States must board agriculture reform bus

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By Pradeep Kumar Panda

Bhubaneswar, April 16: Most of the farmers’ unions seek more doles for the sector rather than competitive and modern markets and other reforms in agriculture sector which can make the sector vibrant, self-reliant and economically quite attractive. The centre came out with a proposal to adopt Model APMC Act in year 2003 which was prepared in consultation with the states.

The objective was to dismantle excessive regulation and control over markets, facilitate direct sale purchase, create more options for sellers, dismantle market collusion by local traders, and attract competition and investments in agricultural markets. However, the adoption and implementation of Model APMC law by states remained patchy, diluted and insignificant.

Some states did not change the Act. Those which changed the Act did not notify rules, and where notification was done it was restricted to tiny fraction of produce. Thus, agricultural markets remained deprived of competitive environment, new commerce, modern infrastructure and formal sector participation, and modern value chains.

Consequently, traditional capital, large price spread, price crashes at harvest time and spikes in lean period, with little value addition, remained the order of the day. This is leading to loss of faith in market and rising demand for MSP for every agricultural commodity. After review of the progress in Model APMC Act (2003) the Union Ministry of Agriculture has prepared and shared with states more progressive and updated marketing Act which also covers livestock.

It is termed as the Model APLM Act (2017). States are being persuaded to adopt this Act but response has been very slow. Two other two important regulations being pushed by the NITI Aayog for adoption by the States are: The Model Contract Farming Act (2018) prepared by Ministry of Agriculture and Model Agricultural Land – Leasing Act, 2016, prepared by NITI Aayog.

Investments to GDP ratio in agriculture at 13.3 per cent is very low. The composition of total investments in agriculture show that 78.2 per cent of it is from households (i.e. farmers themselves) while public investments constitutes 19.4 per cent share. Private corporate sector accounts for less than 2.5 per cent of investments in agriculture sector. Out of total corporate investments of Rs 1874.9 thousand Crore in the economy during 2016-17, agriculture received only Rs 7.987 thousand crore (0.42 per cent).

Regulatory restrictions on marketing and absence of business friendly environment in agriculture acts as a deterrent for corporate investments in agriculture production and marketing. This is said to be an important reason for slow change in agriculture, dominance of traditional marketing channels and weak linkage between pre and post-harvest agriculture. Another disquiet feature of investments in agriculture sector is that between public investments show a decline of 0.4 per cent during 2011-12 and 2016-17.

Changes in APMC Act and provisions for Contract farming are expected to attract much needed modern private sector investments into agricultural marketing as well as agricultural production. This will also reduce the need for government intervention and support for agriculture.

Recent available survey of NSSO reveals that land lease in the country is on rise but it is oral and not recorded. Fifty nine per cent area in Andhra Pradesh, 30 per cent in Bihar, 20 per cent in Odisha was under lease farming in year 2012-13.

Country average is 11.6 per cent. Such farmers can’t avail institutional credit, crop insurance and other government benefits for agriculture. The incidence of tenancy is expected to rise further as members of farm families are moving out of agriculture. Recognition of land lease and protecting right of landowners, will help in raising farmers income in a number of ways and help in emergence of new class of farmers.

Substantial increase in farmers income and transformation of agriculture require a paradigm shift in entire approach towards agriculture sector. Indian agriculture has come a long way. Advancement in science-led technology, enhanced role of private sector in both pre and post-harvest phases, liberalized output market, active land lease market, and emphasis on efficiency will equip agriculture to address challenges of 21st Century and contribute towards goal of New India.

A well co-ordinated action and strategy between the Centre and the states is needed to ensure that agriculture marches to next stage of development along with other sectors, and agriculture is not left behind as it happened in the 1991 reforms agenda.