The government should, therefore, immediately introduce reforms in the farm sector to chalk out a marketing strategy, boost investment and encourage crop diversification. These measures would help agriculture and allied sectors to sustain growth of 7 per cent in the Tenth Plan. The ministries of agriculture and co-operation and consumer affairs, food and public distribution at the Centre should be merged into a single ministry.
The government loses about Rs 48,000 crore annually due to restrictions and regulations on marketing, movement and storage of agro produce. Hence, the Essential Commodities (EC) Act, 1955 should be repealed and other 27 Acts including the Agriculture Produce (Grading & Marketing) Act, 1937 should be reviewed to allow free trade in agro produce. If it is not possible to immediately repeal the EC Act, then it should be kept in abeyance for three years or, alternatively, agricultural commodities that are under WTOs trade agreement should be removed from the Acts purview.
Acts governing agriculture produce marketing in various states should be amended to allow direct purchase from farmers without the need for a licence. The government should develop mega markets to facilitate marketing of produce. Such markets and agri-parks should be set up in joint ventures near ports, airports and production catchment zones. The present marketing system has failed due to the governments intervention in the foodgrain market leading to stockpiling. Marketing should be left to the private sector and government should set up adequate infrastructure.
Forward contracts should be introduced in as many agro produce as possible. A system of certified warehouse receipts as negotiable instrument for accessing easy credit should also be introduced. Nabard and banks should be directed to enhance priority sector credit on securitised warehouse receipts/warrants of certified warehouses (as collaterals) to be traded on online commodity exchanges. This will make Kisan Credit Cards multipurpose.
In addition, spot and futures markets should be linked through information technology to receive price signals. Banks and Nabard should participate in equity for online commodity exchanges. Any income of trade guarantee funds and customer protection funds set by commodity exchanges should be dealt at par with such income of investor protection fund set up by stock exchanges. The provisions of TDS (tax deduction at source) in respect of commission or brokerages on commodity futures should be at par with other securities.
(The writer is Chairman, International Society for Agricultural Marketing, and also Chairman of the expert committee on strengthening & developing agricultural marketing, set up by the government in 2001)