Author – Dr Niharika Kumar, Associate Professor, Department of ECE, BNMIT
Farmers are the backbone of our country. Nearly two-thirds of our nation is either directly or indirectly involved in agriculture or agro-related activities. In the 1970s India witnessed the Green Revolution which led to major improvements in production of cereals and ushered in a change in the lives of farmers. In spite of technological advances in farming, and subsidies to farmers for procurement of seeds and fertilizers, we still see our farmers living a hand-to-mouth existence and reeling under debt and poverty.
There are many reasons for the precarious state of our farmers. One of the main reasons being the fact that Farmers do not get the desired price for their produce even though the government has laid down rules for Minimum Support Price for most of the Agricultural produce. When we look at the demand-supply equation for farm produce, we realize that India and the rest of the world does need the cereals, pulses, fruits and vegetables that Indian farmers are growing. But the supply-chain needs to be streamlined and aligned to the needs of the country and the rest of the world.
With the noble goal of bringing about a change in the lives of Indian farmers, the Government of India has recently passed three ordinances (which I believe will be placed before the parliament in due course). These three ordinances bring about changes to three of our long standing Laws.
The First ordinance amends the Essential Commodities Act. Essential Commodities Act was passed in the 1950s when the entire world was coming out of World War II. There were food shortages in the whole world and there was a need felt to have a law that prohibits hoarding of farm produce like grains, legumes, potatoes and onions. Whenever there is a perceived scarcity of farm produce there is a tendency among market participants to stockpile the farm produce. This accentuates the problem leading to even higher prices for the food grains. Hence the Essential Commodities Act was brought in to discourage hoarding. This law has been effective in curbing hoarding, but as any law would have unintended consequences, even this law took a toll on our farming community. Due to this law the farm produce cannot be stored in large warehouses. The only organization that can store the grains is the Food Corporation of India (FCI). But FCI cannot build warehouses throughout India and even if they build them, maintaining them is a complicated effort. This has often led to rotting and wastage of grains. Cognizant of all these facts, the government brought about the changes to Essential Commodities Act. The new amendment seems to do away with imposing restrictions on storing food grains. With these amendments in place, private players will be able to setup warehouses and store food grains. This may also encourage private players to establish cold storage chains that will help in storing perishables for a longer period of time. This seems like a welcome change being ushered in by the government.
The second ordinance which is called as Farmers’ Produce Trade and Commerce (Promotion and Facilitation) Ordinance, 2020 tries to address the market access to the farmers. Currently the farmers are allowed to sell their produce only within the mandis of Agricultural Produce Market Committees or APMC. At times the farmers are not able to get their desired price at the mandis either due to excess supply or other market factors. We have all seen the plight of such farmers who are not able to sell their goods and how they end up throwing all their produce on the roads and gutters. Farmers would have taken loans to grow their crops and when they don’t get their desired price they feel that they are left with no other choice but to take their lives. In order to provide market access to farmers, the government has brought this ordinance. When this ordinance turns into law, it will give farmers the option to sell their produce beyond the APMC. Farmers will now be able to go across states-lines as well. Previously if a buyer in Chennai was interested in buying apples from Himachal Pradesh, he/she would have had to go through a complicated set of laws and rules. With this act he/she would be able to easily procure the farm produce. Hopefully this will bring a sea change in the lives of farmers.
The third amendment enables farmers to opt for contract farming. Farmers generally sow crops based on the past year’s experience. For example if they experienced higher realization on crops like wheat or rice, most of the farmers will grow wheat or rice in the upcoming kharif or rabi cycle. This will result in overproduction of a particular crop leading to a crash in the price of the food item. The farmers end up getting less money on their crop. With contract farming option, farmers can now enter into an arrangement with private players to grow a crop of the customers’ choice. The customer decides which crop (say wheat) and the variety of crop (say Sharbati Wheat) that the farmer shall grow. They may also agree beforehand on the price that the farmer will receive when he/she sells the crop. Contract farming has the potential to give visibility to the farmer on his/her expected future earnings.
At the heart of it, though the three laws have noble intentions, one needs to be cautious on how these are implemented and interpreted. Farmers are generally not accustomed to nuances and sensing this weakness, large corporations could potentially exploit the farmers leading to further distress for farmers. One good way to circumvent this problem is for farmers to form cooperative societies. A great example of such a cooperative society is Amul. Amul procures milk from thousands of milkmen via a vast network of cooperative societies. Milkmen are informed beforehand on the amount they will receive for the different quality of milk that they sell. Amul is a very transparent and fair mechanism that benefits both the milkmen and the customers. A similar cooperative based approach can be implemented by farmers as well.
The three Ordinances seem to have been well thought out. If implemented in the letter and spirit, these laws have the potential to bring about far reaching changes in the lives of farmers!