Agricultural Marketing & Farm Friendly Reforms Index

•  A new ranking of states by the NITI Aayog, based on their performance in reforming agriculture marketing, land leasing and forestry on private land, has been released.
• According to the government think tank, while Maharashtra, Gujarat, Rajasthan, Madhya Pradesh and Haryana take the top five spots on the list, major agrarian states Uttar Pradesh and Punjab figure in the 13th and 14th positions.
• Bihar and Kerala were not included in the rankings as they revoked their agricultural produce marketing Acts.

About the index:

• According to the ‘Agricultural Marketing and Farmer Friendly Reforms Index’, a score of 0 implies no reforms while a score of 100 means complete reforms. The index is aimed at helping the States identify and address problems in the farm sector, which suffer from low growth, low farm income and agrarian distress.
• The index takes into account several parameters like states’ implementation of the model agricultural marketing Act, joining eNAM, special treatment to fruits and vegetables for marketing and the level of taxes in state-regulated mandis (wholesale markets).
• These indicators reveal the ease of doing agribusiness and opportunities for farmers to benefit from modern trade. The indicators also reflect the levels of competitiveness, efficiency and transparency in agriculture markets.
• The other parameters included in the index are relaxation in restrictions related to lease of farm land to tenant farmers, and the freedom farmers have to fell and transport trees on their own land, which allows them to diversify their incomes.

Analysis:

• The low levels of productivity, growth and incomes ailing the farm sector in India and causing immense agrarian distress is well known. Without undertaking radical reform it is impossible to transform agriculture and double farmers’ income. However, state governments have been extremely lax in implementing much needed reforms to modernize agriculture and create a favourable policy and market environment for farmers.
• Addressing the issue, NITI Aayog has identified three key areas for reform. The areas identified for immediate reforms are: a) Agricultural market reforms; b) Land lease reforms; c) Reforms related to forestry on private land – felling and transit of trees.
• Today, marketing is extremely crucial and almost every sector has embraced marketing principles to ensure best possible outcomes. However, agricultural development in India has entirely ignored the potential of marketing and has continued to follow its old trajectory. Therefore, the benefits that can be accrued from agriculture are largely untapped. Productivity is some states is regrettably low and there is a vast disconnect between prices received by farmers and the prices paid by consumers.
• Moreover, private capital and modernization have completely evaded agriculture, resulting in barely any addition to the value chain. The poor state of reforms in the sector is also the primary reason for the non-performance of agricultural food processing industry in India. This, despite very favourable demand-side factors spread across the country. Much of the potential that post-harvest value addition can bring to agriculture has been ignored. Reforms in this area can bring out an enormous increase in employment by create jobs in cleaning, processing and marketing of grain directly by the farmer. This will also resolve underemployment encountered in agriculture.
• Three crucial reforms pertaining to marketing in agriculture have been recommended by NITI Aayog. First is the immediate need to amend existing regulations in order to liberalize markets. Farmer to should be given the freedom to decide to whom, where and how he wants to sell his produce. Seven indicators have been developed by NITI in this regard. The reforms also suggest special treatment of fruits and vegetables from other farm produce as they are perishable and produced in small quantities. Importantly, the recommended reforms place importance on IT in marketing for the creation of a ‘national market’ for agriculture, so that farmers across the country may benefit from interconnected markets, through the use of appropriate technology. This important reform has so far eluded the country due to strong lobbies of middlemen and the reluctance of political class to take favourable steps.

By: Vishal