The Odisha experience in agri marketing

Odisha govt dithers on policy regarding agri marketing

Print edition : January 01, 2021

A tribal woman with freshly-harvested ragi (finger millet) crop near Tumudibandha village in Odisha’s Kandhamal district, on November 18, 2019. Photo: Biswaranjan Rout

The Biju Janata Dal government in Odisha, which has been ambivalent in its approach to the liberalisation of agricultural marketing arrangements, must provide more clarity on a host of related issues.

The three recent farm produce related laws enacted by the Centre are meant to promote and facilitate trade and commerce of farm produce outside the purview of Agricultural Produce Marketing Committee (APMC) designated mandis, encourage contract farming for the sale of farm produce that could also be tied to hiring of farm services, and amend restrictions to trade and commerce that existed in the law governing essential commodities, respectively.

In the past, the APMC and contract farming related laws were considered to be part of agriculture and, therefore, in the legislative domain of the States as per the Constitution. The new laws do open up questions on the federal structure that need to be taken up by an appropriate court of adjudication.

Independent of the constitutional concerns, the lawmakers of Odisha have been sending mixed signals. Incidentally, Odisha had introduced a Bill on trade and commerce of farm produce in 2005 that had similar provisions, but was not legislated. In fact, substantive objections were raised by a member of the ruling party of the State. The same person is today the Cabinet Minister in the State in charge of food supplies and consumer welfare and cooperation, the very departments associated with the recent laws enacted by the Centre.

Ironically, Odisha promulgated two ordinances in May 2020 before similar ordinances were put up by the Centre that were later converted into Bills and subsequently enacted into laws.

Also read: Corporatisation of agriculture

Curiously enough, members of the ruling party in Odisha, the Biju Janata Dal (BJD) led by Naveen Patnaik, who has been its Chief Minister for more than 20 years now, opposed the above-mentioned two Bills in the Rajya Sabha but chose not to walk out along with other members opposing the Bill. But then, in November this year, Odisha considered introducing a Bill to allow private investment for the setting up of marketing and other infrastructure in line with its earlier ordinance and in sync with the Central law, which enables the bypassing of APMCs. Naturally, to a concerned citizen, the vacillation of the Odisha government would appear perplexing.

The three Central laws have led to widespread protests, with the epicentre in Punjab, the food bowl of India from where the Green Revolution began in the 1960s. The steps initiated then helped India move out from a ship-to-mouth scenario, but as we know now, it has had far-reaching social, ecological and economic consequences.

A Government of India constituted Expert Group on Agricultural Indebtedness chaired by Prof. R. Radhakrishna in its report (2007) indicated that the crisis in Indian agriculture was both agrarian (impacting life and livelihood of those dependent on it) and agricultural (on account of inadequate and inappropriate plans and policies that thrust down a one-size-fits-all thinking from the top).

While conceding that reforms are needed and that policy making is a continuous and ongoing process, it must be said that the three new laws are likely to further precipitate the crisis in Indian agriculture. Let us examine the contents of these.

The Farmers’ Produce Trade and Commerce (Promotion and Facilitation) Act, 2020, is designed to curtail the power and functioning of APMCs, or, to bypass them. It allows a trader to buy farm produce from any farmer, doing away with restrictions on inter-State trade, if any. This has been a long-standing demand from multilateral agencies such as the World Trade Organisation, the World Bank, and the International Monetary Fund, as also multinational companies and corporate/private entities. The Central law also does away with the need to engage with each State that would have required addressing State-specific concerns.

Even in the absence of this law, farmers were not restricted to sell their produce at APMC-designated mandis and receive a minimum support price (MSP). In Odisha, the MSP is largely relevant to paddy/rice procurement. From 2014-15 to 2018-19, about 40-60 per cent of the rice produced was procured, which is substantial, given that the figures are in the range of 30-40 per cent at the all-India level (see Fig 1).

Also read: Farmers' resistance hardens

Moreover, Odisha has taken further steps to increase the procurement of paddy during the pandemic. There have also been initiatives to procure pulses and oilseeds, and since 2018-19, efforts to procure ragi (finger millets) under the Odisha Millets Mission, but their quantum and share are much less than that of rice. Some horticultural produce is also sold at the local mandis, but they do not have MSP, as in most parts of India.

Farmers who sell their produce, including rice, outside the designated mandis often sell at prices below the MSP. In fact, there are many villages that do not have first-mile connectivity (the last mile, depending on whether the perspective is from Bhubaneswar or New Delhi) in terms of access to designated markets and there is a need to strengthen these.

Contract farming

The Farmers (Empowerment and Protection) Agreement on Price Assurance and Farm Services Act, 2020, meant to encourage contract farming, has the potential to open up a Pandora’s box. As per this law, a farmer can either enter into an agreement to sell her produce with a prospective buyer or enter into a tied agreement that links use of farm services to ensure quality produce to be purchased by the buyer. There is no provision to ensure that the farm services are suitable to the agro-ecological environment.

One is not sure of the rights of an individual farmer who happens to be a member of a farmer producer organisation (FPO) that has entered into a contract with a prospective buyer on behalf of its members. It is also not clear what would happen if the desired quality is not met for reasons beyond the control of the farmer.

Also read: New contract farming law

A concern with regard to the 2005 Odisha Bill was the possibility of the farmer losing possession of land. One is reminded of some of the Odia classics such as Fakir Mohan Senapati’s Cha Mana Atha Guntha (Six Acres and One-Third), where the protagonist Sania not only loses his land but also his sanity, or of Gopinath Mohanty’s Amrutara Santana and Paraja, which depict the tribal farmer’s loss of land, livelihood and dignity. These stories not only have historical relevance but may also have lessons in the contemporary setting.

It is possible that a risk-taking farmer may at times benefit from contracts, but risks have to be balanced by safeguards, especially in contracts between two unequal parties.

Deregulating foodstuffs

The Essential Commodities (Amendment) Act, 2020, deregulates foodstuffs, including farm produce, except under extraordinary circumstances and that too only after due notification. A presumption in this promulgation is that the ongoing pandemic is not an extraordinary circumstance. Keeping that aside, after the promulgation of the ordinance on June 5, 2020, as a consumer, one observed some price changes in some commodities. The retail daily food prices in Bhubaneswar, taken for three dates ( June 4, September 4 and December 4) from the Twitter handle of Food Odisha, indicate that over six months, the price had not increased or remained stable for three commodities (atta, moong dal and sugar) and had increased for five others (arhar 12 per cent, mustard oil 18 per cent, palm oil 24 per cent, potato 44 per cent, and onion 150 per cent).

It is important to keep a watch on the percentage change in prices, but one should also keep a tab on absolute price levels. During the six-month period, the 150 per cent increase in onion prices, by Rs.27 per kilogram from Rs.18 to Rs.45, was on everyone’s radar, while an 18 per cent increase in mustard oil, by Rs.23 a litre from Rs.122 to Rs.145, was equally pinching for the consumer and should be a matter of worry, perhaps of greater concern. Also, none of these price rises have anything to do with the price obtained by the farmer, who has already sold her produce after harvest, with or without a contractual agreement. While the ongoing crisis in Indian agriculture requires an urgent set of reforms, we have raised some concerns on the three farm-related laws. We further elaborate on possible implications and also provide some suggestions with a focus on Odisha, but these can also be relevant elsewhere.

Need for clarity

First, the BJD needs to clarify its position on farm-related laws. It might help if the Odisha legislature has a special session on agriculture to discuss the larger issues before they take a position.

Second, Odisha not only procures a substantial proportion of its rice produced, it uses a substantial proportion for public distribution and other welfare measures. In the future, as a counterfactual, if the farmers can sell paddy/rice only in the open market then it could have implications for their income. The fact that more than 90 per cent of the peasantry consists of small and marginal farmers having less than two hectares of land makes this critical for livelihood security. The changes would have obvious welfare implications.

Third, the State recently started procurement of ragi and perhaps has plans to extend it to other millets. But, with the new laws in place, it may have to work out the implications for its flagship Odisha Millets Mission. As an aside, it is to be noted that the APMC bypass law and the contract farming law both use the term coarse grains, overlooking an earlier notification by the Centre that refers to these as nutri-cereals.

Fourth, there is a need to work out nuances of different possible scenarios of contract farming to address the concerns of farmers in Odisha through State-specific laws or operational guidelines.

Fifth, Odisha is prone to natural calamities and needs to address the possible implications of the deregulation of foodstuffs from essential commodities.

Sixth, along with the tweets by Food Odisha, there is a need to further strengthen the price monitoring system by expanding the number of locations as well as extending them to more commodities so that extraordinary price movements can be monitored more effectively.

Also read: Agricultural reform or battering ram?

Finally, in keeping with the larger crisis, and going beyond the three laws, there is a need for a more holistic approach such as integrated/natural farming, which has the potential to reduce costs and risks in agriculture, provide additional employment and increase the incomes of those associated with farming. However, this requires a knowledge-centric approach, similar to the millets initiative. The State could also benefit from the natural farming experience of its neighbour, Andhra Pradesh, which has achieved a certain scale.

Natabar Sarangi is an octogenarian retired teacher-turned-organic farmer who set up the Rajendra Desi Chasa Gabesana Kendra, a research and training centre. Srijit Mishra is Professor, Indira Gandhi Institute of Development Research, Mumbai.

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