Wednesday, March 22, 2023
HomeOpinionEnsuring that only farmers benefit from higher MSP will be a challenge

Ensuring that only farmers benefit from higher MSP will be a challenge

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The idea of giving 1.5 times the cost of the produce is good, but with challenges in implementation, achieving effectiveness will require innovative approach.

The current budget allocation has focussed on improving agricultural market conditions, and to some extent, help address the price risk. The idea of giving 1.5 times the cost of the produce is good, but with challenges in implementation, achieving effectiveness will require an innovative approach.

Computation of the cost of production has not been easy, considering the spread of crops in vast geographical areas, different varieties produced, as well as different production conditions.

Also, there are issues about the right cost of production to be considered for such computations. Proper quality assessment also has been a major concern in such interventions. Ensuring that only farmers benefit from the scheme would need elaborate systems to be established. Payment processes have to be robust.

Connecting 470 APMCs is very much needed. But just by connecting the markets, the purpose will not be served. In order to ensure that buyers and sellers should be able to transact over long distances, grades and standards and fast assessment systems are essential. This needs a lot of attention due to complexities in arriving at trade-acceptable grade standards, and also developing a quality assessment system which has the required integrity.

Challenges in arriving at quick, reliable and cost-effective quality assessment system are formidable, and have to be addressed. Also, in the situation of trust deficit generally prevailing in markets, creating such systems with integrity will be the bedrock of success of unified agricultural markets.

Exempting eNAM from APMC regulation is highly desirable to enable warehouses, where warehouse receipt system is practiced, to directly participate in the e-trading platform. This will help in moving towards grade-based transaction, enabling distant buyers and sellers to transact. However, this should follow a proper logistic arrangement so that distant buyers can be sure of getting their purchases without any loss of quality or quantity of produce.

Doubling the allocation for food processing is another important measure announced in the budget, to prevent large losses of produce in terms of both quality and quantity. However, the utilisation has to ensure focus on streamlining certain large value chains and creating infrastructure so that the product flow in these chains is smooth and cost-effective. Another area of concern has been the food safety practices that the value chain has to follow to ensure safe food to the consumers.

Larger allocation to fisheries is a welcome feature of the budget. Here again, attention towards value chain development and food safety measure that needs to be taken care of in order to streamline the supply and create demand in the market place. The potential to develop fisheries, given the long coast line and inland fisheries, has been huge, and proper infrastructure and market creation will certainly help in realising the potential. The benefit of a well-developed fisheries sector will largely flow to weaker sections of the society.

Supporting a National Bamboo Mission will also help in creating useful products of bamboo, which can particularly substitute plastics and wood, which in turn, will have large positive externalities for the society as a whole, and will also help channel livelihood opportunities to tribal areas.

While initiatives and enhanced allocations in the budget seem to be very welcome, there are questions about the adequacy of allocation, given the extent of distress in the farming sector.

Gopal Naik is Dean, Indian Institute of Management, Bangalore.

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