Overhauling the Agricultural Marketing System

Agricultural market reforms are one of the sought out reform to strengthen the Indian economy. Addressing the challenges of the agricultural market is complex but yet doable. Some of the measures can be:

• Increase in number of Markets

As per the estimates of Dalwai Committee India needs at least 30,000 farm produce markets, as against the approximately 6,500 now. India should explore concepts like mini-markets which are similar to the collection points in the dairy or sugar industries and linked to the main mandis digitally.

With necessary physical connectivity (roads) and e-connectivity (broadband, mobile), these mini markets can become viable hubs for economic activity and employment generation.

• Tackling Demand vs supply

The uncontrolled cycles of excesses and shortages are the root cause of the price volatility. Price projections usually made based on previous years’ trends does not necessarily hold true and often leads to excess or low plantings.

The government must evolve a mechanism to provide real-time guidance to farmers on the choice and management of their crops based on satellite imagery and ground reports, followed by suitable advisories before and after planting. The government can partner with AgTech startups for this job.

• Warehouse Receipt Financing

The mechanism of Warehouse Receipt Financing needs integration with the mandis to enable farmers facing low harvest-time realisations can store their crop with accredited warehouses and raise funds, even as they wait for prices to go up.

Warehouse Receipt Financing facilities should be made widely available with a special focus towards small and marginal farmers. The utilisation of warehouse receipt financing is limited due to inadequate awareness and complexity of the schemes on offer at present.

• Producer consolidation

Consolidation of small and fragmented farms into more viable holdings will aid in improving producers access to finance and quality inputs, besides enabling better price realisations.

The consolidation can be realized by encouraging long-term land leasing or and at the same time providing suitable legal protection to landowners. This will incentivise much-needed investments in land development/ improvement and farm mechanisation.

• Ease of doing agriculture

Ease of doing business is a necessary pre-requisite as much for agriculture as other businesses. Restrictions on the movement of produce, stockholding, pricing and adoption of new technologies are hampering agri-businesses and agriculture in turn. This needs to be addressed.

Further, the above-proposed measures must be taken up in parallel rather than sequentially.