Agriculture needs holistic solutions

G Chandrashekhar | Updated on January 13, 2021

Bits and pieces legislation covering farm markets is unlikely to benefit growers or address the many issues the sector faces

Following long-drawn protests over the three farm laws, the Supreme Court has stayed their implementation and constituted a committee to examine the various objections. The idea of a committee is most unlikely to advance the cause of Indian agriculture or the farmers.

The need to revisit and review these laws is obvious, but designing holistic or end-to-end solutions for the plethora of challenges associated with Indian agriculture is the need of the hour. Bits and pieces legislation such as the market reforms will hardly serve the purpose.

Some aspects of the legislation are clear. There was no prior stakeholder consultation. It is construed as both arrogant and naïve on the part of the government to think that it knows what is best for farmers. Agriculture is a State subject under the Constitution and, therefore, it is only appropriate that States should have been consulted.

The Central government cannot arrogate to itself the right to legislate on areas which are outside its purview. If the Centre wished to legislate on agriculture, a State subject, the Centre should have amended the Constitution and taken agriculture to the Concurrent List. Importantly, these laws and the way they were enacted without consultation go against the spirit of cooperative federalism.

In our country, agriculture is a livelihood, unlike in developed countries such as the US, where it is agribusiness. There’s now an attempt to ‘marketise’ agriculture and, eventually, it will lead to ‘financialisation’ of agri markets.

We first have to lift a majority of farmers out of poverty which will be possible if and only if we address the structural problems of agriculture. The agri-market reforms are most unlikely to lift a vast majority of farmers out of low incomes.

Restictrions on movement

Coming to specifics, the ‘One-nation, One-market’ is a welcome move. Restrictions on movement of agri-produce had to go. Removal of inter-State restrictions makes sense, but it is unclear if the Centre has any authority to unilaterally remove intra-State restrictions. The least the Centre should have done is to have consulted the States — similar to the GST consultations.

There is no formal regulation for private markets, which can short-change farmers. It is like jumping from the frying pan into the fire for growers. Lack of regulation of private markets is the most dangerous and obvious lacuna in the law. Markets need regulation.

Without doubt, APMC markets should be reformed. It cannot be done by allowing private markets. The Centre could have warned the States and given a fixed timeline to States to depoliticise and reform APMC markets. It would be naïve to think that merely by creating competition (of doubtful authenticity) APMC markets will improve.

Contract farming is a good idea. But trust between the farmer and the entrepreneur is critical. A piece of paper (agreement) cannot generate instant trust, but experience will. The dispute-resolution mechanism currently envisaged leaves much to be desired. The District Administration is ill-equipped to resolve disputes relating to contract farming. Political influences can come into play. We need an independent, credible, effective dispute resolution mechanism for contract farming.

A contentious issue is the Minimum Support Price (MSP) and procurement. It is the sovereign duty of the government to ensure that growers obtain at least the MSP. In this the government has failed because of weak procurement infrastructure. If the government cannot ensure MSP for growers, scrap the MSP which is becoming a farce. Lack of MSP implementation (barring rice and wheat) is one of the least discussed failures of successive governments over decades.

There is now demand to legalise MSP and procurement. The least the government can do is to put in writing that so long as PDS/NFSA continues, procurement of rice and wheat at MSP will continue.

That brings us to the aspect of food and nutrition security. Let the government procure at MSP and supply pulses through PDS/NFSA to advance nutrition security; procure oilseeds at MSP and supply edible oil through PDS/NFSA — to targeted vulnerable families.

Strengthening the input delivery system, rapidly expanding the irrigation facilities, infusing multiple technologies, creating adequate rural infrastructure and capacity building among growers is the way forward.

There is a lot to learn from OECD member-countries. They grant over $300 billion as farm subsidy annually. Of this, $80-90 billion is spent on ‘General Services’, which are crop-neutral agri-infrastructure and related support services like warehouses, cold chains, quality testing, crop surveys, crop advisory, export promotion, and so on. We hardly do any of these systematically.

There is ‘trust deficit’ between farmers and the government that needs to be bridged. Soon after passing the laws in September, the government should have undertaken post-facto stakeholder consultation. Unfortunately, it failed to do even that.

What Indian agriculture deserves is a comprehensive approach to farm policies from a long-term perspective. Anything less is useless.

The writer is a policy commentator and agribusiness specialist. Views are personal

Published on January 13, 2021

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