In a move that has far-reaching implications for farmers in India - and Prime Minister Narendra Modi deserves a big applause for this - the Union cabinet on Wednesday approved amending the six-decade old Essential Commodities Act (ECA) to deregulate commodities such as cereals, pulses, oilseeds, edible oils, onion and potatoes. The ordinance, once assented by the President of India and notified in the gazette, will become law.
The move, which shall mean farmers getting free from the clutches of Agriculture Producer Marker Committees, comes days after finance minister Nirmala Sitharaman had said the government will do so. The Act will be amended as per new realities and will encourage investments into the farm sector, allowing farmers far more freedom and financial benefits than in past. There would be no restrictions on farmers on selling their produce to any buyer – a company or individual or a cooperative - and at a price of their choice. This is a big, bold move aimed at helping farmers, and couldn’t have come at a better time.
Agriculture Minister Narendra Singh Tomar rightly termed this as a “visionary step towards transformation of agriculture and raising farmers’ income.” He added,“The freedom to produce, hold, move, distribute and supply will lead to harnessing of economies of scale and attract private sector and foreign direct investment into agriculture sector. It will also"help boost investment in cold storages and modernization of food supply chain.”
Earlier in his Cabinet Media briefing Union Minister Prakash Javedekar informed that “Farmers can now export or store these commodities as they wish. These are our farmers’ demands pending for nearly 50 years now. Farmers are free from the clutches of Agriculture Producer Market Committee.” He added that farmers will now be able to sell produce anywhere and to the highest paying party.
This move is a firm realization by the Government of the yawning policy gap, and a brilliant attempt to rectify many decades of inaction by successive governments. A note by the Government acknowledges this: ”While India has become surplus in most agri-commodities, farmers have been unable to get better prices due to lack of investment in cold storage, processing and export as the entrepreneurial spirit gets dampened due to hanging sword of Essential Commodities Act.” It further added, “Farmers suffer huge losses when there are bumper harvests of perishable commodities. With adequate processing facilities, much of this wastage can be reduced.”
Earlier in May, Finance Minister had announced that no stock limit will apply to processors or value chain participants following amendment to the Essential Commodities Act. Such limits will be imposed only in exceptional circumstances like national calamities or famine. Amending the Essential Commodities Act of 1955 were among the measures announced last month as part of reforms to improve infrastructure and logistics facilities needed for giving a big push to the sector, the largest employer in the economy. The announcements were part of the ₹20 lakh crore stimulus package aimed at helping the poor and vulnerable, farmers, small businesses and corporates hit by the coronavirus epidemic
Another welcoming move to the second reform in form of approval of Farming Produce Trade and Commerce (Promotion and Facilitation) Ordinance, 2020, which the Government says will pave way for creating One India, One Agriculture Market.
Traditionally farmers have not been able tp market their produce because of many unwanted restrictions. For example they could not sell agri-produce outside the notified APMC (agricultural produce market committee) market yards. The farmers are also restricted to sell the produce only to registered licensees of the state governments. Besides this, barriers exist in free flow of agriculture produce between various states due to various APMC legislations enacted by the state governments. The ordinance comes across as a move to create an ecosystem where the farmers and traders will 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. If it is implemented in right spirit, the ordinance could be a historic-step in unlocking the vastly regulated agriculture markets in the country.
The new law gives farmers more choice, reduce marketing costs and help them in getting better prices. It will also help farmers in regions of surplus produce to get better prices and consumers of regions with shortages. The ordinance also proposes an electronic trading in transaction platform.
The Union cabinet also approved a third ordinance Farmers (Empowerment and Protection) Agreement on Price Assurance and Farm Services Ordinance, 2020. The ordinance empowers farmers for engaging with processors, aggregators, large retailers, exporters etc. on a level playing field without fear of exploitation. 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. It will reduce cost of marketing and improve income of farmers. Another important feature is that it will also attract private investment for building supply chains for supply of Indian farm produce and help farmers access technology and advice for high value agriculture.
Summing up, the new reforms now empower farmers to engage in direct marketing thereby eliminating intermediaries resulting in full realization of price. Farmers have been provided adequate protection besides effective dispute resolution mechanism with clear time lines for redressal. A step in the right direction, the Modi government has now started feeling the real pulse of Indian agriculture. By adressing few of the long ignored pain points, government now has its ears on the ground. Hope the farmers have much to cheer for in the coming days.
14 Nov 2024