{"id":61015,"date":"2020-05-19T19:00:28","date_gmt":"2020-05-19T13:30:28","guid":{"rendered":"https:\/\/blog.forumias.com\/?p=61015"},"modified":"2021-01-28T13:51:41","modified_gmt":"2021-01-28T08:21:41","slug":"7-pm-editorial-a-1991-moment-for-agriculture-on-agriculture-reform-19th-may-2020","status":"publish","type":"post","link":"https:\/\/forumias.com\/blog\/7-pm-editorial-a-1991-moment-for-agriculture-on-agriculture-reform-19th-may-2020\/","title":{"rendered":"7 PM Editorial |A 1991 moment for agriculture : On Agriculture Reform| 19th May 2020"},"content":{"rendered":"<p>We are posting Today\u2019s 7 pm editorial Summary<\/p>\n<p>About 7 pm Editorial Summary \u2013 This initiative provides an in-depth analysis of the important news editorial of the day. Students don\u2019t need to look anywhere more for their daily news analysis. We take the most important editorial of the day and provide its comprehensive summary.<\/p>\n<p>For old Archives of 7 pm editorial Summary, Click on \u201cArchives\u201d<\/p>\n<p><a href=\"https:\/\/forumias.com\/blog\/7-pm-editorials\/\">7pm Editorial Archives \u2192<\/a><\/p>\n<h3><strong><b>A 1991 moment for agriculture : On Agriculture Reform<\/b><\/strong><\/h3>\n<h5><strong><b>What has happened<\/b><\/strong><\/h5>\n<p>The third tranche of the Atmanirbhar Bharat Abhiyan\u00a0focused\u00a0on\u00a0improving the\u00a0infrastructure gaps and governance issues plaguing\u00a0the farm sector.\u00a0It\u00a0had 11 major points, of which eight\u00a0are related to\u00a0miscellaneous items like\u00a0financing farmgate infrastructure.\u00a0The other three Agricultural Reforms relate to:<\/p>\n<ol>\n<li>Amending the Essential Commodities Act (ECA) of 1955<\/li>\n<li>Bringing a Central legislation to allow farmers to sell their produce to anyone, outside the APMC mandi yard, and enable barrier-free inter-state trade<\/li>\n<li>Creating a legal framework for contract farming<\/li>\n<\/ol>\n<h5><strong><b>\u00a0<\/b><\/strong><strong><b>Amending the Essential Commodities Act (ECA) of 1955<\/b><\/strong><\/h5>\n<p>The Central\u00a0government\u00a0will\u00a0deregulate the sale of six types of agricultural produce, including cereals, edible oils, oilseeds, pulses, onions and potatoes.<\/p>\n<h5><strong><b>\u00a0<\/b><\/strong><strong><b>Background of the Essential Commodities Act, 1955:\u00a0<\/b><\/strong><\/h5>\n<ol>\n<li>The ECA has its roots in the\u00a0Defenceof India Rules of 1943\u00a0when India was\u00a0plagued\u00a0by\u00a0famines\u00a0and facing the effects of World War II.<\/li>\n<li>It was relevant in the mid-1960s\u00a0due\u00a0scarcity of food grains caused by\u00a0back-to-back droughts.<\/li>\n<li>India needed a legislation to tackle illegal stockpiling as\u00a0it was dependent on PL480 imports from the USA.<\/li>\n<\/ol>\n<p>In present times, India is the largest exporter of rice in the world and the second-largest producer of both wheat and rice. It&#8217;s self-sufficient with\u00a0huge buffer stocks and doesn\u2019t require a law to\u00a0ensure availability of\u00a0food grains.<\/p>\n<h5><strong><b>\u00a0<\/b><\/strong><strong><b>Shortcomings<\/b><\/strong><strong><b>\u00a0of the Essential Commodities Act, 1955:<\/b><\/strong><\/h5>\n<ol>\n<li>The Economic survey (2019-20) describes the Essential Commodities Act (ECA) as anachronistic and\u00a0scarcity-era legislation\u00a0irrelevant today.<\/li>\n<li>It discourages private investment in storage facilities\u00a0as the ECA can put stock limits on any trader, processor or exporter.<\/li>\n<li>Frequent and unpredictable imposition of blanket stock limits distorts<\/li>\n<\/ol>\n<ul>\n<li style=\"list-style-type: none;\">\n<ul>\n<li>movement up the agricultural value chain<\/li>\n<li>development of a national market for agricultural commodities<\/li>\n<\/ul>\n<\/li>\n<\/ul>\n<ol start=\"4\">\n<li>It has remained unsuccessful in controlling the volatility of the prices\u00a0of\u00a0Dal, Sugar and Onions.<\/li>\n<li>ECA enables rent seeking and\u00a0harassment\u00a0by\u00a0overzealous\u00a0bureaucracy.<\/li>\n<li>Poor remuneration for farmers when prices plummet immediately after\u00a0harvesting\u00a0due to lack of storage facilities.<\/li>\n<li>It also leads to inflation in the lean season\u00a0caused by\u00a0distress selling due to lack of warehousing and storing facilities.<\/li>\n<\/ol>\n<h5><strong><b>\u00a0<\/b><\/strong><strong><b>Impact<\/b><\/strong><\/h5>\n<ol>\n<li><b><\/b><strong><b>Private\u00a0Investment: Removal<\/b><\/strong>of stock limits will encourage private sector investment\u00a0in\u00a0agricultural\u00a0value chain.<\/li>\n<li>Creation of warehouses and post- harvest agricultural infrastructure (processors, mills and cold chain storage).<\/li>\n<li><b><\/b><strong><b>Better remuneration:\u00a0<\/b><\/strong>Prevent distress selling by the farmers due to lack of warehouses.<\/li>\n<li><b><\/b><strong><b>Inflation control:<\/b><\/strong>Lack of storage facilities in the lean season leads to flaring up of prices for the consumers.<\/li>\n<li><b><\/b><strong><b>Wastage:\u00a0<\/b><\/strong>Prevent wastage of\u00a0agri-produce that happens due to lack of storage facilities.<\/li>\n<li>Prevent\u00a0harassment by the bureaucracy and cut down\u00a0red\u00a0tapismin farm sector.<\/li>\n<li><b><\/b><strong><b>Balance of Payment:\u00a0<\/b><\/strong>Promote exports leading to\u00a0more\u00a0forex earnings\u00a0that would improve the Balance of Trade.<\/li>\n<\/ol>\n<h5><strong><b>\u00a0<\/b><\/strong><strong><b>Challenges\u00a0<\/b><\/strong><\/h5>\n<ol>\n<li>The provision of re-imposition of stocking limits under the ECA if the prices go\u00a0up.<\/li>\n<li>The law provided deterrence to black marketing and hoarding.<\/li>\n<li>The risk of future inflationary food price spikes in case of total deregulation.<\/li>\n<\/ol>\n<p>This amendment can help both farmers and consumers by bringing in price stability\u00a0and\u00a0preventing\u00a0wastage\u00a0of\u00a0agri-produce.<\/p>\n<h5><strong><b>\u00a0<\/b><\/strong><strong><b>Central legislation on\u00a0Agri-Marketing<\/b><\/strong><\/h5>\n<p>It\u00a0allows\u00a0farmers to sell outside the APMC yards\u00a0and enables\u00a0barrier-free inter-state trade.<\/p>\n<h5><strong><b>\u00a0<\/b><\/strong><strong><b>Advantages<\/b><\/strong>\u00a0o<strong><b>f the proposed\u00a0law:<\/b><\/strong><\/h5>\n<ol>\n<li>Greater competition amongst buyers by breaking the monopoly of APMC markets<\/li>\n<li>Creation of a unified national market\u00a0and connecting\u00a0farmers to end users.<\/li>\n<li>Lower the mandi fee and the commission for\u00a0arhatiyasor intermediaries.<\/li>\n<li>Reduce multiple\u00a0cessesimposed on APMC markets by state governments<\/li>\n<li><b><\/b><strong><b>Better returns:\u00a0<\/b><\/strong>The proposed law will open more choices for the farmers and help them in getting better prices.<\/li>\n<li><b><\/b><strong><b>Better spatial integration of\u00a0prices:<\/b><\/strong>By facilitating the movement of\u00a0agri-goods and removing barriers in inter-state trade<\/li>\n<li><b><\/b><strong><b>Remove regional distortions:\u00a0<\/b><\/strong>Farmers of regions with surplus produce will get better prices and consumers of regions with shortages, lower prices.<\/li>\n<\/ol>\n<h5><strong><b>\u00a0<\/b><\/strong><strong><b>Contract farming law<\/b><\/strong><\/h5>\n<p>Third, the\u00a0Contract farming\u00a0law\u00a0plans to bring in\u00a0legal framework\u00a0to\u00a0provide\u00a0more certainty and choice for farmers.<\/p>\n<h5><strong><b>\u00a0<\/b><\/strong><strong><b>Advantages of the law:<\/b><\/strong><\/h5>\n<ol>\n<li>Provide assurance of a price to the farmers\u00a0before sowing.<\/li>\n<li>Cropping decisions will be based on forward prices instead of the last year\u2019s prices.<\/li>\n<li><b><\/b><strong><b>Lower NPAs:\u00a0<\/b><\/strong>Minimize\u00a0market risks of the farmers leading to less loan defaults and consequently lower NPAs<\/li>\n<li>Promote the idea of Farmer producer\u00a0organizations&#8217;\u00a0(FPOs)\u00a0for collective bargaining.<\/li>\n<\/ol>\n<h5><strong><b>\u00a0<\/b><\/strong><strong><b>Challenges and Way forward:<\/b><\/strong><\/h5>\n<ul>\n<li><b><\/b><strong><b>Asymmetric position:\u00a0<\/b><\/strong>Big processors and\u00a0organized\u00a0retailers will have an upper hand dealing with individual farmers.<\/li>\n<li>Promote farmer producer\u00a0organizations\u00a0(FPOs) to improve the bargaining power vis-\u00e0-vis large buyers.<\/li>\n<li>FPOs will help ensure uniform quality and lower transaction costs.<\/li>\n<li>Most of the FPOs get loans at high rates as they depend on microfinance institutions.<\/li>\n<li><b><\/b><strong><b>Role of NABARD:<\/b><\/strong>It can ensure that all FPOs get their working capital at cheap interest rates.<\/li>\n<\/ul>\n<p>These governance\u00a0reforms\u00a0can go a long way in building efficient value chains and ensuring better returns for farmers.<\/p>\n<p>Source: <a href=\"https:\/\/indianexpress.com\/article\/opinion\/columns\/economic-package-agriculture-relief-fund-farmers-nirmala-sitharaman-ashok-gulati-6414759\/\"><u>IndianExpress<\/u><\/a><\/p>\n<h5><strong><b>\u00a0<\/b><\/strong><strong><b>Practice Question<\/b><\/strong>:<\/h5>\n<p>\u2018In the long term, The Essential Commodity Act did opposite of what it is intended for\u2019. Critically Analyse<\/p>\n","protected":false},"excerpt":{"rendered":"<p>Detailed Analysis about Agricultural Reforms in Atmanirbhar Bharat Abhiyan!<\/p>\n","protected":false},"author":61,"featured_media":49370,"comment_status":"open","ping_status":"open","sticky":false,"template":"","format":"standard","meta":{"jetpack_post_was_ever_published":false,"footnotes":""},"categories":[130,9],"tags":[1576,1471],"class_list":["post-61015","post","type-post","status-publish","format-standard","has-post-thumbnail","hentry","category-7-pm","category-public","tag-articles_for_interview","tag-farm_laws_related_issues","entry"],"jetpack_featured_media_url":"https:\/\/i0.wp.com\/forumias.com\/blog\/wp-content\/uploads\/2019\/07\/7-PM.png?fit=1000%2C500&ssl=1","views":{"total":0,"cached_at":"","cached_date":1700583556},"jetpack_sharing_enabled":true,"_links":{"self":[{"href":"https:\/\/forumias.com\/blog\/wp-json\/wp\/v2\/posts\/61015","targetHints":{"allow":["GET"]}}],"collection":[{"href":"https:\/\/forumias.com\/blog\/wp-json\/wp\/v2\/posts"}],"about":[{"href":"https:\/\/forumias.com\/blog\/wp-json\/wp\/v2\/types\/post"}],"author":[{"embeddable":true,"href":"https:\/\/forumias.com\/blog\/wp-json\/wp\/v2\/users\/61"}],"replies":[{"embeddable":true,"href":"https:\/\/forumias.com\/blog\/wp-json\/wp\/v2\/comments?post=61015"}],"version-history":[{"count":0,"href":"https:\/\/forumias.com\/blog\/wp-json\/wp\/v2\/posts\/61015\/revisions"}],"wp:featuredmedia":[{"embeddable":true,"href":"https:\/\/forumias.com\/blog\/wp-json\/wp\/v2\/media\/49370"}],"wp:attachment":[{"href":"https:\/\/forumias.com\/blog\/wp-json\/wp\/v2\/media?parent=61015"}],"wp:term":[{"taxonomy":"category","embeddable":true,"href":"https:\/\/forumias.com\/blog\/wp-json\/wp\/v2\/categories?post=61015"},{"taxonomy":"post_tag","embeddable":true,"href":"https:\/\/forumias.com\/blog\/wp-json\/wp\/v2\/tags?post=61015"}],"curies":[{"name":"wp","href":"https:\/\/api.w.org\/{rel}","templated":true}]}}