Nurture the Nurturers
All about farming in India
Today, India is a leading producer of a variety of agricultural and allied produce and an exporter of some of them. This is possible only because of the relentless hard work and efforts of our farmers against all odds. They toil day and night, through winter and summer, whether or not they get adequate returns.
But the bitter truth is that they are not the masters of the price of their toil. If any class of economic agents of our country has been denied the constitutional right to freedom of trade, it is our farmers. Anyone who undertakes farming for a livelihood will face problems like:
- Loss of farm output due to the unfavorable environment.
2. Uncontrolled cash outflow to pay for farm inputs required to undertake modern farming.
3. Labour shortage
4. Post-harvest infrastructure
5. Unpredictable farm-gate price
6. Low credit rating in banks
7. Cost of funds
8. Not having the freedom to sell their produce even in their own neighbourhood.
9. Remunerative price is still a mirage.
10. Their farm incomes are at the mercy of markets, middlemen and money lenders.
For every rupee that a farmer makes, others in the supply chain make much more. Despite increasing public investments in irrigation and other infrastructure and the steadily rising institutional credit given to farmers and minimum support price due to the efforts of various governments over the years, farmers are still shackled when it comes to selling their produce.
The Essential Commodities Act,1995, and the Agricultural Produce Market Committee (APMC) Act of the states are the principle sources of violation of the rights of farmers to sell their produce at a price of their choice. These two laws severely restrict the options of farmers to sell their produce. One major drawback of the APMC model is the restriction imposed on farmers. A farmer is not allowed to sign a contract with a manufacturer or processor. It is mandatory that they sell their produce through the specified channels. Furthermore, even though the act is planned to avoid monopoly, the act tacitly allows the monopoly of the APMC over buying the farmer’s produce. Prevalent corruption in APMCs and typical bureaucratic machinery also act as hindrances to the farmer. These acts also impose multiple levies of mandi fee and multiple licenses need to be acquired.
Far-reaching changes were incorporated into the APMC Act, such as the creation of revolving funds to implement the Floor Price Scheme to protect the interests of farmers, allowing contract farming companies to procure directly from farmers with a predetermined agreed price and so on. The e-marketing initiative of the State Department of Agriculture Marketing is considered novel and has been emulated by several states.
A democratically elected committee, the APMC, comprising the farmers, traders, and stakeholders, is assigned the responsibility of managing all these activities. This institutional arrangement of 162 APMCs along with around 50,000 intermediaries is supposed to protect the interests of almost 78 lakh farmers who produce around 170 lakh tonnes of vegetables, and 55 lakh tonnes of fruits annually.
The Union government’s Department of Agriculture, Cooperation and Farmers Welfare prepared a Model Agriculture Produce and Livestock Marketing (Facilitation & Promotion) Act in 2017 and placed it before all States and Union Territories for adoption. Karnataka has already adopted many reforms, except a crucial alteration to limit the regulation of the APMCs to “physical premises of mandi/yard” so as to allow private buyers to procure directly from farmers anywhere. The Centre has given strict instruction to the State government to follow an Ordinance route to incorporate this crucial change, with a claim that this would help farmers affected by COVID-19 lockdown.
Not only does this amendment make the existing APMC system redundant, but also puts an end to farmers’ hope of getting a fair price through government intervention, leaving them at the mercy of free-market forces. It is not clear whether the Centre’s much-touted unified integrated market e-NAM will materialise if uncontrolled private traders start procuring directly at the field and farm gates. The State government has made huge investments to construct roads, warehouses, godowns, and other infrastructure besides agri commodity technology parks. And with this move to privatise the agri commodity marketing, revenue generation through market cess, users fee, and GST will be in jeopardy. Above all, the APMCs have a huge land area as well as real estate properties at prime locations in taluks. There is apprehension of big companies and corporates capturing these prime land.
The country is still far from ensuring efficient value chains for farm produce for want of required infrastructure like cold storage, stocking facilities and transport of perishable commodities. Often, farmers are forced to dump their produce on the roads or feed it to cattle.
Farmers are the cornerstone of food security of our country. At present, hardly 30 to 40% of the farm produce is being bought and sold in the regulated APMC yards in the country. However, there is no guarantee that the market functionaries can deliver justice to farmers under a totally deregulated atmosphere. Hence, the present system needs corrections so as to make it more competitive, transparent and farmer-friendly. So the need of the hour is to take the Agri commodity market as near to the farmers as possible with a strong government intervention by creating roads, village warehouses, and processing industries in the rural areas. Legal recourse is required for the prevention of purchases and sales of farm products below the minimum support prices.
In the current situation, the government is compelled to take care of the health of poor and vulnerable sections for which it must undertake procurement and distribution of food and nutritious commodities such as milk, millets, and vegetables on a massive scale. Under the current unprecedented catastrophic situation caused by COVID-19 pandemic, it will be imprudent to dismantle a government-sponsored marketing mechanism for food and agricultural commodities and dilute the very spirit of State intervention that exists strongly behind that institutional arrangement.
We have come a long way from the ship-to-mouth existence under the PL480 of the U.S. to be the leading producer of many kinds of a farmhouse. But, all that farmers have been getting are platitudes on ceremonial occasions and in the legislature during the customary debates on their plights.
Farmers were promised that restrictions on the freedom of marketing would be removed, but that assurance was never kept. Despite that farmers never stopped working and continued to feed the nation.
Given the economic disparities in the country, the interests of consumers need to be protected. But should that be at the cost of the producers of the very commodities that the consumers use? The restrictive trade and marketing policies being practised with respect to agricultural prices have substantially eroded the incomes of farmers.
The first formal actionable announcement on doing away with restrictions on the marketing freedom of farmers came recently. Prime Minister Narendra Modi announced a 20 lakh crore rupees stimulus to rev up the economy. Further, Finance Minister Nirmala Sitharaman unveiled the details of a package for the agricultural and allied sectors. Apart from approximately 4 lakh crore support for farming and allied sectors, aimed at improving the infrastructures and enhancing credit support, the most welcome feature of this package is the firm commitment to rewriting the Essential Commodities Act and APMC laws.
The latest model Agricultural Produce and Livestock Marketing (Promotion and Facilitation) Act, 2017 was released in 2017 to bring about reforms in agricultural marketing after 14 years of the first model act in 2003. Under the new model Act, depending on a state’s geography, it is divided into market areas that are managed by market committees formed by the respective governments. Market Boards consisting of APMC chairman, representatives of Government Departments, members of yards (mandis), market sub yards, trade license holders nominated by the government, etc. are formed to supervise the functioning of committees. The Principal Secretary in charge of agriculture and/or horticulture, Agriculture Marketing Advisor to Government of India, NABARD Representative, etc. are ex-officio members of the Board.
Some important functions of APMCs as enumerated in the model act include
- Giving authorization to agents/traders to carry out procurement and distribution activities
- Bring about transparency in pricing system and transactions
- Providing necessary facilities for marketing of notified agricultural produce including livestock
- Regulate and supervise auctions
- Ensure that the payments to farmers take place on the same day
- Give publicity through posters, meetings, slides, and other means on the various functions undertaken
- Promote Public-Private Partnership in agricultural markets management
- Take measures to prevent the sale of products below the Minimum Support Price
While allowing several buyers to directly access the produce from farmers, a strong and effective network of Farm Producers Organisations should be created to enhance the bargaining power of farmers. This will ensure that individual farmers are not exploited. To secure incomes of farmers besides enabling private investments, an effective law on contract farming is also the need of the hour. During this pandemic, many are working from home. But farmers have no such option. They have to work in their fields.
Our farmers, the pride of our country, deserve the long-awaited freedom to market their produce at a price of their choice. It should become a reality at the earliest.
