Farming For The Farmer
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As anticipated, the year 2018 has been positioned as an inflection point in the march of Indian agriculture. It marks a clean break from the past by recognising agriculture as an enterprise, and the nation’s commitment to the welfare of farmers.
The new traits the Budget imparts to agriculture are that farmers must be allowed to capture maximum value on their produce; that foodgrains constitute only a sub-sector of the larger sector; that growth is conditional to adequacy of credit and capital formation and that the sector as a whole needs to be liberalised.
The farmer was always constrained from selling the produce, the way he wanted to. The liberalisation of the markets got a fillip with the launch of eNAM (an electronic platform for online trade) in 2016 and Model Agricultural Produce and Livestock Marketing Act, 2017. And the soon to be released Model Contract Farming Act, 2018 will further open up the sector. This story line is taken forward by the new support for an innovative market architecture that organically links Gramin Agricultural Markets (GrAM) with global markets via an efficient wholesale market structure. The upgradation of 22,000 rural haats into centres of aggregation and a direct producer-seller platform integrates small and marginal farmers with the agri-supply chain. The farmer, preferably as a member of an FPO, can also trade on the eNAM platform. The Budget talks of a new export policy, with a favourable duty structure for agri-commodities. With growing production surpluses, leveraging the global market will bring in remunerative prices on the farmers’ produce.
The Budget also recognises that agricultural markets can never be perfect, and hence offers a minimum MSP of one and half (1.5) times the cost of cultivation on all notified commodities. Even on Cost A2 (all paid-out costs) + Family Labour (an imputed value), it marks a cataclysmic change. It covers all notified crops, which account for about 85 per cent of net cultivated area. More importantly, the government declares its obligation to honour the MSP, for which a new instrument will be designed in consultation with the state governments. Hitherto, there has never been such an open commitment to transferring of MSPs, even when prices crashed in the market.
The universe of agriculture gets expanded, with the Budget appreciating the critical role of non-crop sectors and providing a Budgetary support to cluster-based horticulture and non-Budgetary facilitation of a Rs 10,000 crore corpus fund for dairy and livestock (the small ruminants in particular), fishery and aquaculture. This huge push, along with emphasis on large cluster-based organic cultivation and aromatics and medicinal plants (Rs 200 crore of allocation) will essentially link agriculture with value chain and processing and generate additional farm and non-farm jobs.
The Budget also addresses basic structural weaknesses that emanate from land division and fragmentation, unrecognised land lease and poor access to institutional credit, and declining public sector investments. The challenge now lies in efficiency of implementation. For these, changes in the governance framework are underway. All these initiatives can make the farmer a true entrepreneur.
