Market reforms and not loan waivers is the only way to help poor farmers, the weakest link in the food chain, to stand on its feet
That traders and middlemen control agriculture in India was again on display in Maharashtra. Last week, the Devendra Fadnavis government in Maharashtra introduced the Agriculture Produce Market Committee (APMC) bill in the assembly, only to withdraw it a day later. The bill, which follows an ordinance introduced earlier in the year, allows all farmers and livestock breeders to sell their produce outside the ambit of APMC.
Maharashtra became the second state in India after Bihar to free farmers from the shackles of traders and commission agents. However, this freedom did not last. The bill would have allowed free movement of essential items from the purview of APMC Act, introduced taxation on traders and cleared the path for online trading.
However, an indefinite strike called by the traders resulted in vegetable prices rising by 10-15 percent on the very first day. This was enough to bring the state government to its knees. With elections going on in important states and general elections just around the corner, the government decided to pull back before the damage became irreparable.
What was more embarrassing for the government was that members belonging to its own party (BJP) and Shiv Sena (its alliance partner) moved a motion seeking to refer the bill to a select committee of the House for review.
The way the bill was presented and cleared also highlights governance shortcomings. Steamrolling a bill that will affect a largely agrarian population is no way of getting things done.
Though brave on paper, the state government has messed up on policies by its poor implementation. In July 2016, the state government amended the APMC Act to deregulate vegetables and fruits. The recent one sought to deregulate flowers, oilseeds and food grain. The move to deregulate vegetables and fruits has not really helped the plight of the farmers for the simple reason that the government could not provide land to set up an alternative market.
Take the case of Mumbai. The APMC market was shifted to Navi Mumbai to de-congest the city, but allowing farmers to bypass the APMC does not solve any purpose if they do not have a place to sell their goods.
Many small farmers are seen across the city moving around small vans and trying to sell their products through these vans. The hassles of selling these goods in the city with the police behind their backs and the added logistics cost are not leaving much on the table for the farmer. Further, many farmers in remote villages are not even aware of the measures announced by the government as the message has not been delivered to them.
But will this apathy from the government and stubbornness of traders last for long? Technology has shown how it can destroy sectors that have not changed with time. The taxi sector is a case in point. Mumbai’s ubiquitous black & yellow cabs would once decline customers with impunity, but now cab hailing services like Uber and Ola rule the roost. There are enough examples of disruptive technology in retailing, hotels, airlines etc where firms that refused to change with the times failed.
Agriculture will not be far off if the government and traders do not mend their ways. Already, big companies are tapping farmers and delivering vegetables at doorsteps. But they are approaching bigger farmers, who barely account for 10 percent of the farming population. The smaller farmer is yet to see the benefit of technology. But it is only an entrepreneur or one app away.
Many startups did attempt to come in this space but their business plans involved buying goods from the APMC markets and selling it on the internet. Few had the patience to win the farmer’s confidence and bring the product to the market. It is only a matter of time till technology taps on the farmer's door.As for politicians, they would do well to remember that loan waivers as a voting card can only last for so long. It damages banks and farmers alike. Ground-level reforms where the farmer gets a larger chunk of the final selling price are the only way to bring prosperity to rural India.