- Drawbacks of the report
- Way Ahead
Draft Report of Ashok Dalwai Committee on Doubling Farmers’ Income
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GS (M) Paper-3: “Agriculture related topics”
- A high-level committee appointed by the government & headed by Ashok Dalwai, CEO of National Rainfed Area Authority has called for placing agricultural marketing in the Concurrent list and recommended greater private sector participation in agri-marketing and logistics.
- The first time the PM had shared his dream of doubling farmers’ income (DFI) was at a kisan rally in Bareilly on February 28, 2016. A day later, the finance minister talked about this goal in his budget speech.
- On April 13, 2016, the government set up a committee under Ashok Dalwai, then additional secretary in the Union ministry of agriculture, to prepare a report on DFI.
- The report pertains to three areas — productivity gains, reduction in cost of cultivation, and remunerative prices.
- The one-India market concept may benefit from placing agricultural marketing under the Concurrent List (in the Seventh Schedule of the Constitution).
- While cultivation is limited to the land and area of farming operations, marketing has no boundaries and needs to operate on a pan-India level to meet demand across the country.
- The needs include creation of better physical infrastructure, improved price information dissemination campaigns, and reform regulations that force farmers to sell their produce to local monopolies.
Role of FPO/VPO:
- It suggested that farmer producer and village producer organisations (FPO/VPO) could play a critical role in integrating small and marginal farmers into the agricultural market system.
- The report set a minimum target of 7,000 FPOs/VPOs, each of which could cover 1,000 farmers and/or 1,000 hectares.
- The committee also called for amending the Companies Act to facilitate private sector shareholding in FPOs up to 26 per cent and incentivising them by treating them at par with cooperative societies.
Setting up Markets:
- The committee estimated that the country would need about 10,000 wholesale and nearly 20,000 rural retail markets to achieve the desired market density to build a pan-India system.
- The current agricultural marketing system in the country comprised of 2,284 Agricultural Produce marketing Committees (APMCs), which operate 2,339 principal markets. These principal markets have extended their footprint further through sub-market yards, numbering 4,276.
- State Governments may convert these principal and sub-market yards into full-fledged and independent markets.
- This will take the total number of wholesale markets to more than 6,600 and the remaining requirement of about 3,500 may be met by promoting private markets under the provisions of the proposed Agricultural Produce and Livestock Marketing, (Promotion and Facilitation) Act, 2017.
APLM rollout sought
- The committee also urged the Union Agriculture Ministry to roll out the Model Agricultural Produce and Livestock Marketing (Promotion and Facilitating) Act (APLM) Rules so that States can make the act operational.
- States could upgrade existing facilities such as warehouses and silos as markets.
- The demand for rural retail markets could be met by upgrading the existing over-20,000 rural periodical markets as Primary Rural Agricultural Markets.
- It also delineated the need for both the Centre as well as the States/UTs constituting special purpose vehicles to own and operate the National Agriculture Market.
- The Ministry could seek the help of an expert for specialist advice on the transactions involved.
- The committee believes that small and marginal farmers, who constitute 80 per cent of Indian farmers, would benefit from an efficient marketing system, only if they have withholding capacity.
- This can be achieved by offering them pledge finance (post-harvest loan against produce as collateral).
- Storage godowns, including cold storages, should be upgraded per the standards laid down by the Warehousing Development and Regulatory Authority so that they can issue Negotiable Warehouse Receipts.
- The Ministry has to develop comprehensive guidelines to promote warehouse-based post-harvest loans and eNWR based trading.
- There is also a need to popularise post-harvest loans against NWRs among farmers and orient financial institutions to participate in the pledge loan system.
Drawbacks of the report:
- DFI means three times higher effort and resources. That means a humungous additional investment of about Rs 6,40,000 crore at 2011-12 prices. 80% of this investment has to come from the government. The investments in and for agriculture need to rise by 22 per cent per annum in real terms if the dream of DFI is to be realised.
- But the report is totally silent on how, and from where, these resources will be generated.
- The upshot of this example is that India needs to focus on incentives for farmers. Unfortunately, our policy is biased in favour of the consumers and that inadvertently makes it anti-farmer.
- The government can address that issue by using an income policy to protect the poor, and free up prices for farmers, allow private trade to stock and operate freely and have unhindered exports. India can, then, raise farmers’ incomes significantly, if not double them by 2022.