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NEW DELHI: Even after Prime Minister Narendra Modi announced to repeal the 3 new agricultural laws, the farmer leaders are demanding a legal guarantee for minimum support price (MSP).
They also held a mass rally on Monday to demanding extension of MSP to all products and not just wheat and rice.
Thousands of farmers were engaged in protest movements since the past one year, urging the Centre to roll back the laws, fearing loss of MSP and being overpowered by the large private sector players.
Economists at the State Bank of India (SBI) have suggested 5 key agricultural reforms that could act as enablers even without the 3 bills.
The report said that MSP as a price guarantee is always a tricky issue. Currently, the government mainly buys rice and wheat at minimum support prices or guaranteed prices, but the safety net benefits barely 6 per cent of the farmers.
Here are the reforms that SBI considers essential for farmers:
* Quantity guarantee clause instead of MSP
The report states that instead of MSP as a price guarantee that farmers are demanding, the Centre can come up with a quantity guarantee clause for a minimum period of 5 years.
The clause will make its mandatory procurement to production percentage of crops (being currently procured) at least equal to last year’s percentage (with safeguards in exceptional events like droughts, floods etc).
* Convert MSP to floor price of auction on eNAM
The second measure that SBI economists suggest is to convert the MSP to floor price of auction on National Agriculture Market (eNAM).
However, this will not completely solve the problem as the current data shows that average modal prices in e-NAM mandis is lower than the MSP in all kharif commodities (except Soyabean).

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* Strengthen APMC markets
The report further urges for continued efforts to strengthen the Agricultural Produce and Livestock Market Committee (APMC) infrastructure.
“As per our estimates which are based on a government report, the monetary loss for cereals is almost Rs 27,000 crore due to harvest and post-harvest losses,” it noted.
The losses for oilseeds and pulses are Rs 10,000 crore and Rs 5,000 crore, respectively.
APMC is the marketing board established by respective state governments. The purpose is to eliminate the exploitation of farmers by intermediaries, where they are forced to sell their produce at low prices.
Currently, there are 1,000 markets that are linked to the National Agricultural market (e-NAM) network from 18 states and 3 UT’s.
eNAM is a pan-India electronic trading portal that networks existing APMC mandis to create a unified market for agricultural commodities.
* Establish contract farming institution
Contract farming is basically an agreement between farmers and processing/ marketing firms for the production and supply of agricultural products at predetermined prices.
The basis of such arrangements is a commitment on the part of the farmer to provide a specific commodity in quantities and at quality standards determined by the purchaser and a commitment on the part of the company to support the farmer’s production and to purchase the commodity.
Establishing a contract farming institution will give farmers the exclusive right to oversee price discovery.
Citing the example of such model being adopted by many other countries, the report said that the system has provided farmers access to supply chains with market and price stability. It has also helped them by providing technical assistance.
“The experience of Thailand shows market certainty (52 per cent) and price stability (46 per cent) were prime factors due to which farmers participated in contract farming,” it said.
* Symmetric procurement across states
The report also noted that procurement of crops has been largely asymmetric across states.
Top producing states in paddy like West Bengal (first) and Uttar Pradesh (second) are witnessing minimal procurement. While states like Punjab and Haryana that are not largest producers are witnessing much larger procurement.
In Punjab and Haryana, the procurement of cereals was 83 per cent of the produce. While in some states the same figure was in single digits.

Formation of a special committee
The Centre plans to complete the constitutional process in the upcoming winter session of Parliament.
The PM has also announced the formation of a Committee to decide to make the system of MSP more effective and transparent.
The Committee will decide on matters like promotion of zero budgeting farming, that is, natural farming, scientifically change the crop pattern keeping in mind the changing requirements of the country and make MSP more effective and transparent.
It will comprise of representatives of the central government, state governments, farmers, agricultural scientists and agricultural economists.

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