The Union Cabinet on Wednesday approved the amendment in Essential Commodities Act of 1955 to “deregulate” agricultural commodities like cereals, pulses, oilseeds, onions and potatoes to allow their barrier free trade across India.

The Centre also promulgated two ordinances “The Farming Produce Trade and Commerce (Promotion and Facilitation) Ordinance, 2020” and “Farmers (Empowerment and Protection) Agreement on Price Assurance and Farm Services Ordinance, 2020” to allow and empower farmers for engaging with processors, large retailers, exporters without any fear of exploitation.

Until now, processors, aggregators, large retailers and exporters have the bindings to buy cereals, pulses, oilseeds, onions and potatoes from licensed traders in the APMC (Agricultural Produce Market Committee) mandis of their respective talukas or districts.

These changes are part of the Modi government’s special package to boost the agriculture economy and address the unemployment issue amid corona pandemic and lockdown.

“Farmers are not bound to sell their produce to APMC only but since buyers can purchase only from APMC, most farmers end up selling their produce in mandis. Now, farmers can directly negotiate with processing companies and large retailers and seek the best price without middlemen. They have also got freedom to sell their produce anywhere in India,” says Sudhir Kumar Goel, agriculture expert and retired IAS officer of Maharashtra.

The government hopes that these long pending reforms will create “One Nation One Market” and allow farmers to get better prices for produce and push investment in the agriculture sector generating employment in and around rural parts of India.

Experts hailed the move but cautioned there is a long road ahead for Indian farmers to get benefits of these reforms for the reasons such as broken value chains and a complex web of previous schemes.

Crisis to opportunities

The Centre for Study of Developing Societies (CSDS) Delhi’s 2018 report, “State of Indian Farmers”, had found that three in four farmers would prefer to do some work other than farming.

Poor income, bleak future and stress are the main reasons why they want to give up farming. Around 18 percent of respondents surveyed said it was because of family pressure that they are continuing with farming. India sees a large number of farm suicides as well.

The fresh initiatives have come up as a challenge and opportunities both for 14 crore Indian farmers.

Goel says, “In the Lockdown period, farmers in many areas quickly assembled and formed a supply chain to deliver fruits and vegetables to consumers in cities. They managed to save cash and perishable crops like mango. Same way, farmers across India will have to form groups, cooperatives or companies to get the best deal from processors and exporters.”
However, current reforms are unlikely to address the distress of growers in case of bumper production.
Administrative hurdles

This is not the first time that the Centre has come up with some “game changing” schemes for farmers. But most of them either poorly implemented or failed to attract the beneficiaries due to a broken value chain.
For instance, the National Agriculture Market (e-NAM), which was launched in 2016, is an electronic trading portal that networks the existing APMC mandis all over India in order to create a unified single window service for all APMC related information and services. This includes buy and sell trade offers, provision to respond to trade offers, and commodity arrivals and prices.

“However, only a fraction of produce is being traded online as of now mainly because it lacks adequate infrastructure to check the quality of commodities, storage and transportation. Less than 70,000 traders and a few lakh farmers joined the e-NAM so far,” says Goel.

The absence of internet connectivity in the villages has been creating problems in carrying seamless bidding and trading activities.

There are a plethora of schemes at the Centre and State level to support the long value-chain from farmers to mandis to aggregators. To name a few—Nation Food Security Mission primarily for cereals and pulses production, National Mission on Oilseeds and Oil Palm for oil seeds; Mission on Integrated Develop for Horticulture; Mission on Agricultural Extension & Technology; Prime Minister Fasal Bima Yojana; Prime Minister Krishi Sichai Yojana; National Bamboo Mission; Paramparagat Krishi Vikas Yojana and many more.

Then there are income support schemes such as PMKISAN of the Centre and subsidies on fertilizers, electricity, water and credit.

There is an urgent need to integrate them under Rashtrika Krishi Vikas Yojana to bridge the gap and prepare a seamless value chain.

Public Private Partnership for Integrated Agricultural Development, implemented in Maharashtra, Karnataka and Andhra can be explored by other States.

Industry, start-ups and youngsters can revive rural economy

Youngsters and entrepreneurs especially the educated offsprings of farmers have the opportunity to gear up and organise themselves to leverage the opportunity. They can involve in gradation, packaging and transport of the produce. Startups can offer solutions ranging from retail to processing to informational technology support.

Goel says, “Big industry players, who often cite “strict norms” as excuses for not investing in the agriculture sector, can leverage the opportunity and push their resources in the rural economy.”