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Pointing out that many agri commodities lose global competitiveness due to a large number of intermediaries in agriculture marketing leading to high transaction costs — 30-50% of the retail consumer price — a research paper prepared by Icrier for the UN Food Systems Summit has suggested that developing forward and backward linkages can ease price fluctuations and ensure remunerative price to farmers and lower prices for consumers.
“The current set of farm laws sought to achieve precisely this, but some recent ones are stuck for lack of understanding by farmers and for political reasons,” said the research paper, jointly authored by economist Ashok Gulati, former ICAR director general Raj Paroda, ITC CMD Sanjiv Puri, Bayer India head D Narain and farmer leader Anil Ghanwat.
Gulati and Ghanwat were part of the Supreme Court-appointed committee on farm laws, which submitted its report on March 31.
Farmers have been protesting at the Delhi border since November last year, demanding the repeal of three farm laws and enactment of a law guaranteeing purchase of crops at not lower than the minimum support price.
Arguing for a free market in agriculture commodities, the authors have said value chain development and marketing platforms that link farms to agricultural output markets play a critical role in determining prices and incentives for the farmers. Quoting the OECD report on “Agricultural Policies in India”, the authors have said Indian agricultural marketing policies have favoured consumers over producers by suppressing farmers’ prices. “Correcting this bias still remains a tall challenge,” the Icrier study said.
The Producer Support Estimate for India was negative 11.2% of the value of farm receipts between 2000-01 to 2019-20, while Consumer Support Estimate was one of the highest in the world at 28.8%, according to the OECD 2021 report.
Though government programmes like the electronic national agricultural markets (e-NAM), negotiable warehousing receipts (e-NWR), Agriculture Infrastructure Fund (AIF), Atmanirbhar Bharat (self-reliant India) and Farmers Producer Organisations (FPOs) have been applauded as steps in the right direction, the authors have said these schemes “are not free from implementation gaps, which need to be plugged in with timely incentives, investments and monitoring”.
They have suggested the government provide “an enabling ecosystem to private enterprises to invest freely in agriculture value chain development as it will gradually boost investment in building efficient and sustainable supply chains, while ensuring better share of farmers in consumers’ rupee”.
The authors have also asked the government to expand the Bt cotton revolution to other crops such as corn and oilseeds (soybean and canola) and reduce India’s dependence on edible oil imports. “This requires the right agri infrastructure, accelerated market reforms and an enabling policy framework that is focused on empowering farmers and protecting intellectual property rights,” they have said.
India’s import dependence on edible oils is over 70% with an annual outgo of `75,000 crore.