Food for thought on revamping agriculture

Sustained increase in farm incomes is crucial not only for GDP growth, but also to sustain a growing market for goods and services. Integrated agricultural reforms would entail cohesiveness on a number of complex policy measures. Valueadded agricultural activity, particularly agro-processing, is central to any design for restructuring the sector.

India with an arable land area of 184 million hectares produces 91 million tonnes of milk (world?s highest) and 150 mt of fruits and vegetables (second highest), has 480 million livestock (largest), 210 mt of food grains (third highest) and 6.2 mt of fish. Nonetheless, processing activity of fruits and vegetables is just 2%, of milk at 14% and fish at 4%. Nearly 40% of fruits and vegetables go waste. Compare this to countries like Philippines and China, where processing activity is 45% and 23%, respectively, compared to our modest 7% in food products.

Why has India?s food processing activity not taken off? The first factor is the absence of adequate infrastructure, particularly rural road connectivity, inadequacy of information, marketing linkages and the absence of cold-chain systems. The cost of packaging ranges from 10- 54% of production cost. The cold-chain capacity caters to less than 10% of the produce. High cost and low availability of credit remains a problem because even within the priority sector lending by banks for agriculture, food processing receives only 4.5% of earmarked credit. Second, the regulatory framework preventing farmers from directly marketing their produce, except through designated agricultural markets, adds to cost and impairs flexibility. Wholesale modification of the Agricultural Produce Marketing Act is an inescapable necessity. So is greater encouragement for contract farming.

The roadmap is given in the Food Processing Policy, 2005. This needs to be finalised. Issues of infrastructure, financing, legal and regulatory framework need to be addressed. Syn-chronisation of the rural roads programme, with mobile refrigeration facilities and linking cold-chains will minimise waste and improve farm incomes. The most debilitating factor, however, is the legal framework. Currently, food laws span nine ministries, comprising of thirteen Central orders alone! In addition, states have their own control orders. Organisations responsible for enforcing these regulations are poorly staffed or trained and represent the worst vestige of the licence-permit raj.

Two years ago, the government had announced the constitution of a group of ministers to formulate an Integrated Food Law. The composition of the group changed and so did the government. A new group under the minister for agriculture was constituted. It has completed its work expeditiously and the draft of a Food Safety and Standards Bill, 2005, has been put on the website of the ministry of food processing. While this Bill has much to commend, for integrating various laws into a cohesive legislation, several infirmities remain. Some of these include:

? While everybody is conscious that government has a social and moral obligation to promote purity in food, the Bill seeks to achieve this through elaborate licensing procedures. The Bill is clearly draconian, investing wide powers on food inspectors for inspection, search, seizure. The offences are punishable through imprisonment. These are liable to be misused. We need to consider whether we can delicence the sector instead, prescribing rigorous food standards and imposing heavy financial penalty for deviation from standards. Creating a vast network of food inspectors is not the best means to achieve the broad objective of ?ensuring availability of safe and wholesome food for human consumption.?

? The composition of the Authority, under Section 5 of the Bill, consisting of several joint secretaries of various ministries, their selection through a committee headed by the cabinet secretary, the procedures for their removal, the inherent powers retained by government to issue directives over a wide gamut of issues are features that do not inspire confidence on independent constitution or functioning.

? In fact, Article 8(c) of the proposed Act on removal of members is liable to ambiguous interpretation. So is the unusual proviso on the possibility of the Authority itself being superceded.

Both the members of the Authority and the Authority itself are, thus, vulnerable to political exigencies.

? Curiously, the Act does not stipulate the administrative ministry under the aegis of which the proposed Authority would be constituted. There would be many seeking parents, but parenthood needs to be settled. If the focus were development instead of regulation, the food processing ministry would be its logical home. The ministry?s mandate needs clarification, for effecting coordination of post-harvest activity, currently dispersed over a number of institutions.

A lot of time and effort has gone into the drafting of this Bill. Sharad Pawar deserves credit in completing a difficult task quickly where his predecessors had failed. The task of weaving the conflicting views of ministries, each seeking a primacy of role, would not have been easy. However, if this Bill is to truly meet international benchmarks, it needs to be divested of the licence-permit raj mindset. The powers prescribed under the Act, methods of appointment, removal and enforcement need to be simplified. After all, the objective is to make it easier, simpler, safer and more profitable for agro-processing industry to come up in this country. A draconian law in the offing may not be the best means to achieve this end. We need Food for Thought.