Landmark decisions by the Union Cabinet will benefit farmers by bringing a huge transformation in the agriculture sector

In a move that could bring a significant change in farmers’ income in the country, the Union Cabinet chaired by Prime Minister Narendra Modi on Wednesday gave approval to amendment to the Essential Commodities Act through ordinance.

With this decision, commodities like cereals, pulses, oilseeds, edible oils, onion and potatoes will be removed from list of essential commodities, thereby, removing excessive regulatory interference.

It will give farmers a freedom to produce, hold, move, distribute and supply their produce at will, leading to harnessing economies of scale and attract private sector and foreign direct investment into the agriculture sector. It will help drive up investment in cold storages and modernization of the food supply chain.

“It will create an ecosystem where the farmers and traders will enjoy freedom of choice of sale and purchase of agricultural produce. It will also promote barrier-free inter-state and intra-state trade and commerce outside the physical premises of markets notified under State Agricultural Produce Marketing legislations,” a statement released by the Prime Minister’s Office said, describing the move as a “historic-step” in unlocking the vastly regulated agricultural markets in the country.

It will open more choices for the farmer, reduce marketing costs for the farmers and help them in getting better prices. It will also help farmers of regions with surplus produce to get better prices and consumers of regions with shortages, lower prices. The ordinance also proposes an electronic trading in transaction platform for ensuring a seamless trade electronically.

However, while relaxing the regulatory environment, the government has ensured that interests of consumers are safeguarded. To this regard, a provision has been created in the amendment to the Essential Commodities Act where in situations such as war, famine, extraordinary price rise and natural calamity, such agricultural foodstuff can be regulated.

But then the installed capacity of a value chain participant and the export demand of an exporter will remain exempted from such stock limit imposition so as to ensure that investments in agriculture are not discouraged.

The amendment announced will help both farmers and consumers while bringing in price stability. It will also prevent wastage of agricultural produce that happens due to lack of storage facilities.

It will create an ecosystem where the farmers and traders will enjoy freedom of choice of sale and purchase of agri-produce. It will also promote barrier-free inter-state and intra-state trade and commerce outside the physical premises of markets notified under State Agricultural Produce Marketing legislations. This is a historic-step in unlocking the vastly regulated agricultural markets in the country.

It will open more choices for the farmer, reduce marketing costs for the farmers and help them in getting better prices. It will also help farmers of regions with surplus produce to get better prices and consumers of regions with shortages, lower prices. The ordinance also proposes an electronic trading in transaction platform for ensuring a seamless trade electronically.

The ordinance basically aims at creating additional trading opportunities outside the APMC market yards to help farmers get remunerative prices due to additional competition.

It will certainly pave the way for creating One India, One Agriculture Market and will lay the foundation for ensuring golden harvests for our hard working farmers.

The ordinance will empower farmers for engaging with processors, aggregators, large retailers, exporters etc., on a level playing field without any fear of exploitation. It will transfer the risk of market unpredictability from the farmer to the sponsor and also enable the farmer to access modern technology and better inputs. It will reduce cost of marketing and improve income of farmers.

This ordinance will act as a catalyst to attract private sector investment for building supply chains for supply of Indian farm produce to global markets. Farmers will get access to technology and advice for high value agriculture and get a ready market for such produce.

Farmers will engage in direct marketing thereby eliminating intermediaries resulting in full realization of price. Farmers have been provided adequate protection and an effective dispute resolution mechanism has been provided for with clear timelines for redressal.