Saturday, October 24, 2020

Reform could so easily become deform.

 "The government is left with about 25,000 tonnes of onion stock in its buffer that will get exhausted in the first week of November, cooperative Nafed Managing Director Sanjeev Kumar Chadha said on Friday. Currently, Nafed is offloading onion buffer stock in the market to boost domestic availability and check onion prices which surpassed Rs 75 per kg in some parts of the country in the last few weeks." Also, "To contain prices, the Center on Friday imposed stock holding limit on retail and wholesale traders till December 31 to improve the domestic availability of the commodity and provide relief to consumers." At the same time, "State-owned FCI and state procurement agencies have bought 98.19 lakh (9.819 million) tonnes of paddy till Monday for Rs 18,540 crore (Rs 185.40 billion)." This was done at minimum support price (MSP)  which is at higher than market price, so rice farmers win and onion farmers lose. The government passed three farm bills to "provide greater choice and freedom to farmers to sell their produce and to buyers to buy and store, thereby creating competition in agricultural marketing". "It seems the government has one foot on the accelerator to liberalise agri markets and the other on the brake (ban on onion exports). All this dents its credibility." wrote Prof Ashok Gulati. "MSPs provide 'guaranteed prices' and 'assured market' to farmers, and save them from price fluctuations," wrote Misra and Iqbal. "But although MSPs are announced for around 23 crops, actual procurement happens for very few crops such as wheat and rice." The farm bills are meant to provide "freedom to the farmers from the 'villainous and exploitative' Agricultural Produce Marketing Committee (APMC) mandis", but "The middlemen are a source of information, inputs, and sometimes credit without collateral," wrote Prof Himanshu. Farmers realise that these bills give "freedom to private capital to purchase agricultural produce at cheaper prices", and will shift trade from "regulated APMC mandis to private markets without any commitment to investment in infrastructure and regulation from government". Prime Minister Narendra Modi's farm reforms "could turn out to be the most far-reaching. If they succeed, India could not only feed itself, but become a major food exporter," wrote Prakash and Parija. MSP protection for cereals means that, "Compared to an influential diet for promoting human and planetary health, the diets of average Indians are considered unhealthy -- comprising excess consumption of cereals, but not enough consumption of proteins, fruits and vegetables, said a new study." Cannot be a free market if the government keeps interfering. Stopping that itch would be the greatest reform.       

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