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Subject: Agriculture

  • Understanding the opposition of farmers to agriculture Bills

    The article analyses the issue of farmers opposition to the three agricultural bills.

    Context

    • Farmers have been protesting against the three bills related to agriculture.
    • These three Bills are-
    • 1) The Farmers’ Produce Trade and Commerce (Promotion and Facilitation) Bill, 2020
    • 2) The Farmers (Empowerment and Protection) Agreement of Price Assurance and Farm Services Bill, 2020.
    • 3) The Essential Commodities (Amendment) Bill, 2020.

    What are the aims of the bills?

    • The Bills aim to do away with government interference in agricultural trade by creating trading areas outside the structure of Agricultural Produce Market Committees (APMCs).
    • One of the bills aims at removing restrictions of private stockholding (under Essential Commodities Act 1955) of agricultural produce.
    • One of the bills deals with the regulation of contract farming.

    Issues with the Bills

    • The government has failed to hold any discussion with the various stakeholders including farmers and middlemen.
    • The attempt to pass the Bills without proper consultation adds to the mistrust among various stakeholders including State governments.
    • Farmer organisations see these Bills as an attempt to weaken the APMCs and eventual withdrawal of the Minimum Support Prices (MSP).
    • Farmers in Punjab and Haryana have genuine concern about the continuance of the MSP-based public procurement given the large-scale procurement operations in these States.

    Understanding the role of APMC

    • APMCs do play an important role of price discovery essential for agricultural trade and production choices.
    • The middlemen are a part of the larger ecosystem of agricultural trade, with deep links between farmers and traders.
    • The preference for corporate interests at the cost of farmers’ interests and a lack of regulation in these non-APMC mandis are cause for concern.
    • To understand the role of APMC, consider the example of Bihar.
    • After Bihar abolished APMCs in 2006, farmers in Bihar on average received lower prices compared to the MSP for most crops.
    • Despite the shortcomings and regional variations, farmers still see the APMC mandis as essential to ensuring the survival of MSP regime.

    Conclusion

    The protests by farmers are essentially a reflection of the mistrust between farmers and the stated objective of these reforms.

  • Agricultural reform bills introduced in Parliament

    Farmers in Punjab and Haryana have been protesting against three ordinances promulgated by the Centre back in June this year.  After the Monsoon Session of Parliament began this week, the government has introduced three Bills to replace these ordinances.

    Try this PYQ:

    The economic cost of food grains to the Food Corporation of India is Minimum Support Price and bonus (if any) paid to the farmers plus:

    (a) Transportation cost only

    (b) Interest cost only

    (c) Procurement incidentals and distribution cost

    (d) Procurement incidentals and charges for godowns

    What are these ordinances?

    The ordinances included:

    • The Farmers Produce Trade and Commerce (Promotion and Facilitation) Ordinance, 2020;
    • The Farmers (Empowerment and Protection) Agreement on Price Assurance and Farm Services Ordinance, 2020; and
    • The Essential Commodities (Amendment) Ordinance, 2020 (It is the Bill replacing the third that has been passed in Lok Sabha)

    The cause of discontent

    • While farmers are protesting against all three ordinances, their objections are mostly against the provisions of the first.
    • Their concerns are mainly about sections relating to “trade area”, “trader”, “dispute resolution” and “market fee” in the first ordinance.

    What is a ‘trade area’, as mentioned in the Bill?

    • Section 2(m) of The Farmers Produce Trade and Commerce (Promotion and Facilitation) Ordinance, 2020 defines “trade area” as any area or location, place of production, collection and aggregation.
    • It includes (a) farm gates; (b) factory premises; (c) warehouses; (d) silos; (e) cold storages; or (f) any other structures or places, from where the trade of farmers’ produce may be undertaken in the territory of India.
    • In effect, existing mandis established under APMC Acts have been excluded from the definition of trade area under the new legislation.
    • The government says the creation of an additional trade area outside of mandis will provide farmers with the freedom of choice to conduct trade in their produce.

    Why are farmers protesting?

    • The protesters say this provision will confine APMC mandis to their physical boundaries and give a free hand to big corporate buyers.
    • The APMC mandi system has developed very well as every mandi caters to 200-300 villages.
    • But the new ordinance has confined the mandis to their physical boundaries.

    What is ‘trader’ and how is it linked to the protests?

    • Section 2(n) of the first ordinance defines a “trader” as “a person who buys farmers’ produce by way of inter-State trade or intra-State trade or a combination thereof.
    • Thus, it includes processor, exporter, wholesaler, miller, and retailer.
    • According to the Ministry of the Agriculture and Farmers’ Welfare, “Any trader with a PAN card can buy the farmers’ produce in the trade area.”
    • In the present mandi system, arhatiyas (commission agents) have to get a licence to trade in a mandi.
    • The protesters say arhatiyas have credibility as their financial status is verified during the licence approval process.

    Why does the provision on ‘market fee’ worry protesters?

    • Section 6 states that no market fee or cess or levy, by whatever name called, under any State APMC Act or any other State law, shall be levied in a trade area.
    • Government officials say this provision will reduce the cost of the transaction and will benefit both the farmers and the traders.
    • Under the existing system, such charges in states like Punjab come to around 8.5% — a market fee of 3%, a rural development charge of 3% and the arhatiya’s commission of about 2.5%.
    • By removing the fee on trade, the government is indirectly incentivizing big corporates.

  • Redefining a farmer

    The article analyses the issues of multiple definitions of a farmer. The issues of ownership as a criterion for being a farmer and its impact on tenant farmers in discussed.

    Is land ownership right criterion

    • Traditionally, land ownership is a mandatory criterion for availing benefits under various agricultural schemes in India.
    • Laws governing land leasing operate at different levels across India.
    • The Model Agricultural Land Leasing Act, 2016 was introduced to formalise land leasing.
    • However, except a few States, a majority of State governments have not extended the scope of the Act to farmers.
    • According to the 2015-16 agricultural census, about 2.65 million operational holdings are either partially or wholly leased.

    How this impact tenants

    • The impact of agrarian distress is felt disproportionately by tenant farmers.
    • The tenant farmer incurs the costs and faces the risks, while the owner receives the rent, subsidies and other support.
    • The lessees do not benefit from loan waivers, moratorium and institutional credit, and are forced to be at the mercy of moneylenders.
    • The distress is reflected in the fact that tenant farmers account for a majority of farmer suicides reported in the NCRB data.

    Multiple definitions of farmers

    • There are multiple definitions for a ‘farmer’ in official data published by the Government of India.
    • The population census defines ‘cultivators’ as a person engaged in cultivation of land either ‘owned’ or held in kind or share.
    • The 59th round of the Situation Assessment Survey (SAS) of farmers also stresses on ‘possession of land’ either owned or leased or otherwise possessed for defining ‘farmers’.
    • Delinking of land as the defining criterion for a ‘farmer’ was done in the 70th round of SAS carried out by the NSSO.
    • The 70th Round of NSSO refined the definition of a farmer as one who earns a major part of the income from farming. 

    Conclusion

    Access to land as a policy instrument in bringing about equitable growth of rural economies needs no further emphasis. However, until the time ‘land to the tiller’ remains just wishful thinking, adopting a broader definition of a ‘farmer’ is a short-term solution to ensure inclusive and sustainable growth.

  • Pradhan Mantri Matsya Sampada Yojana

    PM will digitally launch the PM Matsya Sampada Yojana (PMMSY) today.

    PM Matsya Sampada Yojana

    • The PMMSY aims to bring about the Blue Revolution through sustainable and responsible development of the fisheries sector in India.
    • It has an estimated investment of Rs. 20,050 crores for its implementation during a period of 5 years from FY 2020-21 to FY 2024-25 in all States/UTs, as a part of AatmaNirbhar Bharat Package.
    • PMMSY aims at enhancing fish production by an additional 70 lakh tonne by 2024-25, increasing fisheries export earnings to Rs.1,00,000 crore by 2024-25.
    • Thus it aims doubling of incomes of fishers and fish farmers, reducing post-harvest losses from 20-25% to about 10% and generation of gainful employment opportunities in the sector.

    Aims and objectives of PMMSY

    • Harnessing of fisheries potential in a sustainable, responsible, inclusive and equitable manner
    • Enhancing of fish production and productivity through expansion, intensification, diversification and productive utilization of land and water
    • Modernizing and strengthening of the value chain – post-harvest management and quality improvement
    • Doubling fishers and fish farmers incomes and generation of employment
    • Enhancing contribution to Agriculture GVA and exports
    • Social, physical and economic security for fishers and fish farmers
    • Robust fisheries management and regulatory framework

    Implementation strategy

    The PMMSY will be implemented as an umbrella scheme with two separate components namely:

    (a) Central Sector Scheme and

    (b) Centrally Sponsored Scheme

    • Majority of the activities under the Scheme would be implemented with the active participation of States/UTs.
    • A well-structured implementation framework would be established for the effective planning and implementation of PMMSY.
    • For optimal outcomes, ‘Cluster or area-based approach’ would be followed with requisite forward and backward linkages and end to end solutions.

    Other inaugurations: e-Gopala App

    • e-Gopala App is a comprehensive breed improvement marketplace and information portal for direct use of farmers.
    • At present no digital platform is available in the country for farmers managing livestock including buying and selling of disease-free germplasm in all forms (semen, embryos, etc); availability of quality breeding services and guiding farmers for animal nutrition etc.
    • There is no mechanism to send alerts (on the due date for vaccination, pregnancy diagnosis, calving etc) and inform farmers about various government schemes and campaigns in the area.
    • The e-Gopala App will provide solutions to farmers on all these aspects.

  • Making agricultural reforms successful

    The article analyses the issues with the reforms in the agricultural marketing policies.

    Recent reforms in agricultural marketing

    • The 3 recent reforms in agricultural marketing bring major changes in policy.
    • The removal of restrictions under the Essential Commodities Act (ECA) should help attract private investment in agriculture.
    • The two new ordinances are expected to enable inter-State trade and promote contract farming, thereby providing a large number of options to farmers.

    Concerns that need to be addressed

    1) Policy credibility problem

    • The first problem is ‘time-inconsistency’ problem or the policy credibility problem.
    • This situation arises when a decision maker’s preferences change over time in such a way that the preferences are inconsistent at different points in time.
    • Because the policy signals are not very clear in the last few years as relates to agricultural marketing, as we will see below.
    • This clarity of clear signal is reflected in rollout of multiple schemes: e-NAM, PM-AASHA, PM-KISAN.
    • In 2016, the electronic national agricultural market (e-NAM) was launched with a lot of fanfare.
    • States needed to amend their respective Agricultural Produce Market Committee (APMC) Acts.
    • Several States could not or did not carry out these amendments and the e-NAM proved to be far less effective than desired.
    • As a result, the government reverted back to public price support by launching an ambitious programme, PM-AASHA, in September 2018.
    • The programme was confined to pulses and oilseeds to limit the fiscal costs.
    • However, the initial budgetary outlay did not match the level of ambition of the programme.
    • In addition to the PM-AASHA programme, two Model Acts were formulated by the Central government in 2017 and 2018 to promote agricultural marketing and contract farming in States.
    • States were required to legislate these Model Acts.
    • However, progress has been tardy and many States have not adopted the Model Acts.
    • This uninspiring performance of PM-AASHA necessitated a more radical and direct approach.
    • Thus evolved the PM-KISAN, a direct cash transfer programme, in the interim Budget of 2019-2020 (February 2019).
    • This programme involved a fixed payment of ₹6,000 per annum to each farm household with a budgetary outlay of ₹75,000 crore.
    • The frequent flip-flops in farm policy — from a market-based e-NAM to a public funded PM-AASHA and now back to market-based measures — may not inspire much confidence in the minds of private investors about the continuance of the present policies.

    2) Centre-State and State-State relations

    • Recent Ordinances were passed by the Central Government using the constitutional provisions but the implementation of the same vests with the States.
    • Also, inter-State trade involves movement of goods across the State boundaries.
    • Thus, coordination between the Central and the State governments, and also among various States becomes crucial.
    • Also, the States must have faced several problems in legislating and implementing the earlier Model Acts.
    • Thus, the Centre must engage with the States about these constraints in order to iron out the potential problems in the implementation of the ordinances.

    3) Multiple market failures and the resultant inter-linkage of rural markets

    • Absence or failure of credit and insurance markets may lead a farmer to depend upon the local input dealer.
    • This, in turn, may tie him to these intermediaries and constrain his choice of output markets.
    • Similarly, the widespread restrictions on land leasing in many States lead to an inefficient scale of production.
    • Thus, reforms in the output market alone are not sufficient.
    • Reforms in output must be supplemented and complemented with the liberalisation of the lease market and better access to credit and insurance markets.

    Consider the question “What are the reform measures taken by the government to deal with the issues in the agricultural marketing by farmers? What are the concerns with such measures?”

    Conclusion

    In conclusion, consistency in policy, collaborative approach and complementary reforms are necessary for the success of the recent agricultural market reforms.

    Back2Basics: Agricultural reform

    Read in detail about the 3 reforms form here-

    Agri reforms and way forward

  • Correcting the agri market

    The article analyses the highlights the importance of post harvest infrastructure for the better price realisation of agri-commodities. It also suggests the two areal which could help the farmers in this regard.

    Purpose of Agriculture Infrastructure Fund

    • Creating post-harvest physical infrastructure is as important as the changes in the legal framework (like the recent ordinances).
    • The recently announced Rs 1 lakh crore Agriculture Infrastructure Fund (AIF) will be used over the next four years.
    • This fund will be used to build post-harvest storage and processing facilities.
    • NABARD will steer this initiative in association with the Ministry of Agriculture and Farmers Welfare, largely anchored at FPOs.
    • The creation of the AIF presumes that there is already large demand for storage facilities and other post harvest infrastructure.

     Reforms in 2 areas which could help farmers get better price realisation

    1) Negotiable warehouse receipt

    • More and better storage facilities can help farmers avoid distress sellingimmediately after the harvest.
    • But small farmers cannot hold stocks for long as they have urgent cash needs to meet family expenditures.
    • Therefore, the value of the storage facilities at the FPO level could be enhanced by a negotiable warehouse receipt system.
    • FPOs can give an advance to farmers, say 75-80 per cent of the value of their produce at the current market price.

    How NABARD can play an important role

    • Since NABARD is also responsible for the creation of 10,000 more FPOs, it can create a package that will help these outfits realise better prices
    • FPOs will need large working capital to give advances to farmers against their produce as collateral.
    • NABARD can ensure that FPOs get their working capital at interest rates of 4 to 7 per cent.
    • Currently, most FPOs get capital from microfinance institutions at rates ranging from 18-22 per cent per annum which is not economically viable unless the off-season prices are substantially higher than the prices at harvest time.

    2)Improving Agri-futures markets

    • A vibrant futures market is a standard way of reducing risks in a market economy.
    • Several countries — be it China or the US — have agri-futures markets that are multiple times the size of those in India.

    Way forward

    • 1) NABARD  should devise a compulsory module that trains FPOs to use the negotiable warehouse receipt system and navigate the realm of agri-futures to hedge their market risks.
    • 2) Government agencies dealing in commodity markets — the FCI, NAFED, State Trading Corporation (STC) — should increase their participation in agri-futures.
    • That is how China deepened its agri-futures markets.
    • 3) The banks that give loans to FPOs and traders should also participate in commodity futures as “re-insurers” for the healthy growth of agri-markets.
    • 4)  Government policy has to be more stable and market friendly.
    • In the past, it has been too restrictive and unpredictable.

    Consider the question “Creating post-harvest physical infrastructure is as important as the changes in the legal framework. In light of this, highlight the importance of recently announced Agriculture Infrastructure Fund and suggest the measures to increase the price realisation of agri-products by farmers.” 

    Conclusion

    India needs to not only spatially integrate its agri-markets (one nation, one market) but also integrate them temporally — spot and futures markets have to converge. Only then will Indian farmers realise the best price for their produce and hedge market risks.

  • Agriculture Infrastructure Fund (AIF) Scheme

    PM has launched a new financing scheme under the ₹1 lakh crore AIF.

    Note the following things about AIF:

    1) It is a Central Sector Scheme

    2) Duration of the scheme

    3)Target beneficiaries

    Agriculture Infrastructure Fund (AIF)

    • It is a Central Sector Scheme meant for setting up storage and processing facilities, which will help farmers, get higher prices for their crops.
    • It will support farmers, PACS, FPOs, Agri-entrepreneurs, etc. in building community farming assets and post-harvest agriculture infrastructure.
    • These assets will enable farmers to get greater value for their produce as they will be able to store and sell at higher prices, reduce wastage and increase processing and value addition.

    What exactly is the AIF?

    • The AIF is a medium – long term debt financing facility for investment in viable projects for post-harvest management infrastructure and community farming assets through interest subvention and credit guarantee.
    • The duration of the scheme shall be from FY2020 to FY2029 (10 years).
    • Under the scheme, Rs. 1 Lakh Crore will be provided by banks and financial institutions as loans with interest subvention of 3% per annum.
    • It will provide credit guarantee coverage under Credit Guarantee Fund Trust for Micro and Small Enterprises (CGTMSE) for loans up to Rs. 2 Crore.

    Target beneficiaries

    The beneficiaries will include farmers:

    • PACS, Marketing Cooperative Societies, FPOs, SHGs, Joint Liability Groups (JLG), Multipurpose Cooperative Societies, Agri-entrepreneurs, Startups, and Central/State agency or Local Body sponsored Public-Private Partnership Projects

  • [pib] First “Kisan Rail” flagged off

    Indian Railways introduced the first “Kisan Rail” from Devlali (Maharashtra) to Danapur (Bihar).

    Try this question for mains:

    Q.Discuss the role of agricultural marketing and logistics for doubling farmer’s income by 2022.

    Kisan Rail

    • From Maharashtra’s Devlali to Bihar’s Danapur, the train will cover the journey of 1,519 kilometres in over 31 hours.
    • It will take stops at Nasik Road, Manmad, Jalgaon, Bhusaval, Burhanpur, Khandwa, Itarsi, Jabalpur, Satna, Katni, Manikpur, Prayagraj Chheoki, Pt. Deendayal Upadhyay Nagar and Buxar.
    • This train will help in bringing perishable agricultural products like vegetables, fruits to the market in a short period of time.
    • The train with frozen containers is expected to build a seamless national cold supply chain for perishables, inclusive of fish, meat and milk.
    • It is a step towards realizing the goal of doubling farmers’ incomes by 2022.

    Other facts

    • Indian Railways have earlier run single commodity special trains like Banana Specials etc.
    • But this will be the first-ever multi-commodity trains and will carry fruits like Pomegranate, Banana, Grapes etc and vegetables like Capsicum, Cauliflower, Drumsticks, Cabbage, Onion, Chilies etc.

  • [pib] 15th Finance Commission submits report on Agricultural Exports

    The High-Level Group on Agricultural Exports set up by the Fifteenth Finance Commission has submitted its report to the Commission.

    Try this PYQ from CSP 2019

    Q.In India, which of the following reviews the independent regulators in sectors like telecommunications, insurance, electricity, etc.?

    1. Ad Hoc Committees set up by the Parliament
    2. Parliamentary Department Related Standing Committees
    3. Finance Commission
    4. Financial Sector Legislative Reforms Commission
    5. NITI Aayog

    Select the correct answer using the code given below.

    (a) 1 and 2

    (b) 1, 3 and 4

    (c) 3, 4 and 5

    (d) 2 and 5

    Why focus on Agri-exports?

    • India’s agricultural export has the potential to grow from USD 40 billion to USD 70 billion in a few years.
    • The estimated investment in agricultural export could be in the tune to USD 8-10 billion across inputs, infrastructure, and processing and demand enablers.
    • Additional exports are likely to create an estimated 7-10 million jobs.
    • It will lead to higher farm productivity and farmer income.

    Highlights of the report

    (A) The HLEG has made its recommendations, major among which are:

    • Focus on 22 crop value chains – demand-driven approach.
    • Solve Value Chain Clusters (VCC) holistically with a focus on value addition.
    • Create a State-led export plan with participation from stakeholders.
    • Private Sector should play an anchor role.
    • The centre should be an enabler.
    • The robust institutional mechanism to fund and support implementation.

    (B) State-led Agri Exports

    The Group has recommended a State-led Export Plan –  a business plan for a crop value chain cluster. It will lay out the opportunity, initiatives and investment required to meet the desired value chain export aspiration.

    The Group has also said that for its success, the following factors needed to be considered:-

    • Plans should be collaboratively prepared with private sector players and Commodity Boards.
    • Leveraging of state plan guide and value chain deep dives.
    • The private sector should play an anchor role in driving outcomes and execution.
    • The centre should enable state-led plans.
    • Institutional governance should be promoted across the state and centre.
    • Funding through the convergence of existing schemes, Finance Commission allocation and private sector investment.

    Back2Basics: Finance Commission (FC)

    • The FC is a constitutionally mandated body that decides, among other things, the sharing of taxes between the Centre and the states.
    • Article 280 (1) requires the President to constitute, “within two years from the commencement of this Constitution.
    • And thereafter constitute FC at the expiration of every fifth year or at such earlier time as the President considers necessary.
    • An FC “which shall consist of a Chairman and four other members”.

    Divisible Pool of Taxes

    • Under Article 280(3) (a) the FC must make recommendations to the President “as the distribution between the Union and the States of the net proceeds of taxes which are to be, or maybe, divided between them under this Chapter and the allocation between the States of the respective shares of such proceeds”.
    • Accordingly, the FC determines a formula for tax-sharing between the states, which is a weighted sum of the states’ population, area, forest cover, tax capacity, tax effort and demographic performance, with the weights expressed in percentages.
    • This crucial role of the Commission makes it instrumental in the implementation of fiscal federalism.

  • What is Green-Ag Project?

    The Union government has launched the Green-Ag Project in Mizoram, to reduce emissions from agriculture and ensure sustainable agricultural practices.

    Note the following things about Green-Ag Project:

    1)Core objective

    2)Implementing agencies

    3)Regions of Implementation

    Green-Ag Project

    • The Green-Ag project is designed to achieve multiple global environmental benefits in at least 1.8 million hectares (ha) of land in five landscapes, with mixed land-use systems.
    • It aims to bring at least 104,070 ha of farms under sustainable land and water management.
    • The project will also ensure 49 million Carbon dioxide equivalent (CO2eq) sequestered or reduced through sustainable land use and agricultural practices.

    Implementing agencies

    • The project is funded by the Global Environment Facility, while the Department of Agriculture, Cooperation, and Farmers’ Welfare (DAC&FW) is the national executing agency.
    • Other key players involved in its implementation are the Food and Agriculture Organization (FAO) and the Environment Ministry (MoEF&CC).

    Regions of implementation

    The project has been launched in high-conservation-value landscapes of five States namely

    • Madhya Pradesh: Chambal Landscape
    • Mizoram: Dampa Landscape
    • Odisha: Similipal Landscape
    • Rajasthan: Desert National Park Landscape
    • Uttarakhand: Corbett-Rajaji Landscape