, while farmers in Nashik fail to sell their onion produce at even Rs 2 per kilo, it is retailed in cities at ten to fifteen times that price, with middlemen accounting for much of the difference aside from transportation and storage costs. Given the increasing number of digital platforms and retail chains beginning to sell horticultural and agricultural produce, the stranglehold of APMCs prevents the modernisation of the farm sector. Freedom to the growers to tie up with retail chains and bulk users, such as hotels and restaurant associations, will result in discovering remunerative prices for their produce.
At least, the mere fact that under the new law, the monopoly of the APMCs to sell farm produce would be broken, they too may reform themselves for fear of the growers exercising the option to commit their produce to bigger- and deep-pocketed retail chains and digital markets. In our view, breaking the monopoly of the APMCs was long overdue to grant real freedom to farmers to sell their produce to whoever pays better price. That said, the real reform in the sector will also require the creation of a nation-wide chain of cold storages and food processing industries.
A lot of farm produce is wasted every year due to exposure to elements and lack of storage facilities for perishable items such as onions, fruits, vegetables, etc. Here again the increasing popularity of digital market platforms and retail chains can help in a big way, should they invest in cold storage chains. This would result in farmers getting a remunerative price for their produce. The short point is that the modernisation of the production and marketing of the agri sector was long overdue. With the reform of the existing laws, a beginning may have been made.
The proposed laws represent a welcome attempt to enable “barrier-free trade in agriculture produce to empower farmers to engage with investors of their choice”, as Tomar told the Lok Sabha. The minister brushed aside criticism from the Opposition that the Centre lacked the power to legislate on these issues, since agriculture was a State subject. Reform of mandis did not in any way impinge on the management of agriculture land or its ownership. Freeing marketing of farm produce was in no way encroaching on the states’ rights, but actually helping farmers get remunerative prices. Meanwhile, corporatisation of agriculture, given that nearly 90 per cent of the farm holdings are less than two hectares, could lead to modernisation of agriculture and benefit both farmers and consumers in augmenting both farm yields and their nutritional value and overall quality.