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DAILY NEWS ANALYSIS

  • 18 May, 2020

  • 8 Min Read

Farm gate in focus: On amending Essential Commodities Act

Farm gate in focus: On amending Essential Commodities Act

Introduction

1-lakh crore fund to finance agriculture infrastructure projects at the farm gate and produce aggregation points. Given that the lack of adequate cold-storage facilities continues to extract a high price on farmers and the agrarian economy by way of post-harvest losses, especially in perishables, the targeted outlay is a welcome step.

Agriculture Infrastructure Funds

  • The decision to channel the funds to agricultural cooperatives, farmer producer organisations, rural entrepreneurs and start-ups is also encouraging as it lays the onus of creating the appropriate infrastructure or logistics solution largely on the principal beneficiaries, the farmers themselves.
  • The Minister also unveiled a ?10,000 crore scheme to promote the formalisation of micro food enterprises.
  • Suggesting a cluster approach focused in different regions to assist unorganised enterprises in scaling up food safety standards to earn the products certification and build brand value.

Agriculture reforms

  • Crucially, the Minister also announced three reform proposals that are ostensibly aimed at enabling better price realisation for farmers by removing restrictions and facilitating enhanced marketing freedom.
  • These include amendments to the 1955-vintage Essential Commodities Act that would effectively hollow out the legislation by deregulating cereals, pulses, oilseeds, edible oils, onions and potato.
  • While the Economic Survey, in January, had recommended jettisoning the “anachronistic” Act, the law has nonetheless remained a vital tool in the government’s armoury for protecting consumers from irrational volatility in the prices of essentials by tamping down on black marketeers and hoarders.
  • While the Act’s provisions do have scope for an overzealous bureaucracy to harass even an honest exporter, who may have paid a fair price to the farmer and stocked produce for shipment overseas, total deregulation for foodgrains is fraught with the risk of future inflationary food price spikes.
  • The other two proposals are also of concern. While one seeks to bypass the APMC regime through a central law that would allow farmers the freedom to sell across State borders, the other proposes a framework for farmers to enter into pre-sowing contracts that would purportedly help assure them of offtake volumes and prices.

Source: TH


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