Agri Reforms: Hungry For Change

The farmer’s woes have made headlines again. Stalemate over the three hotly debated farm legislations and their interpretations and implications are sowing new concerns over the way ahead. Fortunately, it is a relatively lean period for the otherwise busy farmers of India. Sowing for the Rabi crop is nearly done and the harvest season is some months away. All of it allowing them time to dabble into debates on reforming the Indian agriculture sector. In focus are the three pieces of legislation: Farmer’s Produce Trade and Commerce (Promotion and Facilitation) Act 2020, Farmer (Empowerment and Protection) Agreement of Price Assurance and Farm Services Act, 2020 and the Essential Commodities (amendment) Act, 2020.

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Response to what they are meant to achieve and the possible concerns depends on who one is speaking to. The corporate sector has largely welcomed them with some even seeing in these a 1991 moment for agriculture in India that will open up the sector and give greater choice to farmers, much like what the economic reforms of 1991 did to Indian industry and trade.

All also know very clearly that despite the new provisions and however pathbreaking they might seem from the perspective of the corporate sector, life is apparently not going to change overnight, especially for farmers with small holdings, who form the bulk of Indian agriculture.

Leaving the politics and the lobby groups aside, Financial Express Online spoke to experts on what the legislations propose to achieve and the emerging concerns and the possible way out.

Take the Essential Commodities (amendment) Act, 2020. The official line here is to remove fears among the private investors of any excessive interference in their business operations. It is meant to enable greater freedom to produce, hold, move, distribute and supply and hopefully with it hold out hopes for attracting more investors into the agriculture sector and the related infrastructure such as cold storage and supply chain improvements.

Experts have often said that the Essential Commodities amendment has been a long pending need and an overdue reform. In fact, S Sivakumar, who leads agribusiness and IT at the FMCG giant ITC, once called the amendment as a measure that “removes the Damocles’ sword hanging on larger players of the Act being rather loosely invoked.”

The focus now therefore, many see, now lies in addressing the concern around implementation in a manner that the execution results in the desired outcome that ensures consumer interests are also safeguarded while removing any element of arbitrariness for the corporate sector.

The Farmer’s Produce Trade and Commerce (Promotion and Facilitation) Act is meant to allow farmers to bypass the Agricultural Produce Market Committee (APMC) regulated markets. This is meant to open doors for them to directly engage with the formal sector, which some have been already doing but making it possible for them to enter into long-term arrangements and provide greater choice. While, this looks good on paper, much like the 1991 moment analogy and seems to bring in more choices for the producer, the hitch lies in the nature of Indian agriculture and the fragmented holding by farmers – after all, over 85 per cent of Indian farmers have land holdings less than 2 to 3 acres.

Professor Ranjan Kumar Ghosh, Centre for Management in Agriculture at the Indian Institute of Management, Ahmedabad (IIMA) says, the pathbreaking nature of some of the provisions of the Act notwithstanding, the question for the sector is really around ways to enable the small farmers with marginal holdings to be able to effectively engage in trade with the formal sector and still be a net gainer.

The Agreement on Price Assurance bill is meant to strengthen the farmers’ bargaining power because its main purpose is being seen as laying out a national framework on farming agreements. With model terms for an agreement with a buyer of farm produce, the farmer could stand to have a better bargaining power. Here again, Professor Ghosh feels, the concerns could be around the small and marginal farmers. In his view, one way to address the problems could be around creating conditions to create more Farmer Producer Organisations (FPOs), which the government is also intending to do with its 10,000 FPOs creation plans. That alone, he feels, could emerge as a forceful voice for the farming community.

Professor Ghosh also reminds that one of the added concerns among farmers seems around the issue of Minimum Support Price (MSP). “Going by what I can gather, that is not being removed. So, the safety net for the farmers is not being taken away but only it appears as a move to encourage the farmers to not be depended on MSP. Because the irrigation productively could get adversely impacted if farming is done based on MSP alone rather than be guided by the nature of soil, geography and the consumer demand.”

Focus, he feels, now will have to be in greater investments into creation of the supply chains and in the farm gate infrastructure and in bringing about the enablers to strengthen the bargaining power of the small farmers while also ensuring greater transparency and efficient procurement by the corporate sector.

Many experts are also keen to see how the Agri & Allied infrastructure and the Micro Food Enterprises (MFE) funds end up putting money into the hands of farmers. Afterall, the aim is to help build postharvest infrastructure and enable higher value capture by the farmers. This is apart from measures like the PM Kisan scheme for direct benefit transfer to farmers.

Some have argued that the farmer agitation has more of a regional and select crops and select states angle to it too. For instance, Punjab and Haryana have seen a more effectively operating minimum support prices and the public distribution system and therefore a demand to continue with the practice.