Union Cabinet nod for agricultural marketing reforms

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The Union Cabinet has approved an amendment to the 65-year-old Essential Commodities Act, removing cereals, pulses, oilseeds, edible oils, onion and potatoes from the list of essential commodities. The amendment will be made effective immediately via an ordinance, according to the Agriculture Ministry.

At its meeting on Wednesday, the Cabinet also approved ordinances to remove restrictions on farmers selling their produce outside notified market yards, as well as to facilitate contract farming and allow farmers to engage in direct marketing, according to an official statement.

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All these measures were promised in the Aatmanirbhar package announced by Finance Minister Nirmala Sitharaman last month.

Foreign investment

The amendment to the ECA, which has been under discussion for more than a decade, will deregulate the production, storage, movement and distribution of these food commodities. By removing the private sector’s fears of “excessive regulatory interference,” the Centre hopes to increase private and foreign investment, especially in cold storage facilities and the modernisation of the food supply chain, said the statement. Adequate processing and storage facilities will reduce wastage and increase income for farmers of perishable commodities.

To protect consumers, the amendment allows regulation during war, famine, extraordinary price rise and natural calamity, while providing exemptions for exporters and processors at such times as well.

The Farming Produce Trade and Commerce (Promotion and Facilitation) Ordinance, 2020 aims to open up agricultural marketing outside notified mandis for farmers, and also remove barriers to inter-State trade. While both agriculture and markets are State subjects, the Centre is counting on the fact that trade and commerce in foodstuffs is part of the concurrent list to push through its ordinance.

“We are not touching markets. We are simply saying that the full country outside the physically demarcated premises of mandis run by APMC committees should be open to a farmer to sell his produce to anyone with a PAN card,” said Agriculture Secretary Sanjay Agarwal. “Why is the farmer, who is the producer, restricted from selling his own produce? Those who buy from the farmer are unlimited in their further marketing or export, but the farmer is being curbed. By allowing the farmer more choices, it will raise his income and also reduce wastage and improve quality,” he added.

Unregulated sales

In fact, industry sources suggest that 60% of agricultural trade already takes place outside the mandis through unregulated sales. By legalising and facilitating such sales, the Centre hopes that farmers will benefit, rather than middlemen.

Not all States have been on board with these reforms, especially as State governments will not be allowed to levy fees on these sales.

The Farmers (Empowerment and Protection) Agreement on Price Assurance and Farm Services Ordinance, 2020 is aimed at facilitating contract farming, where a private buyer contracts to purchase a crop at a certain price at the beginning of a season, transferring the risk of market unpredictability from the farmer to the corporate sponsor. However, farmers groups have expressed concern that corporates will benefit more than small farmers from such direct marketing measures, and wish to see the specific provisions of the ordinance before welcoming it.

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Printable version | Sep 26, 2021 4:32:55 PM |

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