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Reforms in farm sector

Kashmir Times. Dated: 9/18/2020 11:32:23 PM

The NDA-government has to ensure credibility of its agricultural reform measures and rescind ban on onion export

Once again wrong policies of the NDA-government, resulting in increase in retail prices of onion to Rs 40 per kg in Delhi, which are more than double in the last one month, will bring tears in the eyes of the poor people. Nobody knows who in the Narendra Modi-government responded straightaway by banning exports of onions. The quantities of the farm production are not small by any calculations. The exports of this commodity fetched Rs 2320 crores for the exports of 11.50 lakh tonnes in 2019-20. The exports of onions stood higher at Rs 3468 crores earning for exports of 21.84 lakh tonnes in the previous financial year. In previous years, the exports were well placed and the farmers were also getting good price for their produce and the central government did not put any emergency brakes on exports. The centre would initially fix a minimum export prices and no shipments were allowed below that fixed rate and then gradually raise the prices in order to discourage exports outside the country to cap the prices and maintain the retail prices. The sudden order for ban on exports would be the last resort when domestic prices continued to go up. Unfortunately, the central government has done away with the slow and calibrated response on this issue. The trigger seems to be the latest data on Consumer Price Index (CPI) inflation for August, which, at 6.69 percent, was above the Reserve Bank of India’s (RBI) upper target limit of 6 percent. Moreover, retail prices of food, which are a disproportionate 45.86 percent in the overall index, are up 9.05 percent. Rising food prices, compounded by uncertainty over the extent of damage to the standing kharif crop from excessive August rains, have complicated the RBI’s task of further cutting interest rates to revive the economy that is in contraction mode. And in this case, it’s the entire ‘POT’ (potato, onion, tomato) complex that is on the boil. Potatoes and tomatoes, too, are now retailing at over Rs 35 and Rs 50 per kg, respectively. That, of course, has a huge bearing on inflation expectations of households. Already, unplanned lockdown in the wake of Coronavirus pandemic has resulted in higher prices of the food stuffs across the country while the income of the common citizens has gone down. This is already pinching the pockets of the citizens, who have lost jobs and regular income due to the slowdown in economic activity, which has been witnessing a nosedive since last year.
The present decision of the Narendra Modi-government to ban export of onions come at a time when the centre is set to pass major reform laws for removing all movement and stockholding restrictions on agriculture produce across the country. These moves have seen opposition from the middlemen traders in some parts of the country besides the farmers, who do not have direct access to markets. Onion growers and other farmers have reasons to feel aggrieved about the government intervening on behalf of consumers only. The same onion bulb that is selling today at Rs 28-30 per kg in Maharashtra’s Lasalgaon wholesale market was trading at Rs 6.50-7.00 just over a month back. The government must, to ensure the credibility of its recent agricultural reform measures, rescind the export ban. Farming is a tough job with inherent weather and price-related uncertainties. Building export markets is time consuming and long-haul entrepreneurial effort. The central government, if it wants to help consumers, should build a buffer stock of all essential foodstuffs. The time has come to stop forcing producers to bear the burden of inflation targeting. In fact, the idea of Minimum Support Price (MSP) for all agricultural products should be fixed and revised on annual basis linked to national indexing policy to ensure farmers getting justified price for the produce on sustainable basis.