Farm liberalisation to bring prosperity to entire food supply chain in India

Date:12-03-2020

When the Union Finance Minister proposed 16-point action plan to boost agriculture and farmers' welfare while presenting the budget earlier this year, the stage was set for liberalisation of the farm sector.

There has been a long-pending demand of the comprehensive reforms to make agriculture a sustainable and scalable industry, and the new farm laws are the steps in the right direction. Farmers will not be able to lift out of poverty unless the agriculture sector sees heavy investment in the entire food supply chain. Much like 1991, the year 2020 will be marked as the watershed moment in India's agriculture history.

The new farm laws is a step in the right direction to correct the anomalies that had affected the growth of farm sector for decades. For long farmers have been selling their commodities for an inflated price and are not getting the right price for their produce.

"The newly enacted Farmers' Produce Trade and Commerce (Promotion and Facilitation) Act grants farmers much-needed freedom to sell their produce wherever they want, which ensure farmers can look for the best prices. Similarly, the Farmers (Empowerment and Protection) Agreement on Price Assurance and Farm Services Act allows farmers to tie up with private players and seek better prices. These laws unshackled Indian agriculture from the ruinous practices, making way for successful liberalisation story," said Dr Shivendra Bajaj, Executive Director, Federation of Seed Industry of India (FSII).

Agriculture employs over 54 per cent of workforce in India but its contribution to the GDP has been around 17 per cent. About 86 per cent of farmers in India are small and marginal, which means they cultivate less than 2 hectares of land. The shrinking and fragmented lands and the strict regulations had affected the agriculture sector significantly, making us one of the countries in the world with the lowest crop productivity. The new laws allow farmers to enter into agreements with private procurement agencies, food processors to grow different varieties and sell them at assured prices.

The scope for the cluster farming is set to widen after the private procurement agencies especially food processors would seek to buy bulk amount of crop produce of uniform quality, same nutritional value as well as without chemical traces. It would support the efforts of the Agricultural and Processed Food Products Export Development Authority (APEDA) to capture oversees markets where regulations are quite strict.

The amendments in The Essential Commodities Act will bring investment in the food supply chain. The ambitious plan of doubling farm income by 2022 now appears more practical with the government opening up the agriculture sector for the diversified reforms.

Moreover, the farm liberalisation is going to benefit consumers as well. Since the role of middlemen is gone, the agriculture produce would be made available at lower cost. In the due course, when the roust food supply chain is built, the end prices would go down further as the amount of wastage would reduce substantially. Besides, the nutritional value of the crop would also become better.

With the entry of private players, the farm sector would see higher involvement of digital technology and entrepreneurships. It would help offer a wide array of agricultural commodities and food items for end consumers. There is huge scope for entrepreneurship, which would help farmers, consumers and start-ups alike. Various small companies can buy crop produce such as vegetables and fruits and deliver it to the nearby areas. It would help the local rural economy to flourish.

Most of the farmers or their family members possess a mobile smartphone. The digitisation of supply chain would help farmers to take decision about which crop to grow based on the demand in the local, national or even international markets. The start-ups can make investments in different areas such as yield estimation models to boost productivity, data-driven diagnostics for determination of soil and crop health.

Owing to the changing market demands, farmers would be in search of good quality seeds, pesticides, agriculture tools and equipment. This opens up several opportunities for start-ups in delivery of certified micronutrients, seeds through online interface and in custom hiring area. To sum up, the farm liberalisation is set to enhance the ease of doing business and implementation of flexible policies. The transformation of the farm sector is set to usher over 44 per cent of Indian population that is dependent on agriculture into the era of modernisation and prosperity.