Govt to amend Essential Commodities Act for better prices for farmers

Continuing with details of the Rs 20 lakh crore economic package of the Union government for COVID-19 relief, Finance Minister Nirmala Sitharaman announced on Friday that the Essential Commodities Act, 1955 will be amended to enable better price realisation for farmers. As part of the amendment, cereals, edible oils, oilseeds, pulses, onions and potatoes will be deregulated. This means farmers can sell these items at a higher price.

The Essential Commodities Act, which was introduced in 1955, regulates the production, manufacturing, storage, sale, etc of items that are listed as essential commodities. By invoking the essential commodity act, the government can regulate and control the price at which an essential commodity is sold. So, deregulation of the food items mentioned would mean that they will now be out of the purview of the act and hence the government cannot step in and regulate these items anymore. 

This, the FM says, will help farmers get better prices for their crop and will also enable them to export their produce for a better price.

The FM also said that stock limits for these products will be imposed only under exceptional circumstances such as national calamities, famine or a huge surge in prices. This means that there won’t be a limit of how much grain a farmer can store or hoard. Further, no stock limit shall apply to processors or value chain participants based on the capacity of their plants.

This came as part of the third tranche of announcements by the Finance Minister on Friday, which focused on agriculture and allied activities. This included 11 measures for agriculture of which eight were for strengthening infrastructure and three were governance and administrative reforms

Here are all the announcements made by the Finance Minister

For agriculture:

1. The FM announced a Rs 1 lakh crore Agri Infrastructure Fund for strengthening farmgate infrastructure for farmers and to fund projects at farm-gate and aggregation points such as agricultural co-operatives, farmer producer organisations, agri entrepreneurs, startups, etc. This will address the lack of adequate cold chain and post harvest management infrastructure. The FM said that this fund be created at the earliest
2. Rs 10,000 crore has been announced for the formalisation of micro food enterprises (MFEs). This is part of the government’s initiative to develop products domestically with global outreach. “Most of the products the government is aiming to deal with are health and wellness products, herbal, nutritional, organic products and products being used as alternatives for a healthy living,” the FM said.  Up to 2 lakh micro food enterprises, farmer producer organisations, self help groups and cooperatives will be supported through this.There will be a cluster based approach.  Focus will be on women,SC and STs and where possible, on aspirational districts. 
3. The FM also announced Rs 20,000 crore for fishermen through Pradhan Mantri Matsya Sampada Yojana. This will lead to additional fish production of 70 lakh tonnes over 5 years, she said. The FM said that this will also bring employment to over 55 lakh people and double exports to Rs 1 lakh crore. Of the Rs 20,000 crore, Rs 11,000 crore is for marine, inland fisheries and aquaculture activities and Rs 9,000 crore for Infrastructure such as fishing harbours, cold chain, markets, etc.
4. National Animal Disease Control Program for Foot and Mouth disease and brucellosis - for vaccination of cows, buffalo, sheep, goat, pig, has been launched with a total outlay of Rs 13,343 crore.
5. An Animal Husbandry Infrastructure Fund of Rs 15,000 crore will be set up for dairy infrastructure. This, FM says, can work as an incentive for establishment of plants for export of niche products. Also aiming to support private investment in dairy processing, value addition and cattle feed. 
6. For the promotion of herbal cultivation, the government has allocated Rs 4,000 crore. This the FM said will lead to Rs 5,000 crore of income generation for farmers. The National Medicinal Plants Board will also bring 800 hectare area by developing a corridor of medicinal plants along the banks of river Ganges. 
7. The FM also announced Rs 500 crore for beekeeping initiatives, which will benefit 2 lakh beekeepers. This could lead to not needing import of wax. The government will implement a scheme for infrastructure development related to integrated beekeeping development centres, collection, marketing and storage centres, post harvest and value added facilities.
8. Operation Greens will get an additional Rs 500 crore. The operation Greens will be extended from tomatoes, onion and potatoes to all fruits and vegetables. The scheme will give a 50% subsidy on transportation from surplus to deficient markets and 50% subsidy on storage, including cold storages. This will be a pilot for 6 months. The expected outcome is that there will be better price realisation to farmers, reduced wastage and affordability of products for consumers.

The FM also announced that a central law will be implemented to give farmers adequate choice to sell their produce at attractive prices. This law will also ensure barrier free inter-state trade and develop a framework for e-trading for agriculture produce.

This, FM Nirmala Sitharaman says, is because farmers are bound to sell agriculture produce only to licensees in APMCs, which results in hindrances in free flow of agricultural produce and fragmentation of markets and supply chain. 

In addition to this, the FM also announced that a facilitative legal framework will be created to enable farmers to engage with processors, aggregators, large retailers, exporters.

“Farmers do not have a standard mechanism for a predictable price of crops, predictable sale of their produce. At the time of sowing, he goes in with uncertainty and if he's lucky and is able to produce, he doesn't get a right price. In order to bring in some certainty obtained prior to his sowing, well before every season, if he is given a certain kind of an assured price return quantity, it will lead to a lot of fairness for the farmer,” the FM said.