Agri Reforms Are ‘A Remedy Not Malady’ For Various Marketing Hurdles, Says Economic Survey

The 2020-21 Economic Survey, tabled in Parliament today (29 January) by Union Finance Minister Nirmala Sitharaman, has said that the agricultural reforms approved by President Ram Nath Kovind on 27 September last year are “a remedy and not malady” for farmers for the various restrictions they faced in marketing their produce.

“There were restrictions for farmers in selling agri-produce outside the notified APMC (agricultural produce marketing committee) market yards. The farmers were also restricted to sell the produce only to registered licensees of State Governments,” the Survey said.

Further, barriers existed in free flow of agricultural produce between various states due to various APMC laws passed by the state governments.

“APMC regulations have indeed resulted in a number of inefficiencies and consequent loss to farmers. The presence of multiple intermediaries between the farmers and the final consumers has led to low realization by farmers,” the survey said.

Further, a large number of cess and taxes levied by APMCs cut into farmers’ realisations while only a small portion was ploughed back for development of mandis’ infrastructure, the survey, prepared by Chief Economic Adviser Krishnamurthy V Subramanian, said.

“Poor infrastructure at the mandis compounds the problem of price realization for the farmers. Issues related to manual weighing, single window systems, and lack of modern grading and sorting processes create long delays and measurement errors that tend to be biased against the seller,” it said.

Farmers waiting in long queues, mostly in hot sun, to sell their produce with limited ability to take their produce elsewhere, even if prices were higher, is a characteristic feature of APMC mandis. The delays led to post-harvest losses that were 4-6 per cent in the case of cereals and pulses, 7-12 per cent in vegetables and 6-18 per cent in fruits.

Stating that various committees had recommended several reforms in the marketing of agricultural commodities recognising the current limitations, the Survey said at least 20 reports starting from 2001 had recommended agricultural market reforms.

Besides, various economic surveys including by the current Union government had recommended them, the Survey said, indicating that these had been made after widespread consultations.

Referring to the Farmers’ Produce Trade and Commerce (Promotion and Facilitation) Act, 2020, it said the law would empower farmers to engage with processors, aggregators, wholesale traders, large retailers and exporters to provide a level-playing field.

“It will transfer the risk of market unpredictability from the farmer to the sponsor and also enable the farmer to access modern technology and better inputs. Farmers have been provided adequate protection as sale, lease or mortgage of farmers’ land is totally prohibited and farmers’ land is also protected against any recovery,” it said.

Farmers would have full power in the contract to fix a sale price for their produce and would receive payment within a maximum of three days.

“As part of this law, 10,000 Farmer Producer Organizations (FPOs) are being formed throughout the country. These FPOs will bring together small farmers and work to ensure remunerative pricing for farm produce,” the Survey said.

The agricultural reforms were designed and intended primarily for the benefit of small and marginal farmers, who constitute 85 per cent of the total number of farmers in the country and the worst-hit by the regressive APMC-regulated market regime.

The farm laws will herald a new era of market freedom that can go a long way in improving farmers’ welfare.

The Economic Survey said that the proof of the agriculture sector’s resilience was that despite the novel coronavirus (Covid-19) pandemic, its performance in the output was strong.

While Covid-19 lockdown resulted in the performance of non-agricultural sectors being affected, the agriculture sector came up with a robust 3.4 per cent growth rate.

The sector has also got renewed thrust due to various measures on credit, market reforms and food processing under Atmanirbhar Bharat Abhiyan.

Various initiatives of the central government also saw the potential of the livestock and poultry sectors being tapped, the Survey said, adding that within the agriculture sector the growth of these two sectors outperformed that of crops.