Govt to bring agri reforms, modify law on essentials
FM brings in agri reforms along with stimulus
Finance minister Nirmala Sitharaman used the stimulus platform to push reforms in the agricultural sector, including amendment of the Essential Commodities Act, sidestepping of the APMC Act for interstate trade and creation of a legal framework enabling farmers to directly engage with processors, aggregators and exporters. The reforms will promote the food processing industry’s engagement with farmers.
By amending the Essential Commodities Act 1955, cereals, edible oils, oilseeds, pulses, onions and potatoes will be deregulated. Stock limits will be imposed only in case of national calamities or famines.
The Centre has to work with the states as it’s they who must implement the law.
Finance minister Nirmala Sitharaman used the stimulus package platform to push reforms in the agriculture sector, including amendment of the Essential Commodities Act, sidestepping of APMC Act for inter-state trade and creation of legal framework enabling farmers to directly engage with processors, aggregators and exporters. The reforms will promote the food processing industry's engagement with farmers.
By amending the Essential Commodities Act, 1955, agriculture food stuffs, including cereals, edible oils, oilseeds, pulses, onions and potato, will be deregulated. Stock limits will be imposed only under very exceptional circumstances like national calamities and famine with surge in prices. No such stock limit shall apply to processors or value chain participants, subject to one's installed capacity, or to any exporter, subject to the export demand.
The Act enables government to regulate and prohibit production supply and distribution to secure equitable distribution and fair price. This has been impeding operations of the food processing industry as it imposes limits on holding stocks.
In another reform, the central government wants to sidestep the Agricultural Produce Market Committee Act, which is still in enforce in some of the states, by bringing in a central law to provide adequate choices to farmer to sell produce at attractive price. It will ensure barrier-free inter-state trade and e-trading of agriculture produce. Farmers will no longer be bound to sell farm produce to licensees in APMC markets.
The government will also bring in a legal framework to enable farmers for engaging with processors, aggregators, large retailers, exporters etc in a transparent manner.
According to Ajay Kakra, leader, food and agriculture, PwC India, this will help better enforcement of contract farming wherein a company can engage with a farmer to grow a certain crop for him.
However, all these laws governing agricultural produce and trade are implemented by state governments. Some of the states have already amended the APMC Act. It has to be seen how central government takes the states into confidence while making the reforms.
"The intent is good and the reforms will remove several bottlenecks in the supply chain. But the devil lies in the detail," said Siraj Chaudhry, MD & CEO, NCML.