Proposals for Agriculture Policy Reforms to address Farmers’ Distress

Proposals for Agriculture Policy Reforms to address Farmers’ Distress

By:

Vijay Sardana

S. No.	Action Required	Justification
1.	·      Remove all types of licensing conditions from APMC Act all over India. This will improve farmers income substantially. ·      Allocate at least 25% shops in every mandi (market yards) for FPOs and farmers. ·      Ask all municipalities to allocate space for a farmers market in every colony so that farmer and consumers so that direct transactions can happen. This will reduce police intervention and corruption by local inspectors.	· Example, Delhi itself is about Rs. 1,40,000 Crores food market. About 500 to 600 to 1000 people control the whole market including fruits, vegetables, poultry, fish, food grains and pulses, species and edible oils, etc. What is the tax collection? What are farmers getting from consumers paid amount? How much money is paid by the consumers? Imagine the situation countrywide. This exploitation of the market at the cost of farmers welfare cannot be termed as the free market economy. This is exploitation of the system due to lack of sensible laws and regulations. The existing system is promoting cartelization and exploitation under the protection of policymakers at the cost of farmers. Why political parties are keen to protect exploiters of farmers? Why no political party is keen to eliminate this? Is this the major source of political funding at grass root activities? Lack of transparency in the political funding system reinforces this concern.  ·      Today, consumers are paying the much higher price than MSP for the farmers to produce than what farmers are getting in APMC Mandis. The cartel of traders and their network is exploiting their position. If government change the policy, farmers will get higher than MSP and subsidy burden will go down. The target of doubling farmers income can be achieved by ensuring fair marketing systems. ·      There is also massive tax evasion in Mandi (market yards) all over the country and one of the reasons why investment is not coming into agriculture value chains because new start-ups, well-organized sector, and FDI will not prefer to avoid taxes due to strong auditing systems but also cannot compete with unethical practices of tax avoidance. It is better to close than follow unethical practices. ·      Elimination of licensing requirements for trading in mandi will attract many new people in agriculture marketing and trading. Farmers and consumers both will benefit. ·      This will create massive employment and start-ups in agriculture marketing and attract investment in SME sector. The youth of villages will get involved in marketing. ·      Farmers will get direct payments from the consumers without any middleman. This will improve farmers income.
2.	Review Customs duty when finalizing MSP	Today’s world market is becoming a big threat to MSP enforcement in India. If MSP is revised upwards traders shift to the global market for supplies. This hurts local farmers and local processors. Example: Oilseeds, edible oils, pulses, butter oil, sugar, etc. We must link MSP and customs duty so that there is confidence among the local investors that whenever MSP will be revised, Customs duties will also be revised. This will help in investment in rural infrastructure and will help in strengthening farmer-industry linkages. Uncertainty in policy will discourage investments and investment with farmers in the supply chain. The request is linked revision of customs duty with MSP.
3.	Crop Loan Duration should be increased from 1 year to 5 years and continue to collect interest annually. Ceiling on loan amount should continue. This will reduce debt trap and corruption in banking system affecting farmers.	It is essential to reduce loan waver burden on government, to check corruption in the banking system and reduce farmers suicide. Example: If a farmer takes a loan of Rs. 1 lakh with interest rate of 4% for one year, after one year the interest rate will be 8%.  To save 4% interest, bank managers take a bribe to make book-entry as “loan amount received and loan re-issues” and they extend the limit of a loan from Rs. 1 lakh to Rs. 1.20 lakhs. Rs. 10,000 is a bribe, Rs. 4000 is deposited as interest and remain is given to farmers as cash in hand. Now the loan amount is 1.20 lakhs. This cycle repeats every year and farmer continues to remain in debt trap by bankers. If the loan duration is extended to 5 years, farmers will avoid going to bankers for renewal of loans, he will remain at 1 lakhs limit and will pay 4% interest every year and no padding and bribing will happen. After 5 years, the loan amount will remain same and less burden on farmers, government, and economy.
4.	Introduce WTO compatible Direct Support System by withdrawing fertilizer subsidy to benefit rain-fed farms	To support the farmer's income, to promote balanced use of fertilizer to save soil health, to promote eco-friendly agriculture practices, to conserve water, etc. government may consider extending direct support to farmers. The fertilizer subsidy amount is of the very little benefit of the rainfed area and in the irrigated area, it is misused by over-consumption. The government must withdraw the fertilizer subsidy either fully or partially, and offer Direct support to farmers on a land area basis. Say, Rs. 3000 to 5000 per acre per crop cycle. This will also benefit poor farmers those who are not using fertilizer and rain-fed farmers will benefit and This is compatible with WTO Green box subsidies as well. It is as follows in Annex 2: Domestic Support: The Basis for Exemption from The Reduction Commitments: Item No. 6. Decoupled income support (a)Eligibility for such payments shall be determined by clearly-defined criteria such as income, status as a producer or landowner, factor use or production level in a defined and fixed base period. (b)The number of such payments in any given year shall not be related to or based on, the type or volume of production (including livestock units) undertaken by the producer in any year after the base period. (c) The number of such payments in any given year shall not be related to or based on, the prices, domestic or international, applying to any production undertaken in any year after the base period. (d)The number of such payments in any given year shall not be related to or based on, the factors of production employed in any year after the base period. (e)No production shall be required in order to receive such payments. The whole initiative can also be justified under Item no. 12 of Green Box subsidy: Item No. 12. Payments under environmental programmes (a)  Eligibility for such payments shall be determined as part of a clearly-defined government environmental or conservation programme and be dependent on the fulfillment of specific conditions under the government programme, including conditions related to production methods or inputs. (b)  The amount of payment shall be limited to the extra costs or loss of income involved in complying with the government programme.
5.	Introduce Farmers Income Insurance System to give livelihood assurance to prevent suicides	This should be considered because in changing climatic conditions, farmers income is becoming certain. This will add to the serious financial stress. We must consider this option. We may restructure the subsidies to provide premium from the subsidies. States can also be asked to contribute 50% of the premium. This is compatible with WTO Green box subsidies as well. It is as follows in Annex 2: Domestic Support: The Basis for Exemption from The Reduction Commitments Item No 7. Government financial participation in income insurance and income safety-net programmes (a)           Eligibility for such payments shall be determined by an income loss, taking into account only income derived from agriculture, which exceeds 30 percent of average gross income or the equivalent in net income terms (excluding any payments from the same or similar schemes) in the preceding three-year period or a three-year average based on the preceding five-year period, excluding the highest and the lowest entry. Any producer meeting this condition shall be eligible to receive the payments. (b)           The number of such payments shall compensate for less than 70 percent of the producer's income loss in the year the producer becomes eligible to receive this assistance. (c) The amount of any such payments shall relate solely to income; it shall not relate to the type or volume of production (including livestock units) undertaken by the producer; or to the prices, domestic or international, applying to such production, or to the factors of production employed. (d)           Where a producer receives in the same year payments under this paragraph and under paragraph 8 (relief from natural disasters), the total of such payments shall be less than 100 percent of the producer's total loss.
6.	Office order which restricts “Off-patents agriculture inputs” forcing imports but not to be made in India must be scrapped. (Office order “No.17-2 / 2006-PP.I dated 30th October 2007 issued by Ministry of Agriculture to deprive domestic manufacturing. This is against the spirit of Patent Act and Pesticide Act of India.	Due to this order, India is loosing more than Rs. 5000 crores every year, this amount is increasing every year. Farmers are paying heavy price for these inputs and India is losing competitiveness in Agriculture exports.  More than 100 products are imported but not allowed to be made in India by this one office order. Billions of dollars business opportunity and hundreds of job every year India is loosing.  Ministry of agriculture under the influence of few influential companies of agro-chemicals issued an order to extend the protection of off-patent molecules against the spirit of 'Make in India'. Companies started imported without registration of the product in India, which is a mandatory condition.  Now, Clever move by few costing India billions of dollar, they have taken a shelter under the by filing a case to delay the manufacturing in India by Indian companies. Companies know it will take years to resolve this issue in court. The government must intervene and scarp this order, to improve competition which will reduce prices for farmers like generic drugs. Why Companies are not keen to invest in India but only keen to import and charging very high price? This is making input 3 to 5 time costlier. They have influenced the department not to speed up the cases so that they continue to make the profit. This office order must be scraped to save farmers and foreign exchange. There are more than 100 such products for which Indian farmers are paying 3 to 5 times more cost and India is losing the foreign exchange. This will help in reducing the cost of chemicals by one third, like in case of generic drugs. India is a huge market, no Company can ignore India but they are scared that generic manufacturing in India will make India a major force in world market like generic drugs.
7.	Need to have Animal Husbandry Cost and Marketing Commission	Today, poultry and dairy farmers are suffering due to many unfair trade practices. This will hurt doubling farmers agenda. In Poultry, Why the cost of day-old chick to the Indian farmers is the highest in the world. This must be investigated and rectified. This will hurt the doubling of farmers income agenda of government. This is the result of unfair and restrictive trade practices. This must be checked and controlled by law. The is no proper infrastructure for livestock markets, this should be addressed.
8.	Addressing issues of stray animals	Cow slaughtering ban has created an unexpected challenge.  All farmers respected cow. The issue is should we restrict ban on the trade of all cows or cows which are desi or native to India?  Pure desi breeds do have sentimental value & religious significance. Please notify these breeds and band on slaughtering these breed should continue.  Please understand - I have tulsi in my garden, I worship tulsi, but I don't worship other plants in the same garden. I worship Pipal tree, but I don't worship Kikar or other trees. All animals and all breeds can't have the same significance. What about the hybrid animal, which is reared by farmers only for the commercial purpose, and has no sentimental value for farmers. Should we allow either export of these live animals to the states or countries where they are required and also promote sexed semen in states where the state can only promote productive animals? This must be considered.

The only requirement is Political will to address farmers distress. What was done in 1991 to support industrialization and liberalization for investors, similar bold actions are required to provide market opportunities to farmers to remove their distress. This will improve revenue for states as well as farmers. Which political party will do this, we have to wait?

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