Big-bang reforms: FM opens up farm sector

In the second tranche of announcements about the Rs 20-lakh crore economic package, Finance Minister Nirmala Sitharaman today revealed a roadmap for major reforms in the agriculture and allied sectors. The government will amend the Essential Commodities Act and enact a Central law “adequate choices to [the] farmer to sell produce at attractive price,” she said. She also announced an Agri Infrastructure Fund of Rs 100,000 crore.

Votaries of liberalization have been demanding legislative changes to free agriculturists from the controls pertaining to stocking and marketing. The EC Act, 1955, was enacted in days of scarcity, the Finance Minister said, adding that today there is need to enable better price realization for farmers by attracting investments and making agriculture sector competitive.

The amendment will deregulate agriculture food stuffs, including cereals, edible oils, oilseeds, pulses, onions, and potato. Now, the stock limits could only be imposed under very exceptional circumstances like national calamities and famine with surge in prices.

No such stock limit shall apply to processors or value chain participant, subject to their installed capacity or to any exporter subject to the export demand.

Sitharaman also announced agriculture marketing reforms to provide marketing choices to farmers. At present, farmers bound to sell agriculture produce only to the licensees in Agricultural Produce Market Committees (APMCs). Such restriction of sale is not there for any industrial produce.

This causes hindrances in free flow of agricultural produce and fragmentation of markets and supply chain. This also results in lower price realization for farmers, she said. A Central law will be formulated to: provide adequate choices to farmer to sell produce at attractive price; barrier free inter-state trade; and a framework for e-trading of agriculture produce.

The Agri Infrastructure Fund will be provided for funding agriculture infrastructure projects at farm-gate and aggregation points—primary agricultural cooperative societies, farmers producer organizations, agriculture entrepreneurs, startups, etc. The fund will be created immediately, she said.

The Finance Minister also announced a Rs 10,000-crore scheme for the formalization of micro food enterprises (MFE). Unorganized MFEs units need technical upgrade to attain FSSAI food standards, build brands, and market their products. The scheme will be launched to help 2 lakh MFEs attain these goals.

It will have a cluster-based approach—e.g., mango in UP, Kesar in J&K, bamboo shoots in the North-East, chilli in Andhra Pradesh, and tapioca in Tamil Nadu.

The expected outcomes are improved health and safety standards, integration with retail markets, and higher incomes, she said. This “will also help in reaching untapped export markets in view of improved health consciousness.”

The Finance Minister also announced Rs 20,000-crore for fishermen through the Pradhan Mantri Matsya Sampada Yojana, the Rs 13,343-crore National Animal Disease Control Programme, and the Rs 15,000-crore Animal Husbandry Infrastructure Development Fund.

For herbal cultivation provision has been made for Rs 4,000 crore and beekeeping, Rs 5,00 crore.

There is another provision of Rs 500 crore to mend the supply chains..