Agriculture market reforms are a must

Agriculture market reforms are a must: Although food production has increased tremendously, farmers’ incomes have not been impacted positively...

January 2, 2018
Costs and prices in agriculture*

This refers to the excellent, well-researched piece on agriculture market reforms by A Narayanamoorthy/P Alli (Business Line, January 2). The issues raised include those emanating from agriculture and cooperative sectors remaining in the concurrent list and resultant lack of focused attention on reforms. Farmers and those engaged in marketing and processing of agricultural produce especially in rural areas are still dependent on the cooperative sector which has suffered most in the process of reforms in financial sector and entry of the rich in sectors which were hitherto dominated by local entrepreneurs. The solution lies in a holistic approach to reforms.
The article discusses farmer’s income from different perspectives. An example may bring out the glaring disparity which the authors are trying to explain. A bank takes deposits at an average cost of 8 percent per annum and ‘sells’ its product namely ‘loan’ at 12 percent per annum. Today’s announcement by SBI about a cut of 30 basis points in its base rate makes a headline. No one talks about a farmer getting Rs4 per kg of potato when a kg of potato chips is sold at Rs400 per kg, or when tomato prices are at a low of Rs5 per kg at the farm gate, tomato ketchup is sold at Rs 100 for 400 ml. Where do the margins go? When product prices go up, is it a crime for the farmer who produces the basic ‘raw material’ to expect a reasonable rise in prices of his produce at least to make farming viable? Instead, the farmer gets all the blame for his inability to repay loans on due dates when the real culprit is government policy which is biased.
High time, we took up a comprehensive review of our costs, prices and income policy to ensure reasonable farm gate prices, living wages for workers both on farms and factories and prices for products commensurate with costs of inputs and need for incentives.
Meanwhile, ‘cooperative federalism’ should not remain just a slogan. Problems arising from certain subjects like agriculture and cooperation remaining in the concurrent list should not continue to be a convenient tool for proving ‘one-upmanship’ in election manifestoes. Ongoing consultations between Centre and states should evolve common minimum programs bringing transparency in concessions and waivers where necessary and cross-subsidization of costs where unavoidable.

M G Warrier, Mumbai 
*Please access published version at:


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