We want to promote shift of agri labourers to other sectors: Ramesh Chand

Agrarian distress began after reforms started in 1991, when focus shifted to manufacturing and services sector, says Prof Ramesh Chand of NITI Aayog

Agriculture has not progressed well despite economy growing at 7.5 per cent. Drought and slow pace of reforms in agri-marketing are seen as a major issues. Ramesh Chand, member of NITI Aayog, talks to Rajesh Bhayani about the problems faced by the sector. Edited excerpts:

What should the government do to address the distress in the agriculture sector?

Agrarian distress has begun after reforms started in 1991, when focus shifted to the manufacturing and service sectors, which grew much faster. It was only a decade later that some reforms were undertaken in the sector, like removing wheat from the Essential Commodities Act, liberalising the milk order, and permitting futures trading in commodities.

Commodities like wheat had seen farmers getting more price than MSP (minimum support price), as many private and multinational players entered the market and there was competition. However, again in 2006, due to global crop losses and other problems, prices of agri commodities started rising and wheat was again put under the Essential Commodities Act. Even APMC (Agricultural Produce Market Committee) reforms initiated in 2003 were moving on a slower pitch.

Which reforms are underway?

 

National Agriculture Market (NAM) is one of the key ones that has been launched and pilot projects are on, with 12 states showing interest. NAM could be a game changer and the goal to double farm income by 2022 set by the Prime Minister cannot be achieved without NAM. This project has the potential to replicate the success seen in the green revolution. But, the initial process is facing several issues like lack of leadership, with frequent change of officials in charge, etc.

But the initial process as we hear is facing several issues. Like lack of leadership as officials incharge keep changing, states not comfortable with new platform going by their experience in pilot?

These are in my view teething troubles. We have received some complaints and I will take it up with the government to sort these out. But, for a successful futures market, a competitive and efficient spot market is a must. All evils of futures market can be attributed to spot markets. For that, spot markets has to be efficient. Not only in agri commodities like cereals, pulses and oilseeds and so on, we want to reform the horticulture sector as well. Fruits and vegetables give 4-10 times the return from other crop groups. There is need to repeat a dairy- like revolution in horticulture. We have a few proposals for this. Take fruits and vegetables out of the APMC Act and make their sale and purchase completely free. This will allow setting up vegetable/fruit collection centres by local entrepreneurs, like milk collection centres, where farmers can sell even a few kg of their produce.

Two, horticulture producers companies or associations of various types can also help farmers in marketing their produce without the involvement of a long chain of market intermediaries. Three, as delicensing of dairy in 1991 and the amendments in Milk and Milk Product Order in 2002 attracted large investments in milk marketing and processing, free marketing of horticultural produce will attract a lot of investments in horticultural processing and value chains.
 

One of the reasons for agrarian distress is shifting of land use from agri to non-agri and falling farm size, making farming unviable and forcing farm labour to shift to elsewhere. How can this be addressed?

We want to promote agriculture labour to go to other sectors. Our study shows that for a farmer to remain just above the poverty line, he needs a minimum of 0.63 hactares of land. Smaller that that will not help him even cross the poverty line. Hence, we have proposed a model Land Leasing Act, which will help farmers acquire land on lease or lease out his land and earn rent. The proposed law is now with the Cabinet for consideration. It has provisions for tenants and protection for owners. Tenant coming on record as users of land will help him get loans and even be eligible for Direct Benefit Transfers which as of now he is deprived of.

In some commodities like pulses and onions we see huge price fluctuations. Government talks about building buffer stock but no serious efforts are being made?

For onions, we are diversifying sowing and taking it near to consuming states. Last year we started it but seeds were an issue. This time seeds supply is being arranged to states where we are initiating sowing for the first time. For pulses, we have an internal calculation regarding how much needs to be stored. However, we have made a small beginning and FCI has been asked to do market intervention. Pulses is a commodity where even a small intervention in pockets will have an impact on price levels.