NRI Pulse


“Government of India is sensitive to farmers’ issues”

We have seen protesting farmers from Punjab and Haryana camping at the Delhi -Haryana border for the past few days. The Government of India is sensitive to the issue and has held several rounds of talks with farmers to resolve the matter. Union Agriculture Minister Narendra Singh Tomar is part of these talks. During the talk, the Government has indicated that it is ready to address all the concerns and apprehensions voiced by farmers. The Government is meeting them continuously for early resolution.

The main concerns voiced by farmers are that Government is doing away with Minimum Support price (MSP) for farm produce and abolishing the Mandi system. This is not correct. This is a misinformation campaign. The MSP system will continue – in addition to it farmers are given more and better options and a competitive environment to get better deals for their produce in open market. The Mandis will remain – in fact the Government is investing in modernizing these markets.

With an objective to enable the doubling of farmers’ incomes and bringing agriculture into the ambit of “One Nation, One Market”, the Government of India recently moved three legislations to reform agricultural marketing:

  • Farmers’ Produce Trade and Commerce (Promotion and Facilitation) Act 2000 (FPTC Act)
  • Farmers’ Empowerment and Protection Agreement on Price Assurance and Farm Services Act 2000 (PAFS)
  • The Essential Commodities (Amendment) Act, 2020.
Union Agriculture Minister Narendra Singh Tomar.

What do these legislations permit? What are the benefits?

  • Under the FTPC Act, farmers will now have the freedom to sell their produce to who they want and where they want, an option denied to them up until now. They can sell in a physical market or an electronic platform, and directly at farm or anywhere else.
  • These bills do not dismantle the existing structure of State APMCs; rather, they provide competition to this system by opening up alternative marketing structures, direct buying, and contract farming
  • Public Procurement at Minimum Support Price is retained. These Bills were designed to address many of the prevalent shortcomings in the agriculture market and to fulfill long-standing demands of reforms in this sector for the benefit of farmers.
  • Under the Farmers’ Empowerment and Protection Agreement Act (PAFS), there is a provision for guaranteed price in voluntary contracts, intended to insulate farmers against market and price risks so they can cultivate high value crops. The Act will promote diversification, quality production for premium price, export and direct sale of produce to interested consumers. This will also boost backward linkages with the food processing sector, and pave the way for farmer’s participation in value chain. This is not a provision for corporate farming. Land will remain with the farmer.
  • The amendment to the Essential Commodities Act (ECA) specifies a transparent criterion in terms of high price trigger for imposition of the Act in case where there is excessive price escalation. Earlier, this was an arbitrary power of the Government.
  • Complementing these reforms, a Rs. 1 Lakh Crore Agriculture Infrastructure Fund has been launched to create infrastructure close to the farm-gate. Such infrastructure will reduce post-harvest losses, improve remuneration through grading & sorting and boost linkages to terminal markets in food processing, retail, and exports.

Expanding India’s Agricultural Market

  • Impact of these reforms will see India’s agriculture & food processing industries transformed, with a liberal procurement regime. Incentives are now aligned for private sector investments across the entire cold chain, reducing post-harvest losses and ensuring better prices received by farmers. Better backward linkages will ensure better quality of produce, allowing India to capture a bigger share of global export markets. It will also ensure better price discovery.
  • Employment in the food processing sector will rise, and this will put India on the path towards becoming the leading food exporter in the world, whilst ensuring our food security.

As a way of background, liberalization of many parts of the Indian economy has taken place over the last three decades. However, while the rest of India connected to global markets, Indian farmers could only sell their produce in their local mandis, on account of pre-reform legislations. These were done through Agricultural Produce Marketing Corporations (APMCs). The APMC regulations treated agriculture marketing as a localised subject, ensuring that the produce grown in the notified area was only allowed to be sold to traders within the notified area. These regulations went to the extent of prohibiting end users and processors located elsewhere from buying directly from farmers if they did not have a license with the respective APMC. The limitations on marketing meant that despite being one of the largest producers of agriculture commodities globally, India only processes 10% of total production. Similarly, India’s exports in global food exports stands at 2.3%, well below its potential. The inability to tap into the national and global market effectively meant that farmers’ incomes stagnated. There was a clear need for a new policy paradigm that would place farmers’ income and interest at the top of the agenda.

All in all, the Government of India understands that farmers may have concerns as reforms are introduced and options are expanded to market their produce.

“The government is committed to engaging with the farmers and addressing their concerns,” said Consul General Dr Swati Kulkarni. “The Government of India has held four rounds of meetings with the representatives of the Farmers Organizations and will continue to engage with representatives.”

As an open society, India stands for free discussion and dialogue, including the right to protest and be heard.

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