Union Cabinet approves agricultural marketing reforms


Commodity law to be amended by ordinance.

The Union Cabinet approved an amendment to the 65-year-old Essential Products Act removing grains, pulses, oilseeds, edible oils, onions and potatoes from the commodity list essential. The change will take effect immediately via an ordinance, according to the Agriculture Ministry.

At its meeting on Wednesday, the Council of Ministers also approved ordinances to remove restrictions on farmers selling their products outside notified market prices, as well as to facilitate contract farming and allow farmers to engage in direct marketing, according to an official statement.

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All of these measures were promised in the Aatmanirbhar package announced by Finance Minister Nirmala Sitharaman last month.

Foreign investment

The amendment to the ECA, which has been under discussion for over a decade, will deregulate the production, storage, movement and distribution of these food products. By suppressing private sector fears of “excessive regulatory interference,” the Center hopes to increase private and foreign investment, especially in cold storage and modernization of the food supply chain, the statement said. Adequate processing and storage facilities will reduce waste and increase farmers’ incomes from perishable foods.

To protect consumers, the amendment allows for regulation during war, famine, extraordinary price hikes and natural disasters, while providing exemptions for exporters and processors at such times as well.

The Agricultural Trade and Trade (Promotion and Facilitation) Ordinance of 2020 aims to open up the marketing of agricultural products outside the notified mandates for farmers, and also to remove obstacles to interstate trade. While both agriculture and markets are matters of the state, the Center relies on the fact that trade and commerce in food is part of the competing list to pass its ordinance.

“We don’t touch the markets. We are simply saying that the whole country apart from the physically demarcated premises of the mandis managed by the APMC committees should be open to a farmer to sell his produce to anyone with a PAN card, ”said the secretary of agriculture. Sanjay Agarwal. “Why is the farmer, who is the producer, forbidden to sell his own products? Those who buy from the farmer are unlimited in their subsequent marketing or export, but the farmer is held back. By allowing the farmer more choice, it will increase his income, also reduce waste and improve quality, ”he added.

Unregulated sales

In fact, industry sources suggest that 60% of agricultural trade already takes place outside of the mandis through unregulated sales. By legalizing and facilitating these sales, the Center hopes that farmers will benefit rather than middlemen.

Not all states have signed on to these reforms, especially since state governments will not be allowed to charge fees on these sales.

The 2020 Agreement on Farmer Price Insurance and Agricultural Services (Empowerment and Protection) aims to facilitate contract farming, where a private buyer agrees to purchase a crop at a certain price at the start of a season, transferring the risk of market unpredictability from the farmer to the corporate sponsor. However, farmer groups have expressed concern that companies will benefit more than small farmers from these direct marketing measures, and want to see the specific provisions of the ordinance before welcoming it.

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