Deregulating farms

Union Cabinet's green signal to three key agro reforms indeed amounts to "a historic day for agriculture", not only due to the much-needed changes that it will usher in for Indian farmers but for the conclusiveness that was finally reached. The three ordinances cleared by the Cabinet will have a considerable impact on the agriculture paradigm of the country. Foremost is the amendment to the six-and-a-half decades-old Essential Commodities Act that was enacted at a time of food scarcity in the country and allowed the government to control the production, supply, distribution and stock limit of any notified commodity. The amendment allows deregulation of agro commodities providing private players with an interference-free investment opportunity while reserving the right to impose stock limits only during "very exceptional circumstances". In any case, an amendment to ECA, 1955 was due since the country has been producing surplus unlike the past days of scarcity and unnecessary stock limits and regulations have not let farmers realise the true price of their produce. Even the investment in cold storage and supply chains has been lukewarm due to excessive regulations. Fewer regulations mean more business in essence and amendment to ECA becomes a case in point. Second to ECA amendment is the Farming Produce Trade and Commerce (Promotion and Facilitation) Ordinance, 2020. It sets the farmers free of restrictions to sell their produce to APMC mandis while also allowing for electronic trading platforms. This coincides with ordinances of several states that have pushed for similar freedom to their farmers — selling outside mandis. The ordinance promotes trade and commerce outside mandis nullifying the monopoly held by APMCs. As the PM had asserted, the said ordinance will pave the way for One India, One Agriculture Market that will keep prices competitive and allow farmers to directly negotiate their sale in a bid to procure a remunerative price for his produce. The ordinance serves to facilitate what the National Agriculture Market or e-NAM had proposed back in 2016. Lastly, the Farmers (Empowerment and Protection) Agreement on Price Assurance and Farm Services Ordinance, 2020 which will facilitate direct engagement of farmers with exporters, wholesalers, retailers, etc. Through this, farmers can fix the price of produce with buyers at the time of sowing and both parties remain insulated from vagaries of the market. To avoid exploitation of farmers, a separate dispute resolution mechanism has also been provided for.

These reforms arise from the government's commitment to double the farmers' income by 2022. But the nod to it appears incidental to the pandemic that has incapacitated global economies. Since these reforms have been under deliberation for quite some time, the pandemic has served as an opportunity to deliver on a siting promise. Nevertheless, the dynamism injected will strengthen the agriculture sector, especially in such an hour. The MSP hike together with these reforms as well as a good monsoon forecasted by IMD should collectively allow farmers to grab remunerative prices for their Kharif produce this year. The farm data this year would give the government a better idea of where they fare in their promise of doubling the farmers' income in the remaining two years.