APMC Act is not the main problem:
- The priority post-1991 has been given to industry as well as services.
- Middle-class consumers have been favoured by at the expense of farmers.
- This neglect of agriculture resulted in an equally unprecedented gap between the standard of living in the rural and urban parts of the country.
- As a result, the urban/rural ratio, in terms of monthly per capita expenditures, has jumped from 1.84 to 2.42 between 2012 and 2018.
- This means that an average urban-dweller today can consume almost 2.5 times more than an average person in a village.
Reforms by the government
- Government has decided to liberalise India’s agriculture by amending the APMC Act and the Essential Commodities Act.
- Contract farming will also be introduced in such a way that the buyer can assure a price to the farmer at the time of sowing.
What is APMC?
- Agricultural Produce Market Committee (APMC) is a system operating under the State Government since agricultural marketing is a State subject.
- The APMC has Yards/Mandis in the market area that regulates the notified agricultural produce and livestock.
- The introduction of APMC was to limit the occurrence of Distress Sale by the farmers under the pressure and exploitation of creditors and other intermediaries.
- APMC ensures worthy prices and timely payments to the farmers for their produce.
- APMC is also responsible for the regulation of agricultural trading practices. This results in multiple benefits like:
- Needless intermediaries are eliminated
- Improved market efficiency through a decrease in market charges
- The producer-seller interest is well protected
APMC Act in the context of Shanta Kumar Committee report
- The argument against the APMC Act is that it does not allow the free market to function due to government intervention.
- It denies farmers the opportunity to determine the prices of crops in the marketplace.
- In theory, this is a valid argument.
- But, Shanta Kumar Committee observed in 2015 that only 6 per cent of farmers get the Minimum Support Price (MSP).
- This is because of barriers to access for farmers as only 22 crops are procured under MSP.
- Infrastructure is also inadequate as there are only an estimated 7,000 APMC mandis across India.
- Procurement depends on the stocks required by the state.
Why the APMC Act is not the problem
- Farm Pricing is the problem
- The living costs of farmers was considered while determining agricultural pricing by the Agricultural Prices Commission (APC).
- CACP that replaced the APC in 1985 added a 10 per cent mark-up over the MSP to account for entrepreneurial costs.
- Such practices have been gradually eroded post-1991.
- The problem, therefore, is not state intervention but the way the government deals with agriculture.
- APMC Act helped India build up food stocks
- India managed to weather the 2008 global food crisis only because it had enough food stocks as Indian agriculture was not linked to the international futures market.
- This was possible due to the procurement done through the APMC Act.
- APMC Act reformed already by States
- Since agriculture is a state subject, the Act has been modified in 17 states.
- On the contrary, the condition of peasants has often been affected when the APMC Act has been diluted.
- Bihar is a case in point. The APMC Act was revoked in 2006 with the same rationale that further deregulation will attract private investment in infrastructure.
- Not only has that not materialised, but the existing APMC market infrastructure was also dismantled.
Reforms that Indian Agriculture needs
- Subsidy Reforms
- Indian Agriculture is still too heavily subsidised in favour of the big players.
- In the Union Budget 2019-20, the allocation for the Ministry of Agriculture was Rs 1,30,485 crore and the fertiliser subsidy alone was estimated at Rs 79,996 crore.
- But these subsidies are concentrated on a few crops.
- Agriculture economist Bruno Dorin has shown, only three crops receive more than 60 per cent of the so-called “non-product-specific” support to agriculture rice, wheat and sugarcane.
- This has led to environmental degradation like the depletion of groundwater levels and monocultures which are a threat to biodiversity.
- It has also led to the industrialisation of agriculture, that results in the strengthening of a handful of multinational companies, which supply chemical inputs.
- Liberalisation would only strengthen the role of large companies — including those in the agri-food sector.
Agriculture needs to be ecologically viable
- Structurally, farming needs to be made economically and ecologically viable in India.
- State intervention for better pricing, investments in water harvesting and an agroecological transition could ensure a more resilient system to weather shocks like the current one.
- The government could draw inspiration from the Andhra Pradesh Community Managed Farming model.
- It promotes agroecological principles with the use of locally-produced, ecologically-sustainable inputs focusing on soil health..
- Since the agro-ecological system of farming is more biodiverse in nature, it will make the system more resilient overall.
- It will provide a safety net for farmers in case of crop damage due to various factors such as climate change or droughts.
By investing again in agriculture and following, at last, the recommendations of the M S Swaminathan Committee, the Government of India would also help bridge the drastic