Farmers Protest: Five measures that may end deadlock over new farm laws | India Business News – Times of India
[ad_1]
The government had passed three agricultural bills in September with the aim to change the way agricultural produce is marketed, sold and stored across the country. The laws will allow farmers to trade freely without any license or stock limit and lead to increase in availability of buyers for the produce, the report states. However, the farmers fear the laws will lead to the end of the Minimum Support Price (MSP) system and want them to be withdrawn.
The SBI Ecowrap report suggests five ways that could end the impasse over the new laws:
1) Provide quantity guarantee instead of price
The report suggests that the government can insert a quantity guarantee clause for a minimum period of 5 years instead of MSP as a price guarantee. This would ensure that procurement to production percentage of crops is at least equal to last years’ percentage except in events like droughts, floods, etc.
“Historical procurement trends indicate that only 25 to 35 per cent of total wheat production has been procured over the years, with largest procurement happening through Punjab and Haryana. While, in case of rice, procurement has been in range of 30 to 40 per cent with significant procurement by Telangana, Punjab, Haryana and Kerala,” the report noted.
In the recent kharif procurement regime, Punjab has witnessed a staggering procurement of 55 per cent even though it ranks third in paddy production. While, procurement from top paddy producing states of West Bengal and Uttar Pradesh has been nil and 8 per cent, respectively.
However, most government procurement centres in Punjab, Haryana and a few other states are located within the notified APMC mandis. Farmers fear that encouraging tax-free private trade outside these mandis will make these markets unviable and thereby lead to reduction in government procurement.
2) Convert MSP into floor price on eNAM
The SBI report further suggested that MSP regime be converted to floor price of auction on National Agriculture Market (eNAM) portal.
eNAM is a pan-India electronic trading portal which networks the existing APMC mandis to create a unified national market for agricultural commodities. These were formed to provide a common online market platform to facilitate trade and provide better price discovery through transparent auction process based on quality of produce.
At present, there are about 1,000 APMC mandis, 1.45 lakh traders and 1.67 crore farmers registered on eNAM.
However, the report admits that converting MSP to a floor price of auction on the eNAM portal will not completely solve the problem as the current data shows that average modal prices in e-NAM mandis is lower than the minimum support price in all commodities except urad.
3) Strengthen APMC market infrastructure
Efforts must also continue to strengthen APMC market infrastructure, the report said. As per estimates, the monetary loss for cereals is almost Rs 27,000 crore due to harvest and post-harvest losses. While the losses for oilseeds and pulses are Rs 10,000 crore and Rs 5,000 crore, respectively.
After production, the produce undergoes multiple rounds of post-harvest operations, handling stages and storage before finally reaching the consumer. Each stage results into some losses which in turn leads to decrease in food availability.
A 2015 report showed that 4.6-6 per cent cereals, 6.4-8.4 per cent pulses, 3.1-10 per cent oilseeds, 6.7-15.9 per cent fruits, and 4.6-12.4 per cent vegetables are lost during harvest, post-harvest operations, handling and storage.
4) Establish contract farming institution
Contract farming involves an agreement between a farmer and a buyer which outline conditions for production, quality or grade of product required, terms and timeline for delivery at a pre-determined price.
Establishing a contract farming institution in India that will give the exclusive right to oversee price discovery will prove beneficial, especially for small and marginal farmers as they often tend to get crowded out from the growth process, the report suggests. It will enable them to deal with large buyers as large firms often attract small growers with favourable conditions and later tightens them.
Contract farming has been instrumental in providing growers access to supply chains with market and price stability, as well as technical assistance. For example, Thailand had the most extensive and widest range of crops by early 1990s. Its market certainty (52 per cent) and price stability (46 per cent) were prime factors due to which farmers participated in contract farming.
5) Need for flexible KCC norms
The Kisan Credit Card (KCC) scheme was introduced in 1998 by the Reserve Bank of India (RBI) for issue of KCC to farmers on the basis of their holdings for uniform adoption by the banks.
The KCC enables farmers to obtain short term loans at an interest rate of 4 per cent. On timely payment of the loan, the limit can be extended up to an amount of Rs 3 lakh. The card holder also get the facility of insurance which can provide protection to the notified crops.
As of March, about Rs 7,09,500 crore KCC loans were given to 6.7 crore active KCC card users, which constitute about 40 per cent of the total agricultural loans given by them. During February-April, banks received 75 lakh KCC applications out of which 36 lakh have been issued.
However, the KCC portfolio of banks has come under increasing stress due to a variety of factors like crop losses, unremunerated prices, debt waivers and the rigidity of the KCC product. Therefore, SBI Ecowrap suggests that RBI, in conjunction with the government, must introduce an operational flexibility in the structure and direct the banks to allocate a specific percentage of their loans to particularly agri start-ups to give a boost to agri supply chains in India.
As per the model calculations, the SBI believes that income of farmers will rise by a sharp 35 per cent by revisiting the current scheme.
[ad_2]
Source link
