Prime Minister had set a goal of doubling the farmer’s income by 2022 in 2015. This required an income growth of 10.4 per cent per annum. But the farmer’s income growth in the last three years was around 3.5 per cent. To accomplish the agenda of doubling the farmer’s income it now requires increasing the farmers’ real incomes by 13 to 15 per cent per annum. One of the key components in accomplishing this mammoth task is to reform the agricultural produce marketing system.
Steps to accomplish the agenda
- Ensuring the effective implementation of Model Agricultural Produce and Livestock Marketing Act 2017.
- Building competitive and inclusive value chains for agricultural products, on the lines of AMUL’s model for milk.
- Setting up of an Agri-marketing Reforms Council (AMRC), on the lines of the GST Council, to carry out agri-marketing reforms in states in a synchronised manner.
- AMRC must be tasked to review and prune the Essential Commodities Act of 1955, revamp the livestock marketing and the warehouse receipt systems and revitalise the agri-futures markets.
- The higher minimum support prices (MSPs) based on cost A2+FL as announced for 23 commodities, has serious limitations because it disrupts the open market dynamics. This is unsustainable. Hence India can look at the Chinese Model to ensure the twin goal of income to farmers and non-disruption of market forces.
Chinese Model
After the economic slowdown and recession in 2008, China had increased the MSPs of key commodities such as rice, wheat, corn and cotton significantly. As result stocks of grain with the government touched almost 300 million tonnes, leading to massive inefficiency.
China set out a reform agenda. China withdrew the MSP support for corn, then the cotton procurement was reduced and the MSP for wheat has been reduced in a phased manner. To protect the farmer’s interests China moved from price support operations to direct income support on a per acre basis.
Even India is at a similar juncture the Chinese model can aid India in achieving the twin objectives of doubling of farmers income and driving out the inefficiencies in the agricultural procurement.