New farm bills could transform India’s agriculture system

Last updated on February 17th, 2023 at 01:02 pm

The Modi government last month passed the three controversial farm reform Bills amid widespread public protests by farmers and opposition leaders against the move. While one section of society welcomed the amendments calling it a historic step for India to alter global food trading, others expressed concerns that it will create hurdles in the livelihoods of farmers. Prime Minister Narendra Modi also reiterated that the reforms will add impetus to the efforts of farmers in doubling their income and transforming the agriculture sector.

One of the most significant changes that the bills bring is giving greater freedom to farmers to sell their produce. By removing various levels of intermediaries between farmers and buyers, the bills will help the farmers in getting a bigger price share from selling their produce directly to their buyers.

Prior to these reforms, farmers were allowed to sell their crops to government-facilitated Agricultural Produce Market Committee (APMC) markets or Mandis in their states only and not in other states.

As part of its Minimum Support Prices (MSPs), the government fixes price floors for a number of crops. It also buys staples such as wheat and rice in bulk quantities from farmers for its welfare schemes and to distribute to the poor through thousands of fair price shops (FPSs) across the country. With the introduction of private players in the sector through the new reforms, farmers fear that it may lead to exploitation by these companies and may eventually end the MSP-based crop procurement system. However, the Centre and PM Modi have time and again assured that both MSP and government-procurement of produce will continue even after the amendments.

According to industry experts, new farm reforms will encourage increased contract farming to provide more income to the farmers for their hard work on the fields. In addition, with these new policies, farmers will have more choices to sell their produce across various states and even in foreign countries.

“As private sector participation increases over the years, the Indian agriculture sector’s supply chain and infrastructure would improve,” said analysts at Motilal Oswal Financial Services Ltd. said in a report.

It is important to note that the agricultural sector in India has been facing several difficulties towards stable progress as compared to other sectors of the Indian economy due to a shortage of resources for farming and lack of awareness among farmers about ways to improve their crop production. At the same time, about Rs, 90,000 crore ($12.3 billion) of food production is lost every year due to wastage from inadequate warehousing, according to NITI Aayog CEO Amitabh Kant.

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Amid these challenges, the COVID-19 pandemic has disrupted the food supply chains and exacerbated the crises for millions of farmers in the country. If the government takes appropriate steps to implement these while keeping the farmers in confidence, it will facilitate betterment for food production across the country.