Recently announced Agri reforms address some key sore points like Essential Commodities Act (ECA) and Agriculture Produce Marketing Committee (APMC) jurisdiction which are very welcome reforms for improving market access.

 

However, these reforms fall significantly short in addressing what truly ails agriculture in India. Whatever agriculture reforms are rolled out, we must gauge their effectiveness from the viewpoint of small and marginal farmers who constitute 88 per cent of farming community. Let us take a look at this large majority of farmers. These small and marginal farmers own average 0.6 hectare (1.5 acre) farmland. As per NABARD’s Financial Inclusion Survey (NAFIS), average monthly agri income of Indian farmers is Rs 3,140 per household comprising of average 4.9 members per household.

 

Further, 52.5 per cent farmers are in debt. Nearly 60 per cent farmers live in villages that are more than 10 kilometres away from the nearest town.

 

These small and marginal farmers are not growing enough in their small farms to have any kind of bargaining power to negotiate better prices with any buyer, let alone big buyers.

 

These farmers’ life revolves around debt, they need cash as soon as they harvest and that leads them to sell their produce to agents in their village for want of instant cash and because of their inability to deal with logistics of carting their produce even to the nearest mandi let alone to a distant buyer.

 

The ECA and APMC reforms are not addressing any of these problems of small and marginal farmers. Worst, none of these reforms are going to make huge impact on agri income of these farmers. What is ‘potential’ 10/20/50 per cent increase in an average monthly agri income of Rs 3,140 to make a significant impact on the life of these farmers? Even with ‘potentially’ (highly unlikely) 50 per cent increase because of these reforms to an average monthly agri income of Rs 4,710 (for a family of 4.9 members), the agri income will be barely above the poverty line income. The question we must ask the reformers, why are we setting the bar so low?

 

For impactful agri reforms, let us examine the characteristics of our farming community. The farm size is very small with 88 per cent farmers owning less than two hectare farm. Of these, ~70 per cent own less than one-hectare farm and nearly 35 per cent own less than one-acre farm. Supply and demand mismatch is an issue with non-existant national level and state level crop planning, resulting in perennial mismatch of supply and demand that leads to inadequate compensation to the farmers most of the time. Poor bargaining power is another issue.

 

On account of small farm holdings, farmers are unable to negotiate better input costs or output price. Similarly, farmers are unable to access capital for technology and farm solution adoption. Extremely poor technology adoption results in poor productivity.

 

The proposed amendments in ECA and jurisdiction limitation in APMC or private participation in building storage or contract farming regulations do not address any of the above challenges of our agriculture community. There are three major reforms that must be brought or strengthened to benefit the large majority of farmers and specifically small and marginal farmers.

 

Massive build-out of Farmer Producer Organisations (FPOs): ALL the farmers must be organised in FPOs which are full-fledged companies owned exclusively by farmers equitably. Although the reforms talk about formation of 10,000 FPOs (of 1000 farmers each), one, it is too little as it covers only one crore of 14.5 crore farmers, and two, there is no owner of forming FPOs at the state/district/block/village level – and that is the reason why the progress in FPO formation is lackadaisical. We must build a plan (not just targets) to buildout FPOs with clear ownership at each level of the state bureaucracy to cover every farmer in a stipulated period of time. FPOs will provide the platform from which several reforms for the farmers (specifically small and marginal farmers) can be launched effectively. Significant enhancement in collective bargaining power for input cost and produce; access to capital; ability to invest in technology and Agri solutions (including post harvesting solutions like storage); FPO facilitated collective farming; and eventually becoming a value adder/processor that can increase farmer income manifold, are all possible through this platform of FPO. We must replicate Amul model pervasively. We must enable the farmers themselves to become entrepreneurs and processors by facilitating partnerships with India’s corporate.

 

Nationwide Crop Planning: We must fix supply and demand mismatch without which we will not end the misery for the farmers in getting adequate compensation for their produce.

 

 National Crop Planning that considers the demand, environment (suitability of soil, water, climate) to grow a crop, and enables appropriate compensation of the produce should be a top priority. Effective National Crop Planning will fix the problem of over/under produce and will benefit both, the farmers for providing them adequate compensation for the produce, as well as the consumer in providing appropriate cost for the commodity.

 

Pervasive Technology Adoption: Indian farmers’ productivity is among the lowest in the world, primarily on account of abysmally low technology adoption.

 

Their consumption of water (and therefore electricity consumption), fertilisers and pesticides are among the highest in the world. Their post-harvest wastage is among the highest in the world (nearly 30-40 per cent produce is wasted post-harvesting). All these are significant drawbacks which have significant bearing on the earnings of the farmers. All these can be effectively addressed by technology. We must facilitate technology adoption by the farmers on a massive scale to pervasively to reach every farmer. Technologies like Drip Irrigation (enables for 50-60% reduction in consumption of water, fertiliser and pesticides; enables 50-60% increase in yield; enables significantly superior quality produce; enables soil conservation, etc.), Polyhousing (specifically for small farm holdings where even an acre (~4000 sq metres) of Polyhouse can yield Rs 10-20 Lakh revenue per annum), Post harvesting solutions that extend the life of the produce (cold and warm storage; pest resistant packaging; decay resistant coatings, etc.), etc. should be facilitated at a massive scale. For technology adoption, 100% subsidy should be provided, or the FPO should be enabled with a rolling fund to provide interest free loans by the FPO to member farmers for technology adoption, or through a specific Technology Fund (e.g. Drip Irrigation Fund) that facilitates technology adoption.

 

The subsidies that are currently provided are inadequate and make tech adoption out of reach by large majority of farmers. All the three measures will immensely benefit the entire spectrum of farmers – specifically small and marginal farmers. Without these measures, the agri reforms announced will not benefit large majority of farmers and will be reforms that majorly benefit large farmers and big corporate houses.

 

Resourse: The Pioneer