Problems farmers face are rooted in structural constraints, require regulatory intervention -Mekhala Krishnamurthy

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published Published on May 22, 2020   modified Modified on May 22, 2020

-The Indian Express

We must recognise and strengthen the diversity, dynamism, enterprise, and resilience of India’s agricultural markets.

Last week, Finance Minister Nirmala Sitharaman signalled the Union government’s intention to enact a new central law that would override existing state regulations that restrict the farmer from legally selling to anyone other than a buyer licensed by the local Agricultural Produce Marketing Committee (APMC). The decision to push for a central law comes after dissatisfaction with two decades of partial and uneven reforms by different states.

In the haste to rid ourselves of old edifices, one must not fail to learn from this long and varied regulatory history and the distinct and diverse realities of agricultural markets on the ground. If this moment is to be a watershed for Indian farmers, we must not begin by overstating the power of legal reform in guaranteeing economic freedom and outcomes. The problems farmers face are not only a result of vested, monopolistic interests, but are rooted in larger structural conditions that significantly weaken their terms of engagement in agricultural markets. The former may be addressed by regulatory intervention. But the latter will need location-specific policies, well-directed investment, and well-functioning agricultural institutions. It is hard to imagine how either can be achieved without a great deal of consensus, coordination and capacity in which the states will need to play a major role.

The dominant narrative laments the fact that farmers are forced to sell their produce only to licensed APMC traders. But the reality is that even today the majority of Indian farmers, especially small and marginal cultivators, sell their produce to small-scale and largely unlicensed traders and intermediaries in the village or in local sites of exchange outside regulated market yards. But, if farmers are bound by law to sell in APMC mandis, why are so many of them selling outside?

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The Indian Express, 22 May, 2020,

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