• Over the years, India has transformed itself from a country grappling with the threat of food security to a leading food producer.
• However, India has not been able to fully leverage the benefits of its agricultural revolution to emerge as a prominent player in international trade.Â
• Agri-marketing needs to be integrated on a pan-India basis, and the Government must ensure widespread utilisation of the e-NAM platform.
• Corporatisation of farming, adoption of uniform quality and packaging standards and branding Indian agri-products including GIs will go a long way in helping farmers tap domestic and global markets.
For a country where agriculture contributes around 17% to the GDP & provides a source of livelihood for nearly 50% of the total workforce, its role in economic growth cannot be undermined. It is for this reason that the Indian government invested in technological advancements aimed at bolstering agricultural production. The green revolution engineered by Professor MS Swaminathan transformed India over the last few decades from a net importer of food grains to being a leading contributor to the global food basket.
While India has made significant strides in establishing itself as the top producer for agricultural commodities like cereals, fruits & vegetables, cotton & jute; it has not been able to establish itself as a leading player in global agri trade. Instead, India’s agricultural imports are growing at a CAGR of 9.8% in the last five years, while export growth has been relatively sublime at 1.1%. Given the current scenario of Indian agriculture, the government has decided to set up a high-powered committee to recommend structural reforms to boost farm productivity and marketing. While most discussions in the past have focused on boosting agricultural productivity, we discuss the oft-neglected impetus on agri-marketing reforms.
Commencement of agri-marketing in India
The existence of a traditional market system in India goes back to its rendezvous with colonialism. Back then, fine Indian cotton was needed to keep the textile mills in Manchester running. Consequently, the Berar Cotton and Grain Market Act of 1887 were enacted. This empowered the British Resident to declare any place in the assigned district as a market for the sale and purchase of agricultural produce and form a committee to supervise it. The post-Independence period saw many states adopting regulated markets & setting up Agricultural Produce Market Committees (APMC).
Over time, it was realized that regulated markets may not be the best solution for enhancing India’s agricultural trade. Market fragmentation, disparity in the density of regulated markets in different parts of the country, inadequate marketing infrastructure & high market fees are some of the daunting challenges faced by the farmers. Further, there are issues like cartelisation, existence of middlemen, high post-harvest wastages, restrictions in licensing, market information asymmetry & inadequate credit facilities.
Need for agri-marketing reforms
Time & again, it has been reported that the agri-produce cultivated by Indian farmers with their sweat and toil is rotting at the Food Corporation of India (FCI). But this post-harvest loss can be converted into a huge source of profit by value addition & converting them into products like pickles, sauces, biscuits, juices & jams. Further, technological & infrastructural bottlenecks (refrigerated transportation vans & cold storages) need to be addressed in order to enhance the shelf life of perishables like fruits & vegetables so that the produce does not go waste.
NITI Aayog member Ramesh Chand further opines that agri-marketing should be brought into the Concurrent or Union list to benefit farmers. This will help in the successful execution of agricultural marketing on a pan-Indian level by facilitating market integration. Another step in this direction, as suggested by the Committee on Doubling Farmers’ Income, is to roll out the model Agriculture Produce Marketing Committee (APMC) Act 2017. This would create a single-point levy of taxes, promote direct interface between farmers and end-users, and give liberty to farmers to sell their produce to whomsoever and wherever they get better prices.
The government should ensure more comprehensive implementation of e-NAMs (electronic-National Agriculture Markets) in order to dismantle the tyranny of APMCs. E-NAMs will go a long way in offering multiple go-to-market channels to the farmers by facilitating warehouse sales and reducing transportation costs. They will also allow traders greater market access & the opportunity to indulge in secondary trading.
India will also do well to take a cue from other regions in order to revamp its agri-marketing structure. China has been reforming its agri-pricing support system since 2016 and has moved from price support operations to direct income support on a per-acre basis. States such as Telangana and Odisha, too, have introduced income support – a WTO compliant move – to support their farmers.
Corporatisation of farming will be a critical step forward, as it will lead to better remuneration for their produce and greater alignment with the needs of the market. Besides remuneration, private companies provide farmers with invaluable knowledge on the right crop varieties to grow, inputs to use, etc. The government can take inspiration from success stories like those of potato farmers in Gujarat,who have engaged in contract farming by signing agreements with the likes of Pepsico and Balaji.
Another area where India needs to pull up its socks if it wants to give impetus to international agricultural trade is ensuring uniform quality and packaging standards for its agricultural products. Cultivating crops that are acceptable according to the food safety norms (sanitary and phyto-sanitary measures) of regions like EU & US, will go a long way in boosting agri-exports. The government should invest in establishing agricultural commodities as brands in themselves through extensive global marketing campaigns. Geographical Indication (GI) status and its promotion is another potent strategy that must be leveraged to establish trust in Indian agricultural commodities in the eyes of the international consumers.
