Farming: As a market-based enterprise

 

Relevancy:

  • GS Mains paper II, III
  • Agriculture, problems of farming, farmer distress, market-based solutions to farming

Recently:

  • Farmers in Maharashtra and Gujarat held peaceful protests on the anniversary of Gandhi ji’s Dandi March of 1930.

These protests were different from past farmer agitations:

  • The protests were mostly silent and disciplined, mostly leaderless, non-disruptive and non-violent, and well organised.
  • It received the sympathy of middle class city dwellers, food and water from bystanders, free medical services from volunteer doctors, and also bandwagon support of all political parties from the left to the right.
  • The State government agreed to all the demands, including pending transfer of forest land to Adivasis, expanding the scope of the loan waiver and ensuring higher prices for farm produce.
  • Farmers’ protests are not new. There have been many recommendations by various committees in the past, but they have not been implemented.
  • Take the case of M.S. Swaminathan report, which is over 10 years old. And several of its recommendations have not been implemented.

What should be done?

  • Seek solution outside farming sector:
    • Productivity in agriculture sector is very low in India. This reflects disguised unemployment.
    • This is because of lack of opportunities in industrial sector.
    • Employment in industry should be pushed and ease of doing business should be improved.
  • Treat farming as a business:
    • There needs to be a direct link between the Farmer and the Buyer.
    • The monopoly procurement regime and the APMC (Agriculture Produce Market Committees) need a revival.
    • Contract farming should be encouraged.
    • Credit access should be increased.
    • Foreign Direct Investment (FDI) in the entire ‘Farm to Fork’ chain is very restricted. This needs to be liberalized.
    • Land leasing laws also need revisions. Focus should be more on land consolidation and crop diversification.
  • Loan waivers are a bad idea:
    • Loan waivers become imperative, more for moral and ethical reasons, than economic.
    • Loan waivers punish those who worked hard and repaid, and the cash anyway goes to banks, not to farmers.
    • Banks don’t issue fresh loans out of their own risk aversion.
    • Hence, loan waivers are a bad economic idea but often a political compulsion.
  • MSP discourages crop diversification:
    • The farmers are rewarded with 50% more minimum support price (MSP), no matter what the cost.
    • This paradigm of cost plus pricing is bad economics.
    • Sugarcane grows cheaper in Uttar Pradesh in the Gangetic plains than in drought-prone Maharashtra.
    • But with an assured cost plus MSP, there is little incentive to diversify crops to suit weather and cost conditions.
  • Some positive steps taken by the government recently:
    • Neem-coated fertilizer has reduced leakage, and direct benefit transfer to the farmer-buyer will reduce subsidy further.
    • Soil cards ensure appropriate matching of inputs to soil conditions.
    • Giving tax holiday to the farmer producer companies is also the right fiscal incentive.
    • The government’s aim to double farm income in the next four years is a near impossible feat, but signals the right intention.

Conclusion:

  • The big agenda is to unshackle agriculture to make it a truly commercial market-based enterprise;
  • to create opportunities outside farming for large scale exit of the workforce;
  • to connect farmers to the value chain of farm to fork, including agribusiness;
  • to remove restrictions on movement and exports of farm produce and let them tap into international market, to also allow easier land transfers including leasing;
  • to encourage crop diversification and land consolidation that reverses fragmentation.

 

Source: The Hindu

 

Q. The solution to the problem of farmers’ distress lies outside the farming sector. Analyse.

 

Farming: As a market-based enterprise Farming: As a market-based enterprise Farming: As a market-based enterprise Farming: As a market-based enterprise Farming: As a market-based enterprise

 Farming: As a market-based enterprise Farming: As a market-based enterprise Farming: As a market-based enterprise Farming: As a market-based enterprise Farming: As a market-based enterprise

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