India this year saw a bumper crop production to the tune of 272 million tonnes, which is highest since Independence. However, there has been a decline in agri-commodity prices.
Shobhana K Pattanayak, Agriculture Secretary told CNBC-TV18 that government is conscious that farmers should receive correct price and for that the minimum support price (MSP) has been introduced. The government has also introduced the market intervention scheme, to support prices, he said.
Talking of spot and derivative market integration, he said it is an area looked after by the Finance Ministry and Consumer Affairs but said any transparency in the market mechanism was a welcome step.
In a move that could structurally change the agriculture sector, the government is working on creating a common agricultural market. The goal is to create a 'one nation, one market' model for farmers in line with the Goods and Services Tax (GST) model for industries. For this to be a success the inter-state trade should move smoothly, said Pattanayak, adding that they have been trying to convince different states to amend their Act to permit inter-state trade.
A few months ago Prime Minister Narendra Modi launched e-NAM (National Agriculture Market). It is a platform that provides information to both buyers and sellers on produce available, its price as well as quality and the location where it is available.
Below is the verbatim transcript of the interview.
Q: As you have been talking about on how we are looking at record crop production this time around and while it is a big boost but with the kind of price decline that we have seen and the point that the government has been pushing at good farm income that really doesn’t seem to be really working. What is the government preparedness to achieve that at this point in time?
A: I can tell you that we had witnessed a very good production this year for which we had a bumper crop. Our estimated food production is close 272 million tonne which is perhaps the highest since independence. Naturally there are ups and downs in the market and there is a general decline in price, but I can tell you that government is very conscious of the fact that farmers should receive the correct price for which we have imposed what is called the minimum support price (MSP) and based on the MSP we have carried out procurement in different markets in the country.
Apart from the scheme of MSP, we have a scheme which is called market intervention scheme in such markets where the price is ruling very low, in the interest of farmers depending on the request of the state government, the central government chips in its own bit and we ensure that commodities are procured so that the prices do not fall below the MSP.
Our government is very farmer friendly, and welfare measures it has been taking. However, I must compliment and congratulate the framers because they have really risen to the occasion and sort of had a record production.
Q: The government is working with MSP and market intervention scheme as you said but even then there have been lots of issues. We have been hearing the news about how Andhra Pradesh farmers had landed in Delhi, the chilli prices have declined by 50-60 percent from the kind of highs, and there have been instances of farmers throwing away produce, burning produce as well. How have you been tackling that?
A: We are sensitive to the needs of Andhra Pradesh. We have already ordered for procurement of chilli from Andhra Pradesh and this facility is not only given to Andhra Pradesh but also it is given to Telangana and procurement is on as on today, just right now the procurement is on.
Q: Come in on the spot and derivative commodity market integration. The Finance Minister (FM) also mentioned that in the Budget, similar platform for the equity and the commodity players, also spot and futures integration, what is being done in that step and how soon or what is the pace of that really?
A: This is an area which actually the consumer affairs and the finance ministry looks at. However, I can tell with confidence any transparency in the market mechanism is a welcome feature. So, if there is an evolution in the derivatives market, it is good for everyone. So, we encourage this, but at the same time this is a responsibility which rests in another wing of the government. So, I would not like to comment on this.
Q: Come in on sugar as a sector that has been buzzing quite a lot, there have been various measures taken into this step and the most bold of them seems to be coming in from the UP government where there have been some strict measures taken in. Come in on that, what is your sense on the loan waiver, the cane arrears, how are you looking at all of that sector?
A: I can only say that we cannot be satisfied at this stage because eNAM is just one year old. We have to strengthen eNAM in a very big way. Let me give you the statistics; close to 8 lakh farmers have been connected and Rs 15,000 crore worth transaction has taken place and the volume speaks for itself that in a short span of time we have been able to scale it up. However, now the question comes is how to strengthen it in terms of its robustness of the architecture, of the IT system that we have.
We must also train the manpower who handles this, we must ensure about the digital transactions that take place, we must ensure that the farmer is paid quickly, the money is credited quickly into the account of the farmers and we need not restrict the sale of these commodities only to few markets. We need to move not only fast in terms of inter-market trade but inter-state trade. Now that is an area which needs to be addressed. For example, the inter-state trade, so, we are conscious of this in our attempt and we have been convincing the different states that they must amend their act to permit inter-state trade and then only we can think of one nation and one market. So, that is also top most on our agenda.
Apart from this we want to ensure that not only we restrict ourselves to 585 markets, we have close to 2,000 active markets so we will be also trying to scale it up to link all of them. In the future, futuristic projection of eNAM would be that permit even private trading that is private market once it comes up. They should also be hooked on to our platform but that is something which we are thinking about the distinct future, not now. So, our effort is to consolidate what we have done and scale it up in these markets that we have identified for the current year i.e. 585 markets by the end of 2018. When I say end it is March 2018.
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