Better late than never

Agriculture reforms have been long overdue. For a country such as India, agrarian distress has been an area of perpetual concern. Unclogging the peculiarities that contribute to this farm distress is perhaps an area that needs intervention, and the same has been an area of deliberation for policymakers. With uncertainties looming large due to the pandemic, there appears to be a certain rush to implement few reforms that could largely benefit farmers. The rush can be understood by actions of the Gujarat government which on Monday passed the Agricultural Produce Markets (Amendment) Ordinance, 2020. The Ordinance runs along norms specified in the Model Agricultural Produce and Livestock Marketing (Promotion and Facilitation) Act, 2017 issued by the Centre. Now, private entities are allowed to set up their own market committees or sub-market yards that can compete and offer the best possible remuneration to farmers for their produce, effectively ending years of monopoly exploited by APMCs. The ordinance further restricts the jurisdiction of these market committees to physical boundaries of their respective yards which means the cess levied by APMC on any transaction would not be applicable outside their yards. As per new rules, farmers are not mandated to sell their produce to only one APMC and traders will be issued a unified single trading licence which will enable them to trade across the state. Thus, farmers will be offered better prices for their produce. Gujarat's decision to bring in such reforms naturally shifts the balance in favour of farmers, with APMCs being visibly distressed by the new law. Prior to this, APMCs would form cartels and deprive farmers of remunerative prices. They would drive up food inflation by hoarding and cause an artificial shortage of supply for profiteering. In a nutshell, Gujarat has paved the way for a post-APMC regime wherein market forces calibrate prices depending on the quantity and quality of farmers' produce, further augmented by the provision of portals for e-markets.

Gujarat has simply followed what Madhya Pradesh did a week back when the Shivraj Singh Chouhan government — which can be credited for the state's strong agro-economy in previous terms — announced an overhaul of APMC structure. MP has gone a step further in the implementation of key features of the model APML Act. Apart from the reforms done by Gujarat such as ending APMC monopoly, private market yards, unified licensing and portal for electronic trading within the state, MP has ushered in single-point levy of mandi fee, disintermediation of food supply chain and promotion of inter-state and national market along the lines of e-NAM launched by PM Modi in 2016. For the better discovery of buyers and sellers, the prevailing prices across mandis will be made public to farmers. Private mandis of MP have a broader definition as compared to Gujarat; farmers would now be able to directly trade with consumers, bulk buyers, retailers and food processing firms. Therefore, it becomes relatively easier for farmers to control the prices for their produce, especially with the availability of a large number of buyers in the market, directly at his doorstep. The electronic retail facility of MP which has been in the spirit of e-NAM sets a benchmark for other states to follow suit in allowing for a unified national level market for buyers and farmers across the country.

While both states have taken a lead in agro reforms, a comprehensive outcome can be yielded only when other states follow suit. Implementation of the Model Contract Farming Act, 2018 can further benefit India's small and marginal farmers. Collectively, such reforms would pave way for the formation of FPOs, allowing better negotiations for their produce whilst focussing on their production scale or quality or both. Because agriculture is a state subject, there have been several roadblocks in implementation of Union-led schemes and model acts. However, with states overcoming their political barriers to implement such changes, especially in such grim times, there is hope for a prospering agro sector in future. Such reforms might have been long overdue but even if they are delivered now, they will benefit our farmers in an hour when they most need it. Better late than never!