Rebooting agriculture: Govt must look at holistic reforms in farm sector

We need a system that can ensure adequate returns to growers without the government having to needlessly hold stocks of commodities for which it announces the MSPs

The thinking in the National Institution for Transforming India (NITI) Aayog that agricultural growth and a spurt in farmers’ incomes is not feasible without radical farm sector reforms and that the state governments are doing little on this count has come rather belatedly. The economic reforms carried out since 1991 have either bypassed the farm sector or touched only its fringes, thus, restraining this sector from growing to its full potential. Even now the NITI Aayog has picked up only three areas for immediate action whereas the need is for a comprehensive, all-embracing process of agricultural reforms. The action on revamping farm marketing – one of the three chosen areas along with land leasing and farm forestry – has been going on for years but without showing tangible results. Though several states have amended their Agricultural Produce Marketing Committee (APMC) Acts, not many of them have strictly followed the model draft circulated by the Centre way back in 2003 for fear of losing mandi revenues. The NITI Aayog has now offered to come out with a fresh model of the APMC Act, which would address the revenue issue and also facilitate direct transactions between producers and end-users to eliminate middlemen.

The necessity of legalising land leasing has been felt for long. It would let the land owners hire out their unutilised lands to tenants without fear of losing its ownership. It would also let the small and marginal farmers expand their operational holdings. However, the true objective of this measure would be served only if it is accompanied by a land consolidation move to undo the damage caused by unabated fragmentation of landholdings. Unfortunately, this aspect is being wholly overlooked.  Ensuring remunerative prices to farmers is another critical area which is being mismanaged. The concept of minimum support prices (MSPs) and its enforcement through procurement-based market intervention has served only a limited purpose. It has worked only in wheat, rice and, to an extent, in cotton and sugarcane. An overwhelming majority of farmers do not receive the minimum prices. Many of them, in fact, suffer from the market distortions caused by the inept implementation of MSPs. Yet, for some inexplicable reasons, successive governments have seldom thought of looking beyond it. What is needed is a system that can ensure adequate returns to growers without the government having to needlessly hold stocks of the commodities for which it religiously announces the MSPs. From this viewpoint, the novel concept of “price deficiency payment”, conceived by the NITI Aayog, merits consideration as it involves compensating producers if prices slide below a pre-specified threshold without any physical intervention in the market.

This apart, well-conceived strategies are imperative to elevate crop yields and promote efficient use of inputs such as seeds, fertilisers, pesticides and water through induction of improved technology. Much of the new technology being churned out by the country’s vast farm research network, counted among the largest in the world, seldom reaches farmers due largely to the collapse of states’ farm extension systems. This is a highly critical, though woefully neglected, aspect that needs immediate attention if the country’s agriculture has to be put on a high-growth trajectory.