1. What are the major bottlenecks in creating an efficient nation-wide agricultural market? Discuss. What recent measures have been taken to address these bottlenecks.
एक कुशल राष्ट्रव्यापी कृषि बाजार बनाने में प्रमुख अड़चनें क्या हैं? चर्चा करें। इन अड़चनों को दूर करने के लिए हाल ही में क्या उपाय किए गए हैं।
Demand of the question:
It expects students to discuss major bottlenecks in creating an efficient nation-wide agricultural market. It also expects students to write about the recent measures taken by the government to address these bottlenecks.
Agriculture sector is one of the dominant sectors of Indian economy. It contributes about 14% of the total GDP of India and provides employment to over 60% of the population. But, it is plagued with many problems. The problem of nation-wide agri marketing tops the list of issues related to agriculture.
Bottlenecks in creating an efficient nation-wide agriculture market:
- Minimum Support Price (MSP) for different crops announced by the Union Government. But there is a wide gap between the cost of production and the MSPs announced for the year. MSP is not available to Dairy products, vegetables, fruits etc.
- Not many private markets could come up during the last 15 years as the local APMCs felt threatened by them.
- There are hindrances when it comes to establishing market for livestock sector which is a very important sector of the agribusiness economy.
- India has surplus production in most agri-commodities but farmers have been unable to get better prices due to lack of investment in necessary infrastructure such as Ware house, Cold Storage etc. Almost 40 per cent produce of all fruits and vegetables production lost annually in India due to less number of cold storages, ware houses etc.
- The imposition of the curbs on stocking of farm produce and regulation of the prices of commodities, etc. under Essential Commodities Act (ECA) are some of the factors responsible for less interest of entrepreneurs. Hence, less investment in the farm sector.
- There are restrictions for farmers in selling agri-produce outside the notified Agricultural Produce Market Committee (APMC) which in turn put less money in the hands of farmer.
- The farmers are also restricted to sell the produce only to registered licensees of the State Governments, which restricted farmers option to explore new markets in other states.
- Further, barriers exist in free flow of agriculture produce between various States owing to the prevalence of various APMC legislations enacted by the State Governments.
- Climate change is expected to make the situation worse by posing some unprecedented challenges such as floods, sea level rise, disturbed monsoon cycle etc.
These structural, operational & natural bottlenecks resisted the creation of efficient nation-wide agriculture market. Hence, Union government recently introduced new measures to address these bottlenecks:
The central government introduced major agriculture market reforms through three ordinances & other initiatives:
- The Essential Commodities (Amendment) Ordinance 2020. (ECA)
- The Farming Produce Trade and Commerce (Promotion and Facilitation) Ordinance, 2020.(FPTC)
- The Farmers (Empowerment and Protection) Agreement on Price Assurance and Farm Services Ordinance, 2020.
- Besides earlier to it the Department of Agriculture & Cooperation formulated a Central Sector scheme for Promotion of National Agriculture Market through Agri-Tech Infrastructure Fund (ATIF) through provision of the common e-platform.
- Also, Pradhan Manthri Fasal Bima Yojana provides insurance coverage and financial support to the farmers in the event of failure of any of the notified crop as a result of natural calamities, pests & diseases.
It will help to create efficient nation-wide market in following ways:
- The amendment to ECA would deregulate the commodities such as cereals, edible oils, oilseeds, pulses, onions and potatoes. It will help to lessen the fears of private investors of excessive regulatory interference in their business operations.
- The freedom to produce, hold, move, distribute and supply will lead to harnessing economies of scale and attract private sector/foreign direct investment into the agriculture sector.
- It will help drive up investment in cold storages and modernization of the food supply chain.
- An amendment to FPTC will create an ecosystem where the farmers and traders would enjoy freedom of choice of sale and purchase of agri-produce.
- It will also promote barrier-free inter-state and intra-state trade and commerce outside the physical premises of markets notified under State agricultural produce marketing legislations.
- It empowers farmers for engaging with processors, wholesalers, aggregators, large retailers, exporters etc. and thus eliminating intermediaries resulting in full realization of price.
- It also provides an effective dispute resolution mechanism with clear timelines for redress.
- These reforms are expected to build necessary agrarian infrastructure in the country which will lead to build “One India, One Agriculture Market” i.e. an efficient nation-wide agricultural market.
These reforms will promote efficient nation-wide market under the slogan of one nation one market. But, there are some challenges which still persists:
- Agricultural marketing is mainly a state entitlement, as Union government introduced these reforms, it might keep away the state from its limited revenue resources.
- The peasantry may be at large will be at the mercy of the Agri Business Corporations since there will not be any arrangements for price support and price stabilisation for crop.
As NITI Aayog’s three year agenda focuses on reforming the agricultural market so that farmers are empowered to sell their produce to whomsoever they wish. The recent measures are taken by the government in this light will be helpful to create an efficient nation-wide market and will also ensure rise in income of farmers in turn contributing to achieve the target to double farmers income by 2022.