Farm gate in focus 

#GS3 #Economy #GS2 #Governance 

Move to amend the Essential Commodities Act is fraught with risks 

  • The Centre’s objective of using the COVID-19 crisis to usher in an Atmanirbhar Bharat saw Finance Minister focus Friday’s tranche of announcements on farm sector reforms.  
  • The centrepiece was a ₹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.  
  • 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 package, may be more beneficial in the longer term than providing any immediate relief from the lockdown-exacerbated distress in the rural hinterland. 
  • The 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.  
  • 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.  
  • Both the changes, once enacted, could privilege market forces without necessarily safeguarding food security.  
  • Surely, it would be in no one’s interest to throw the baby out with the bathwater. 
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