Agriculture should not be a State subject
Below is a MRR and PLR article in category Food Beverage -> subcategory Other.
Rethinking Agriculture as a Central Subject
Summary:
The Confederation of Indian Industry (CII) recently hosted a seminar focusing on reforms in the Agricultural Produce Market Committee (APMC) Act and its implications for Southern States. This event aimed to address the urgent need for agricultural reforms, as driven by the CII-Southern Region's Agri Business Sub-Committee.Key Highlights:
The Need for Agricultural Reforms
In his opening remarks, Mr. Shankarlal Guru, Chairman of the International Society for Agricultural Marketing, emphasized the urgent need for agricultural reform at the state level to boost economic growth. He advocated for agriculture to become a central rather than a state subject, separating it from political influences. Mr. Guru also stressed the importance of promoting contract farming to introduce modern technology and practices into the sector.
Challenges of the APMC Act
Each Indian state’s APMC Act requires agricultural products to be sold exclusively in government-regulated markets. These markets impose high taxes and fees, often offering limited services like price discovery and quality grading. Consequently, private and foreign investments in the agriculture sector are stifled, and farmers lack legal options to enter into direct contracts with buyers.
Transition in Agri Business
Mr. Sivakumar, Chairman of the Agri Business Sub-Committee, CII-Southern Region, and Chief Executive of Agri at ITC Ltd., noted that India's agriculture is at a crucial transition point. Although agriculture employs 57% of the population, it only contributes 27% to the GDP. This disparity highlights the need for strategies such as contract farming and direct marketing to stimulate agri-exports. Reforms in the APMC Act are necessary to align with these evolving needs.
Aligning with New Market Models
Prof. S Raghunath from IIM Bangalore presented on the importance of effective distribution systems and transparency in supply-demand. He pointed out the Act’s original aim to protect farmers from exploitation, but stressed the need for modern reforms. Despite India being a leading producer of vegetables and fruits globally, a 40% wastage rate persists due to inadequate infrastructure and supply chain issues. Organized participation and removing intermediaries can address these challenges.
Central Government's Role
To enable direct sales from farmers to the industry and foster contract farming, the central government has urged states to amend the APMC Act. Current restrictions prevent farmers from engaging directly with manufacturers, discouraging trade and investment. A new central scheme provides subsidies for developing marketing infrastructure, conditional on states amending the Act. Industry stakeholders support these changes due to the restrictive nature of existing policies on agricultural trade.
Conclusion
Decentralizing wheat and rice procurement could enhance the cost-effectiveness of the Public Distribution System. The CII and industry players advocate for necessary amendments to the APMC Act to stimulate growth and efficiency in the agricultural sector.
The seminar highlighted the critical need for reform, emphasizing that transforming agriculture into a central subject could drive meaningful and sustainable growth across India.
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