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Farm sector reforms by Modi Government

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Rajiv Saxena
Rajiv Saxena
Rajiv Prakash Saxena is a graduate of UBC, Vancouver, Canada. He is an authority on eCommerce, eProcurement, eSign, DSCs and Internet Security. He has been a Technology Bureaucrat and Thought leader in the Government. He has 8 books and few UN assignments. He wrote IT Policies of Colombia and has implemented projects in Jordan, Rwanda, Nepal and Mauritius. Rajiv writes, speaks, mentors on technology issues in Express Computers, ET, National frontier and TV debates. He worked and guided the following divisions: Computer Aided Design (CAD), UP: MP: Maharashtra and Haryana State Coordinator to setup NICNET in their respective Districts of the State, TradeNIC, wherein a CD containing list of 1,00,000 exporters was cut with a search engine and distributed to all Indian Embassies and High Commissions way back in the year 1997 (It was an initiative between NIC and MEA Trade Division headed by Ms. Sujatha Singh, IFS, India’s Ex Foreign Secretary), Law Commission, Ministry of Law & Justice, Department of Legal Affairs, Department of Justice, Ministry of Urban Development (MoUD), Ministry of Housing & Urban Poverty Alleviation (MoHUPA), National Jail Project, National Human Rights Commission (NHRC), National Commission for Minorities (NCM), National Data Centres (NDC), NIC National Infrastructure, Certifying Authority (CA) to issue Digital Signature Certificates (DSCs), eProcurement, Ministry of Parliamentary Affairs (MPA), Lok Sabha and its Secretariat (LSS) and Rajya Sabha and its Secretariat (RSS) along with their subordinate and attached offices like Directorate of Estate (DoE), Land & Development Office (L&DO), National Building Construction Corporation (NBCC), Central Public Works Department (CPWD), National Capital Regional Planning Board (NCRPB), Housing & Urban Development Corporation (HUDO), National Building Organisation (NBO), Delhi Development Authority (DDA), BMPTC and many others.

Blue Economy is being developed and popularised. The government proposes to put in place a framework for development, management and conservation of marine fishery resources. Farmers must be encouraged to dig ponds in their fields and raise fish and ‘Kamal’ ponds.

Modi 2.0 government is deeply committed to the goal of doubling farmers’ incomes by the year 2022. The government has provided energy sovereignty through KUSUM and input sovereignty through Paramparagat Krishi Vikas Yojana. It has provided resilience for the 6.11 crores farmers insured under the PM Fasal Bima Yojana.

Focus on cultivation of pulses, expansion of micro – irrigation through Krishi Sinchai Yojana, have raised the self – reliance in the food security of the country. Provision of any annual supplement of the income to the farmer, directly is done through PM – KISAN Samman Yojana. Connectivity through PMGSY, financial inclusion have helped to raise farm incomes.

Prosperity to the farmers can be ensured by making farming competitive. For this, farm markets need to be liberalised. Farm markets are the mandis and the APMCs. Distortions in farm and livestock markets need to be removed.

Purchase of the farm produce, logistics and agri – services need copious investments. Substantial support and hand-holding of the farm – based activities such as livestock, apiary and fisheries need to be provided for. (Beekeepers are also called honey farmers, apiarists, or less commonly, apiculturists (both from the Latin apis, bee; cf. apiary).

All this and more can be achieved through working with and in cooperation with the States. The following 16 action points indicate the government’s keen focus:

The Government propose to encourage those State governments who undertake implementation of following model laws already issued by the Central government: a) Model Agricultural Land Leasing Act, 2016 b) Model Agricultural Produce and Livestock Marketing (Promotion and Facilitation) Act, 2017; and c) Model Agricultural Produce and Livestock Contract Farming and Services (Promotion and Facilitation) Act, 2018.

Water stress related issues are now a serious concern across the country. The government is proposing comprehensive measures for one hundred water stressed districts. This work has been initiated for water conservation by creating new water bodies and digging of new ponds and thus ensuring continuous water to the fields.

In the Budget speech of July 2019, FM had stated that “annadata” can be “urjadata” too. The PM – KUSUM scheme removed farmers’ dependence on diesel and kerosene and linked pump sets to solar energy.

During this financial year, the FM expanded the scheme to provide 20 lakh farmers for setting up stand – alone solar pumps; further the Government shall also help another 15 lakh farmers solarize their grid – connected pump sets. In addition, a scheme to enable farmers to set up solar power generation capacity on their fallow / barren lands and to sell it to the grid would be operationalized.

Along with this scheme the Government must develop skill sets in the recently returned labor to repair such solar sets and set up new sets. Of late these solar lamps have become inexpensive and scheme must be drawn such that normal citizens may donate such lamps and get special 80 G benefits.

The government shall encourage balanced use of all kinds of fertilisers including the traditional organic and other innovative fertilisers. This is a necessary step to change the prevailing incentive regime, which encourages excessive use of chemical fertilisers.

The vegetable waste must be converted into organic fertilizers and vegetables must be packed in 1 kg packing for use by city bred families. This will help solve the solid waste disposal issues of the major metros. The peas must be shelled and send to the cities.

India has an estimated capacity of 162 million MT of agriwarehousing, cold storage, reefer van facilities etc. NABARD has undertaken undertake an exercise to map and geo-tag them. In addition, the Government propose creating warehousing, in line with Warehouse Development and Regulatory Authority (WDRA) norms.

The government is providing Viability Gap Funding for setting up such efficient warehouses at the block / taluk level. This can be achieved, where States can facilitate with land and are on a PPP mode. Food Corporation of India (FCI) and Central Warehousing Corporation (CWC) shall undertake such warehouse building on their land too.

Thus for a given catchment area of the farm produce effective storage silos are getting build to solve the major storage problems of the farmers. Warehouse in the private sector or semi-private sector must be encouraged.

As a backward linkage, a Village Storage scheme is proposed to be run by the Self Help Groups (SHGs). This will provide farmers a good holding capacity and reduce their logistics cost. Women, SHGs shall regain their position as “Dhaanya Lakshmi”.

The government is making concerted efforts to build a seamless national cold supply chain for perishables, inclusive of milk, meat and fish, the Indian Railways will set up a “Kisan Rail” – through PPP arrangements. There shall be refrigerated coaches in Express and Freight trains as well. This train has started operating even during Covid – 19 time.

Krishi Udaan will be launched by the Ministry of Civil Aviation (MoCA) on international and national routes. This will immensely help improve value realisation especially in North-East and tribal districts.

Horticulture sector with its current produce of 311million MT exceeds production of food grains. For better marketing and export, the government proposed supporting States which, adopting a cluster basis, will focus on “one product one district”.

Integrated farming systems in the rainfed areas shall be expanded. Multi-tier cropping, bee-keeping, solar pumps, solar energy production in non-cropping season will be added. Zero-Budget Natural Farming (mentioned in July 2019 budget) shall also be included. The portal on “jaivikkheti” – online national organic products market will also be strengthened. This was launched recently.

Financing on Negotiable Warehousing Receipts (e-NWR) has crossed more than Rs. 6,000 crore. This will be integrated with e-NAM. This will be a great booster for the farm sector.

Non – Banking Finance Companies (NBFCs) and cooperatives are active in the agriculture credit space. The NABARD re-finance scheme will be further expanded. Agriculture credit target for the year 2020 – 21 has been set at Rs. 15 lakh crore. All eligible beneficiaries of PM-KISAN will be covered under the KCC scheme.

The government intends to eliminate Foot and Mouth disease, brucellosis in cattle and also peste des petits ruminants (PPR) in sheep and goat by the year 2025. Coverage of artificial insemination shall be increased from the present 30% to 70%. MNREGS would be dovetailed to develop fodder farms.

Further, the government is also facilitating doubling of milk processing capacity from 53.5 million MT to 108 million MT by 2025. Already milk prices are firming up and milk production has picked up after the pandemic as hotels and road side tea shops have started opening.

Blue Economy is being developed and popularised. The government proposes to put in place a framework for development, management and conservation of marine fishery resources. Farmers must be encouraged to dig ponds in their fields and raise fish and ‘Kamal’ ponds.

Youth in coastal areas benefit through fish processing and marketing. By 2022-23, the government propose raising fish production to 200 lakh tonnes. Growing of algae, sea – weed and cage culture will also be promoted. The government will involve youth in fishery extension through 3477 Sagar Mitras and 500 Fish Farmer Producer Organisations. The government aims to raise fishery exports to Re 1 lakh crore by the year 2024 – 25.

Under Pandit Deen Dayal Antyodaya Yojana for alleviation of poverty, 58 lakh SHGs have been mobilised. Now, for the fund allocation for the 16 different steps mentioned above, they are being stated under two different categories: For the sector comprising of Agriculture and allied activities, Irrigation and Rural Development an allocation of about Rs. 2.83 lakh crore has been made for the year 2020 – 21. It is divided, inter-alia; a) For Agriculture, Irrigation & allied activities – Rs. 1.60 lakh crore b) For Rural development & Panchayati Raj – Rs. 1.23 lakh crore.

In south India, farmers do not burn the stubble for the next round of crops, but convert rice stubble into additional income by using it for animal feed or to make card board or paper. Earlier when I was in school our house help used to go to her village for cutting the crops with sickle and group work to clean wheat and rice and the grain which used to get dropped was manually picked up and brought home along with the stubble which used to be the fodder for the cows or buffaloes which many house helps used to domesticate for extra income along with cash as wages for farm labour. But advent of threshers have reduced the earning of urban poor and even farm labour as entire work is done by machines.

Major bills in the farm sector has been passed today by the Rajya Sabha, which will make the income of farmers rise dramatically but farmers of Punjab and Haryana have been protesting against the three ordinances promulgated by the Centre on June 5, 2020 which will become a law soon after the President approves and the administrative ministry approves and forms sub ordinate legislation and other rules.

After the Monsoon session of Parliament began this week, the government had introduced three Bills to replace these ordinances. Lok Sabha passed these bills this week. On Thursday, SAD leader Sukhbir Badal announced in Lok Sabha that Harsimrat Badal, the Union Minister for Food Processing Industries from his party, will resign in protest over these bills.

They are called 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.

While farmers are protesting against all three ordinances, their objections are mostly against the provisions of the first. And while there is no uniform demand among the protesters or a unified leadership, it emerges that 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’?

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 including (a) farm gates; (b) factory premises; (c) warehouses; (d) silos; (e) cold storages; or (f) any other structures or places, from where trade of farmers’ produce may be undertaken in the territory of India.

The definition does not, however, include “the premises, enclosures and structures constituting (i) physical boundaries of principal market yards, sub-market yards and market sub-yards managed and run by the market committees formed under each state APMC (Agricultural Produce Market Committee) Act”. It also excludes “private market yards, private market sub-yards, direct marketing collection centres and private farmer-consumer market yards managed by persons holding licences or any warehouses, silos, cold storages or other structures notified as markets or deemed markets under each State APMC Act in force in 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 the freedom of choice to conduct trade in their produce.

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 around 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, either for self or on behalf of one or more persons for the purpose of wholesale trade, retail, end-use, value addition, processing, manufacturing, export, consumption or for such other purpose”. 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.” A trader can operate in both an APMC mandi and a trade area. However, for trading in the mandi, the trader would require a licence / registration as provided for in the State APMC Act. 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. “But how can a farmer trust a trader under the new law? This also explains why the protests have mostly been concentrated in Punjab and Haryana. The arhatiya system is more influential in these two states than in other states, agriculture experts said. Such system also exists in New Delhi and role of such agents will diminish.

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 on any farmer or trader or electronic trading and transaction platform for trade and commerce in scheduled farmers’ produces in a trade area”.

Government officials say this provision will reduce the cost of 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 incentivising big corporates.

They said this provision does not provide a level playing field to APMC mandis. “If you calculate the mandi transaction cost on 1 quintal wheat, at 8.5% all inclusive, it comes about Rs 164. So, on the sale of every quintal of wheat outside of the mandi, you are incentivising big corporates, who will use this difference to offer better prices to farmers in the initial days. And when the APMC mandi system collapses in due course, they will monopolise the trade.” Such is the feeling of the aggrieved party.

A government official, on the other hand, questioned why the states do not make transactions in mandis cost-efficient. “When they are giving free electricity and other subsidies, why can’t they provide a free facility to farmers for selling their produce?”

What is the objection as far as dispute resolution is concerned?

The protesters say that the provision on dispute resolution under Section 8 does not sufficiently safeguard farmers’ interests.

It provides that in case of a dispute arising out of a transaction between the farmer and a trader, the parties may seek a mutually acceptable solution through conciliation by filing an application to the Sub-Divisional Magistrate, who shall refer such dispute to a Conciliation Board to be appointed by him for facilitating the binding settlement of the dispute. Farmers fear the proposed system of conciliation can be misused against them. They say the ordinance does not allow farmers to approach a civil court.

What is the government’s defence? While the Opposition has echoed farmers in alleging that the new legislation will benefit only big farmers and hoarders, the government said the provisions will be beneficial to all: farmers, consumers and traders. “Almost all agriculture experts and economists were batting for these reforms in the agriculture sector. The Centre was also persuading states to implement the Model APMC Act, 2002 – 03. But the states did not fully adopt it.

Therefore, the Centre had to adopt the ordinance route. It will lead to helping farmers realise a better price. This is very forward-looking legislation and it is a win-win situation for all farmers, consumers and entrepreneurs,” said Ramesh Chand, member of NITI Aayog.

The farmers in the state of MP are not protesting since they are selling most of their produce of wheat to the ITC through eChoupal in major wheat growing areas of Vidisha, Ashok Nagar and Raisen, where the BJP government lead by Shivraj Singh has done a fantastic work in raising both value of farm produce and farm value by giving continuous power, good seeds, abundant water by completing long pending irrigation schemes and good roads connecting the farms. The money is paid instantly through digital payments and excellent storage tube technology imported from Brazil.

Farmer empowerment and more money to it will reduce the rural financial distress which was being proposed by Congress for long but was implemented by the Modi 2.0. My vote for the year 2024 is already booked for ‘Kamal’. So from ‘abki baar modi Sarkar’ to ‘is bar bhi modi Sarkar’ to ‘phir se modi Sarkar’ will be a reality.

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Rajiv Saxena
Rajiv Saxena
Rajiv Prakash Saxena is a graduate of UBC, Vancouver, Canada. He is an authority on eCommerce, eProcurement, eSign, DSCs and Internet Security. He has been a Technology Bureaucrat and Thought leader in the Government. He has 8 books and few UN assignments. He wrote IT Policies of Colombia and has implemented projects in Jordan, Rwanda, Nepal and Mauritius. Rajiv writes, speaks, mentors on technology issues in Express Computers, ET, National frontier and TV debates. He worked and guided the following divisions: Computer Aided Design (CAD), UP: MP: Maharashtra and Haryana State Coordinator to setup NICNET in their respective Districts of the State, TradeNIC, wherein a CD containing list of 1,00,000 exporters was cut with a search engine and distributed to all Indian Embassies and High Commissions way back in the year 1997 (It was an initiative between NIC and MEA Trade Division headed by Ms. Sujatha Singh, IFS, India’s Ex Foreign Secretary), Law Commission, Ministry of Law & Justice, Department of Legal Affairs, Department of Justice, Ministry of Urban Development (MoUD), Ministry of Housing & Urban Poverty Alleviation (MoHUPA), National Jail Project, National Human Rights Commission (NHRC), National Commission for Minorities (NCM), National Data Centres (NDC), NIC National Infrastructure, Certifying Authority (CA) to issue Digital Signature Certificates (DSCs), eProcurement, Ministry of Parliamentary Affairs (MPA), Lok Sabha and its Secretariat (LSS) and Rajya Sabha and its Secretariat (RSS) along with their subordinate and attached offices like Directorate of Estate (DoE), Land & Development Office (L&DO), National Building Construction Corporation (NBCC), Central Public Works Department (CPWD), National Capital Regional Planning Board (NCRPB), Housing & Urban Development Corporation (HUDO), National Building Organisation (NBO), Delhi Development Authority (DDA), BMPTC and many others.
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