A Four-Week Immersive Online Introductory Certificate Training Course and An Online Spring School Program on Fundamentals of PUBLIC POLICY were conducted by IMPRI Impact and Policy Research Institute, New Delhi. An informative talk about ‘Agricultural Reforms in India@75’ was delivered by Dr A Amarender Reddy, Principal Scientist (Agricultural Economics), ICAR- Central Research Institute for Dryland Agriculture, Hyderabad.
Agricultural Marketing During British Era
The lecture started with the point that most of the traders involved in trade in agriculture were petty traders during the British Era. The first regulated market in India for these traders was established in 1886. The first legislation in this regard was related to cotton and textiles in the form of the Berar Cotton and Grain Market Act of 1887. This act facilitated the exporting of raw cotton from India to the United Kingdom and then sending the manufactured product back to India.
Further, Agricultural Produce Marketing (Grading and Marketing Act),1937 established regulated markets at the block and district levels as suggested by the Royal Agricultural Commission,1928. Model Bill of 1938 indicated that provinces can have their regulations to fill the local-level marketing gaps.
Along with these acts, the fact was that agricultural productivity was low. The Bengal famine in 1943 impacted the production further. India depended on imports for its food security in pre-independence times. Because of continued low productivity, famines, and wars like the 1965 Indo-Pak war, even after Independence, India had to import food grains through programmes like PL 460 programmes.
Agriculture after Independence
Further, Acts like the Essential Commodities Act, of 1955 and the National Cooperative Management Act, of 1962 tried to improve the food security condition with the help of technological measures like High Yield Varieties (HYVs). Along with the Green Revolution in grains, there was a cooperative lead White Revolution, popularly known as Operation Flood.
Dr. A Amarender Reddy highlighted that though there were these efforts, from the 1980s, policy paralysis can be observed in the agricultural sector. Agriculture reforms did not take place because of fear of farmer’s protests etc. The Agricultural Produce Marketing Committees (APMCs) did not make efforts to improve the infrastructure, storage etc. They became bodies of petty politics at the block level, siphoning off the cess charged on the trade in agricultural commodities at the Block level. There is a high cost of intermediation in APMCs, given their stagnant nature and no competition from the private sector. (monopolistic nature)
Agriculture markets are not functioning well because of weak percolation of market signals amongst producers. There are frequent ad hoc bans on the export of products to curb rising prices and food inflation. Also, there needed to be more investment in the post-harvest infrastructure. Various laws like the Model APMC Act,2003 and Warehousing (Development and Regulation Act),2006, Model Contract Farming Act,2018 dealing with these problems were voluntary in nature for state governments. Very few states had implemented these laws.
The speaker talked about the Farms Laws of 2020 in this context. They were aimed at improving the supply chains of perishable goods with the involvement of the private sector. Prof. Reddy gave an example of how potato prices rarely fluctuate like Onion or Tomato do because of strong storage and supply chains in North India. Also, Farm Laws were aimed at freedom and choice to farmers, and increased access to the market.
The three laws, The Farmers’s Produce Trade and Commerce (Promotion and Facilitation), 2020, the Farmer Empowerment and Protection Agreement on Price Assurance and Farm Services Ordinance,2020, Essential Commodities Amendment Act, 2020 had different benefits such as free inter-state trade, creating better channels for farmers to sale their produce outside APMCs. As Prof.Reddy underlined in the session, they were supposed to promote healthy competition amongst APMCs and private players.
However, to ensure these benefits are reaching farmers, there were certain prerequisites. The speaker mentioned strengthening Farmer’s Producing Organisations (FPOs), local-level institutions such as SHGs, and village storage structures. Expanding eNAM and reforming APMC markets also needed to be considered as a prerequisite to the Farm Laws.
Following these prerequisites, if agricultural markets are to be liberalised, there will be some gainers/winners and some losers. Prof. Reddy highlights that farmers and large corporates will be winners. Middlemen, state revenue, and petty traders will lose.
In the end, Dr. Reddy suggested some solutions to balance out this situation. One of the important amongst them was to reform the Minimum Support Price Mechanism. He also suggested that insurance systems shall be adjusted with the crop insurance schemes. Prof. Mukul Usher thanked Dr. Reddy for this talk.
Acknowledgement: Chaitanya is a research intern at IMPRI.
Teaser Youtube Video of Fundamentals in Public Policy Programme: https://youtube.com/shorts/mf-BjX1_C0c?si=sxDNu1yXzpmexPyc.
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