The financial measures that Finance Minister Nirmala Sitharaman announced for farmers fail to alleviate the losses suffered by some of them during the lockdown. Moreover, legal changes to usher in agricultural marketing reforms, while ambitious, could fail if not diligently implemented and states are not taken in confidence.
Cereal producers did not suffer much during the lockdown. The supply of wheat to Punjab, Haryana and Uttar Pradesh was delayed, but efficiently. Fruit and vegetable growers have been hit the hardest by the shock lockdown that went into effect on March 25 with just four hours’ notice.
Winegrowers suffered losses on exports during the closure of Western Europe. Prices also collapsed nationally as markets and logistics became congested. Some winegrowers diverted their harvest to raisins and recovered part of the cost. Banana growers did not have that option. Even the market gardeners have found no takers for their products.
Although farming activities were excluded from the lockdown, Syed Javed Ismail from Beed in Maharashtra said he had to destroy the tomato crop remaining in his field in mid-May to make way for the next planting as the price he was getting ─ Rs 1 or less a kg was too low.
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“There is no immediate relief from the losses,” said Vilas Shinde, founder and managing director of Sahyadri Farmers Producer Company, based in Nashik, the country’s largest exporter of grapes. He expected short-term loans to convert to longer-term loans and a waiver of interest on past loans.
Nivrutti Khandrao Medhane, 47, Nashik winemaker, has a loan of ₹ 2 cr. He also expected a loan waiver. It’s a need he hadn’t felt before, he said.
The finance minister’s announcement of an investment in agricultural infrastructure like cold stores was welcome, but farmers needed a break from loan and interest repayments, so that they did not make default and that the banks continue to lend. This would have helped them to continue their farming activities and to repay their obligations from future income.
Just as the governments of Karnataka and Delhi had made cash transfers to barbers, drivers and dhobis (laundresses), the central government should have provided relief to specific sections of farmers based on the pain they had suffered.
Longer-term measures, such as proposed changes to the Essential Commodities Law and the Agricultural Commodity Marketing Committee (APMC) law aim to help farmers obtain better prices for their products. These were on the agenda of a meeting of the NITI Aayog Board of Directors held in June of last year. Prime Minister Narendra Modi had set up a committee of chief ministers headed by former Maharashtra chief minister Devendra Fadnavis to suggest how the changes could be implemented.
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The APMC law governs mandis. It was seen as restrictive because it prevents big buyers like exporters, organized retailers or food processors from buying directly from farmers without paying a fee. mandi cess. the mandi commissionaires, or arhatiyas, are considered exploiters.
Agricultural marketing is a matter of state. The government of Atal Bihari Vajpayee drafted a model amendment to the APMC in 2003 for states to legislate. NITI Aayog member Ramesh Chand said no state except Arunachal Pradesh had adopted it in its entirety. Everyone else made exceptions.
In 2017, the government made another attempt. He drafted a model law to guide states. This included livestock and is called the Farm Products and Livestock Marketing Act. The goal of these two model modifications was to increase competition among buyers.
The BJP-led states – Gujarat, Madhya Pradesh, Uttar Pradesh, and Haryana – enacted the 2017 Model Law through ordinances or bills.
Non-BJP states are not as well aligned. In January, the Punjab changed its agricultural produce market rules of 1962. It allowed for the establishment of private markets of at least 10 acres, but only for fruits, vegetables, timber and flowers. These could not be within 5 km of a restricted area mandi or its sub-yard. Rice, wheat, cotton, pulses and oilseeds were excluded.
Sukhpal Singh of the Center for Management in Agriculture at the Indian Institute of Management, Ahmedabad, says arhatiyas have political weight. In the Punjab, he says, about a third of them are Jat Sikhs, traditionally a farming community. Wheat and rice were also excluded because the state earns a lot of money from the mandi taxes he levies on their purchases. the arhatiyas generously earn commissions and are reluctant to let go. At 2.5%, they would have earned around 625 crore from buying wheat in the current season.
Singh says state agencies like the Food Corporation of India (FCI) and Pungrain want to source directly from farmers but need to route their purchases through arhatiyas because they finance the elections.
In November 2018, the government of Maharashtra withdrew a bill that would have ratified an ordinance that removed all agricultural products from the scope of its APMC law. The bill was passed by the lower house but was withdrawn by the upper house after traders from the large mandis state goes on strike.
Mekhala Krishnamurthy, who studied regulation mandis in Madhya Pradesh and Bihar, argues that intermediaries cannot simply be viewed as special interests; they have a role to play. They give credit to farmers, whom the banks do not consider solvent. Krishnamurthy teaches economics and sociology at Ashoka University and is associated with a Center for Policy Research program on strengthening state regulatory capacity in the agricultural, industrial and social sectors.
On the other hand, they can force these borrowers to sell to them soon after harvest when prices are low, and to pay off their debt. So just passing a law allowing big traders to buy directly from farmers will not help, if farmers are not free to borrow. It is important to separate the credit and commodity markets.
The regulated mandis also help with dispute resolution. When farmers sell in a regulated yard, the mandi the committee executes the payment. Such comfort is not available when they bypass it.
Santosh Gorade, 38, an onion and grape grower from Nashik, welcomed the proposed amendments, but said traders who buy directly from farmers should be under the supervision of the local authority. mandi commission or district administration. He says a Delhi grape trader deceived him by 3.95 lakh kh in 2010. His uncle lost 2.5 lakh ₹.
Such defects are common among winegrowers, explains Jaydutt Holkar, director of APMCs Lasalgaon and Vashi.
Can the Center bypass states and put in place central legislation for agricultural trade?
Singh says that agricultural markets being physical spaces are a matter of state, but commerce is in the competing list. Thus, the Center can legislate on trade outside the mandiswhether public or private. But what if the states say the mandi Cess will be payable not only on transactions within a mandi but beyond, in a notified area?
Even if they can, large companies like Cargill India or Pepsi may not want to buy directly from large numbers of small farmers for logistical reasons. They may prefer to source from traders. Their supply may be seasonal and limited to the products of interest to them. mandi is open year round and deals with multiple products of different batch sizes.
Rather than moving the mandis and the arhatiyas, central legislation should strive to increase competition between them. If states are bypassed and not seen as confidential, they could create obstacles.
(This story is part of a series on Farm questions)
(The writer is a journalist and blogger on www.smartindianagriculture.com)
(The federal government seeks to present views and opinions from all sides of the spectrum. The information, ideas or opinions contained in the articles are of the author and do not necessarily reflect the views of the federal government)