The agriculture ministry has created a cell to modernise farm logistics and supply value chains. This move comes in line with Nirmala Sitharaman’s recent announcements of reforms to purge the agricultural sector of middlemen, who often take a sizeable cut of value from the produce sold.
The reforms includes making amendments to the six-decade-old Essential Commodities Act and pushing two ordinances — freeing up farm trade from all restrictions and guaranteeing a legal framework for pre-agreed prices to farmers — an official said, requesting anonymity.
The agriculture ministry is gearing up to new challenges and making all preparations in the wake of the government’s decision to free agricultural markets. The reforms cell will help coordinate efforts to streamline supply and transportation of farm produce, and also aid projects to add value to primary farm goods for better prices to the farmers.
Additionally, the reforms cell will look after a national mission of ‘One District One Crop’ to boost crop diversity. In the aftermath of changes such as amendments to The Essential Commodities Act (ECA) of 1955, the reforms cell will play a key role.
Recently, the government had made said that while India has become surplus in most agri-commodities, farmers have been unable to get better prices due to lack of investment in cold storage, processing and export as the entrepreneurial spirit gets dampened due to hanging sword of Essential Commodities Act.
The government hopes that scaling back the ECA will help drive up investment in cold storages and the food supply chain. Cold storages are refrigerated warehouses that can store perishables for up to six months. Refrigerated old stocks can cool food prices in times of scarcity.
The ECA was mainly used to curb inflation by empowering the Union and state governments to dictate quantities traders can store and also restrict the movement of any commodity deemed “essential”. Under the law, the government generally imposes stock limits to discourage hoarding of items such as pulses and vegetables. Although agricultural products can be regulated in emergency situations such as war, famine or extraordinary price rise; participants in the value chain and exports remain exempted.
Last week, the government enacted ‘The Farming Produce Trade and Commerce (Promotion and Facilitation) Ordinance, 2020’. The ordinance, which is a law promulgated when Parliament is not in session, effectively brings down the curtains on the decades-old agricultural produce market committees regulations (APMC) system that regulates buying and selling of farm produce.
APMC regulations require farmers to only sell to licensed middlemen in notified markets, usually in the same area where farmers reside, rather than in an open market, scuttling price discovery.