Home / Opinion / Quick Edit /  A refreshing dose of farm freedom

Finance Minister Nirmala Sitharaman on Friday unveiled the third tranche of the Centre’s new economic package. It was focused on agriculture and such allied sectors as animal husbandry, fishery, beekeeping, and farm infrastructure, but what stood out among her announcements—and deserved a standing ovation—were a couple of farm sector reforms. Neither quite goes far enough, but both unshackle India’s market for agricultural produce in a way earlier governments didn’t dare. They do away with food scarcity-era relics of the past that have held back the prosperity of farmers and curbed their bargaining power for much too long.

In a surprise finale to an otherwise drab list of primary-sector schemes, Sitharaman announced that the government would amend the Essential Commodities Act (ECA) of 1955 to deregulate the stocking, sale and marketing of cereals, potatoes, onions and edible oils. The Centre also proposes to enact a central law to let farmers transport their produce across state borders and sell to whoever they want, not just APMC licencees. A legal framework was also mentioned to link farmers with large retailers and big agro-based business. If competitive supply chains emerge, this could shorten the farm-to-fork path, as it’s called, and assure farmers a larger share of the consumer spend on food.

The benefits of the first two reforms are likely to kick in much sooner. Farmers, like producers of other goods and services, must have the freedom to sell their produce freely in a market with minimal restrictions for them to maximize the value of their exertions. Likewise, big-budget buyers should not fall afoul of the law in trying to procure and store large volumes. The stocking limits under the ECA, as the finance minister said, could yet be invoked against hoarding in case of a crisis. In general, however, it’s about time forces of demand and supply were allowed to determine prices, sending out market signals that would balance both and serve the interests of consumers and farmers alike. Will the prices of freed commodities turn volatile? At first, they might. Disintermediation will have to play stabilizer. With fewer middlemen and greater competition, the price of onions need not bring anyone to tears. Overall, market forces deserve a chance. And farmers, the leeway to sell as they please.

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