BackStates press the reform button when pandemic locks agriculture in
Freeing up of the farm produce market will give the food processing sector better access to raw materials
PremiumStates across India have been speeding up farm sector reforms, prompted by the crippling of supply chains of farm produce and the food processing industry by the covid-19-induced lockdown.
Uttar Pradesh(UP) has announced freeing up of its agriculture market, which will allow farmers to sell from their homes and earn better value for their produce by skipping the wholesale market.
UP, the fifth-largest state economy in the country that depends heavily on agriculture, is embracing decentralisation in the farm sector by amending an over-five-decade-old law governing wholesale markets or mandis. The Bharatiya Janata Party (BJP)-ruled state led by chief minister Yogi Adityanath has cleared amendments to the UP Krishi Utpadan Mandi Adhiniyam of 1964 through an ordinance, according to an official statement.
The decision by UP mirrored steps announced by BJP-ruled Madhya Pradesh(MP) last Saturday to free up farm produce markets in the state.
Analysts said the opening up of the market for agricultural produce will help ensure better access to raw materials for the food processing industry, at a time the more-than-a-month-long lockdown has severely curtailed movement and economic activities in large parts of the country. Both UP and MP opted to designate warehouses and cold storages as private mandis.
The UP government said in a statement on Wednesday that it excluded 46 fruits and vegetables from the exclusive purview of mandis so that there are no trading curbs. These include fruits like apple, mango, banana, water melon, pomegranate and vegetables like green pea, bitter gourd, radish and lady’s finger.
“With this, the sale of these fruits and vegetables can be procured from farmers in the villages and can be traded in the state without any restrictions," the statement said.
Farmers will no longer have to pay any mandi tax, which totals about ₹125 crore a year. The farmers would however have to pay a charge for using infrastructure if they chose to sell in mandis.
The need to quickly free up the farm produce market was highlighted by Prime Minister Narendra Modi, who on Saturday held a meeting on farm sector reforms in which issues such as farm produce marketing, management of marketable surplus, access of farmers to institutional credit and freeing agriculture sector of various restrictions were discussed. Agriculture and allied activities account for more than 160 million workers, making it the country’s largest employment generating sector as per the 2011 census.
Experts said lifting trading curbs on farm produce was the need of the hour. “The harvest season has just ended and at this point when supply chains are broken, farmers need this measure (abolition of mandi tax so that they can sell directly). Farmers borrow and invest and now is the time for them to recoup their investments and repay loans. To get remuneration, markets have to be functional which they are not at this point. Movements of trucks is also limited," said Himanshu, associate professor at Jawaharlal Nehru University and visiting fellow at the Centre de Sciences Humaines, New Delhi. He said that mandi tax is a source of revenue for the states and that the Centre could compensate states for removing it as the income sources of states are limited at this juncture.
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