Market Reforms for Agriculture

Prime Minister Narendra Modi described the Union Budget 2018 as farmer-friendly, common man-friendly, business environment-friendly and development-friendly. The major thrust to agriculture and allied activities is the allocation of ₹63,836 crore, which is an increase of more than 12% compared to the 2017 budget allocation. Targeting for institutional credit increased by 10% and is now ₹11 lakh crore. Minimum support price (MSP) is to be fixed at a minimum of 50% higher than the cost of production. The budget also provides for the upgradation of 22,000 rural “haats” into gramin agricultural markets and for linking them to the e-NAM (National Agricultural Market) platform. Besides, it also includes some schemes such as “Operation Green” to promote farm production. The shift in focus from a production-centric approach to a more comprehensive approach, in order to improve input, production, marketing, and value addition of agricultural produce, is a welcome step. However, more needs to be done at the grass roots to ensure that benefits get accrued to the farming community.

Let us focus our attention on some of the market reforms undertaken in the country. The introduction of e-market systems in Agricultural Produce Market Committees (APMCs), is considered a significant step towards market reforms. But, studies have indicated that the three prominent stakeholders associated with market transactions withinAPMC, that is, traders, commission agents and farmers are not reaping the benefits of the new system (Nidhi Aggarwal et al, “The Long Road to Transformation of Agricultural Markets in India: Lessons from Karnataka,”EPW, 14 October 2017). It is a well-established fact that transactions atAPMCs do not take place purely on demand and supply factors of any commodity. Several other social factors also influence the trade. This leads to interlocking of markets which is well-documented in literature. An evaluation study on the efficacy ofMSPs on farmers, undertaken byNITI Aayog in 12 major states of India also emphasised the need to increase awareness among farmers aboutMSP, announceMSP well in advance, and avoid delays inMSP payments. It also highlighted the need to improve facilities at procurement centres, such as drying yards, weighing bridges, and toilets provided to the farmers, along with setting up well-maintained godowns in order to improve storage and reduce waste (Report No 231, Development Monitoring and Evaluation Office,NITI Aayog).