Agri reforms won't disrupt govt procurement, APMCs to co-exist with other markets; signals export bans avoidable
MSPs were administrative measures and these had never been part of any law.
Agriculture minister Narendra Singh Tomar on Wednesday said he was ‘cognizant of” the apparent dichotomy between the unfettered freedom for farmers to access markets, as envisaged in the two farm Bills cleared by Parliament recently, and the ban on onion exports. He said the concept that prices of agriculture commodities must be market-determined to the extent possible was unexceptionable and indicated that artificial market interventions would require to be minimised.
Speaking at the Indian Express Group’s Idea Exchange programme, Tomar ruled out the possibility of bringing the minimum support price (MSP) system for farm goods under the Bills, which are awaiting Presidential assent. He strongly refuted the notions of the carping critics in the Opposition that the reforms proposed in the Bills would kill the APMC mandis and the system of MSPs, to the detriment of large sections of farmers.
The Bills had little to do with the MSP system or government procurement of agriculture commodities, he stressed. MSPs were administrative measures and these had never been part of any law. If anything, procurement only increased under the current dispensation, he pointed out, adding that the NDA government made MSPs more meaningful with the rule that these prices must be at least 50% above cost (A2+FL).
Tomar, who is also the rural development minister, said the government would consider raising the minimum guaranteed days of work under the National Rural Employment Guarantee Scheme (NREGS) from the current 100 days a year per household, if he gets any such proposal from the states. Demand for work under the NREGS has surged this fiscal, thanks to the pandemic.
The average days of work per household so far this fiscal have already reached 35.17, against 48.39 in the entire 2019-20 fiscal.
“The objective of the two Bills is to uplift the economic conditions of the farmers…Opposition (Congress) was in power for long years. If there was need to make law on MSP, why it did not they do it? MSP was not part of law earlier is not part of law even now,” the minister said. He added: “When the prime minister has clarified that the procurement will continue at MSPs, where is the need for any fear?”
The fact is MSPs even now benefit only small segment of farmers. Though the Centre announces MSPs of 22 crops every year, the official procurement is limited to just ten – wheat, paddy, masur, urad, moong, arhar, mustard, gram, groundnut and cotton. Of course, there has been some improvement in procurement at MSPs over the last five years. The total procurement of nine crops (barring cotton) in 2013-14 was 61 million tonne, which increased to nearly 114 million tonne in 2019-20.
An FE analysis of nine crops with MSPs show that pan-India average mandi prices of three out of four rabi crops were 2-17% below their MSPs while only masur was 1% above MSP during the harvesting period (March-June). Similarly, five out of six kharif crops were 3-17% below their MSPs during harvesting period (October-January) and only paddy was 3.5% above MSP.
As far as APMC mandis are concerned, there are already some signs of them losing the grip. But a vanishing of these mandis, which results in an unreasonable burden of taxes and other imposts on agriculture trade, might not occur overnight. These could likely co-exist with other markets, the physical infrastructure for which is still under development.
During the June 6-August 31 period, mandi arrivals of crops – from fruits and vegetables to cereals and pulses – have dropped. The fall was up to 49% for fruits, 57% for vegetables and 45% for grains, according to data reviewed by FE. These could be seen as early signs of a weakening of the APMC networks and new markets emerging.
Tomar said: “When there is nothing to oppose, they (opposition parties) are saying APMCs will be closed. How can they be, as APMCs are set up by law of the state governments?”
Commenting on the ban export of onions on the day when the Bill was introduced in Parliament, the minister said: “There is process in the government. Normally, there are certain commodities which may have shortage (which could led to) increase in prices. In such situation, the commerce ministry keeps a watch on the market regularly whether to allow import or (restrict) export. They have taken the step (to ban export) in that direction (to control prices). However, I feel the Centre is conscious that onion rates should increase. The issue has come to my notice.”
India’s onion exports are roughly Rs 3,500 crore per annum. Any fall in India’s exports of the vegetable is taken advantage of by Pakistan.
Despite the Operation Greens announced in FY19 Budget to give price stability support to all-season vegetables, for the second year in a row, the government has had to ban onion exports to check rising prices of the vegetable. It has been employing such market intervention tools recurrently to quell domestic prices as and when they skyrocket, although the efficacy of such steps have remained doubtful. Last year, for instance, the government imposed minimum export price for onion in October, put stocking limits on wholesalers and retailers and later banned its exports altogether. However, these steps yielded little and the retail prices went up to even the `100-120/kg range in many places, including Delhi, by December-January.
As per the MG-NREGS dashboard, the Centre has released nearly Rs 62,000 crore to the states so far in the current fiscal under the scheme. About 208 crore person (work) days have been created under the scheme so far during the current fiscal year, up by around 52% over the year ago period. This is against a revised target of 300 crore days set for the whole of the year.
In the first five months of the current fiscal, 14.89 crore households demanded MG-NREGS work compared with 10.5 crore in the same period in 2019-20.
Tomar defended the government’s decision not to refer the two farm Bills to the select committees. “Normally, Bills, which are lengthy, long-pending or complex, are sent to select committees. These two bills are very small and the provisions are also very clear. Also no member had any objections on any provision of these Bills, so there was no need to send to a select committee,” the minister said.