Agriculture Reforms in India in 2020

Agriculture Reforms in India in 2020

As the world reels under the COVID-19 pandemic, supply chain disruptions have yet again revealed the critical gaps vexing the agricultural infrastructure and logistics systems; but there are a few countries only which are utilizing the crisis as an opportunity to push through politically difficult reforms that have been in a state of suspended animation for a long time.

India plans to convert this crisis into an opportunity and strengthen its fight by becoming Atmanirbhar or self-reliant; a term coined by the Prime Minister of India, Mr Narendra Modi. In what could be termed as a Historic Day for the livelihoods of 60% of the population, the measures announced under the Atmanirbhar Bharat Abhiyan focuses on agriculture and allied activities supporting the farmers of India.

On the reform front, the government has finally decided to bite the bullet by rolling out three key reforms which economists have long advocated for to ease the lock jams in the process of selling of produce and providing farmers with more avenues of sale. These include relaxation in the agriculture marketing rules where anew law will be framed to give farmers the option to choose the market where they want to sell their produce by removing inter-state trade barriers and providing e-trading of agriculture produce; amending the Essential Commodities Act to mitigate the post-harvest losses and wastage by giving a push to scientific storage facilities and lastly enable a facilitative legal framework to oversee the contract farming initiative.

These steps, in the long run, will secure India’s food security and supply chain in a self-sufficient manner aimed at promoting free trade under the slogan of one nation one market. The direct dependency of the farmers in the hands of APMCs will be side-lined and the powers of the state governments will be eroded. This may cause a tumult to the existing established channels which have for a long time gnarled the farmers but who said that reforms are not disruptive.

The reforms unveiled carry within them the freedom to earn more and live a sustainable livelihood breaking the shackles of dependencies. Ability to directly sell farm produce to any private entity or food processing company from farm-gates will bring in more of the big buyers like processors, exporters, and organized retailers in direct contacts; improving the linkage of the farm sector with markets will give an impetus to contract farming and this private sector involvement will help attract better technology, inputs and market knowledge to farmers.
Now, the farmers will sow by looking at the prices in future rather than the prices of past and the quality of the farm produce is also set to improve as large retail buyers would insist on quality. This engagement will lead to better alignment of crops and varieties based on up-to-date consumer trends and will enable the farmers to grow what the markets want, rather than trying to sell whatever they produced.No stock limits on processors or value chain participants such as exporters and de-regulation of foodstuffs such as cereals, edible oils, oilseeds, pulses, onion & potato will ultimately prove a boon to the farmer’s income who earlier had to comply with the curb on prices and stocking surpluses imposed by the state governments.
The government also intends to loan a significant amount to various cooperative societies, start-ups and others to create cold storage facilities and post-harvest storage centres. These will help small and marginal farmers to sell their products at a good price instead of having to sell them immediately to avoid spoilage. Steps to strengthen the formalization of MFE and Farmer Producer Organizations will help in strengthening the value chain and lower the barriers of entry for new entrants in agriculture.
Being an unorganized sector, the issue of disguised employment is big. Thanks to the initiative of contract farming legal framework, once these large corporations start investing by controlling vast swathes of agriculture production, thousands of people can be pooled in under a single framework thus providing a sense of continuity of service all year round.

The slew of agricultural reforms measures announced under Atmanirbhar Bharat shows that the government is keeping itself busy at seas and timely and efficient implementation of these reforms would make the sector a reliable growth engine for the nation’s economy.