SBI Ecowrap report- Highlights

November 23, 2021

The Economic Research Department of State Bank of India (SBI) released its research report called SBI Ecowrap, proposing 5 significant agricultural reforms.

Highlights

SBI published its report in the backdrop of withdrawal of three agricultural laws.

What are the proposed reforms?

SBI has proposed following 5 agricultural reforms:

  1. Quantity Guarantee Clause: Instead of Minimum Support Price (MSP) as a price guarantee that farmers are demanding, government can ensure a “quantity guarantee clause” for a period of 5 years. This clause will make “procurement to production percentage of crops (which is being currently procured) being equal to last year percentage”, mandatory, along with safeguards in exceptional events such as floods, droughts etc.
  2. Floor Price Auction: Convert MSP to Floor Price of Auction on National Agriculture Market (eNAM). Though, this will not solve the problem completely because current data shows that average modal prices in e-NAM mandis are lesser than the MSP in all Kharif commodities.
  3. APMC infrastructure: Government must work for strengthening APMC market infrastructure, to reduce the monetary loss. As per SBI’s estimates based on a government report, monetary loss for cereals is around Rs 27,000 crore because of harvest and post-harvest losses.
  4. Contract Farming Institution: SBI proposes to establish Contract Farming Institution in India. The institution will have exclusive right to look after price discovery in Contract Farming. Contract farming has been instrumental across several countries by giving growers access to supply chains with market & price stability and technical assistance. For instance, in Thailand, market certainty (52%) and price stability (46%) were the factors due to which farmers involved in contract farming.
  5. Symmetric Procurement: SBI proposes to ensure a symmetric procurement in states. Procurement of cereals has been asymmetric, with top paddy producing states like West Bengal (First) and Uttar Pradesh (Second) have been witnessing minimal procurement.
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