Green shoots of the new farm bills will be visible in 3-5 years: Ashok Gulati

The three farm bills introduced by the government last week is a bold step in the right direction and will lead to thousands of new experiments and unleash different models to improve the efficiency and competitiveness in agriculture, said Ashok Gulati, Infosys Chair, Professor for agriculture at ICRIER, New Delhi.

He was speaking at a webinar ‘Will the new farm acts unleash the potential of Indian Agriculture?’ organised by Chennai International Centre (CIC) on Saturday.

“You will start seeing the green shoots and I think in next 3-5 years horizon, you will see thousands of new experiments coming in to build direct supply lines connecting with the farmers, either with individual farmers or farmers organisations or FPOs as it happened in the case of milk cooperatives,” Gulati said.

Possibility of green shoots

The Professor, however, said the green shoots also depend on complementary actions from the state governments where business people feel safe to invest.

“Bihar repealed APMC long back but nothing happened either in agriculture or manufacturing because it had some governance problems and there was no infrastructure in place,” Gulati said, adding, “So, businesses will go where they can get good returns.”

He also added that states, which welcomes investors with subsidies to create back-end infrastructure, along with FPOs, will take big lead and investors will be interested to go to such states to create processing facilities, valuation addition, and create organised retail or exports.

Noting that the Agricultural Produce Market Committee (APMC) is here to stay, Balram Singh Yadav, Managing Director of Godrej Agrovet said, “APMCs will not vanish. They have infrastructure in place. They will become more efficient and reduce cost. Karnataka has already reduced the market fee, Haryana and Punjab recently reduced market fee for exports of Basmati which they never thought of earlier.”

He also added that along with farm bills, the government is also pushing on creating more Farmer Producer Organization (FPOs) which will greatly help agriculture. “Consolidation of farmers is very important to realise a lot of benefits such as access to technology, credit, new skills and to be able to play in the e-commerce market, all of which requires consolidation and sufficient marketable surplus.”

In the Union Budget 2019-20, the Government announced formation of 10,000 new FPOs to ensure economies of scale for farmers over the next five years.

Mekhala Krishnamurthy, Senior Fellow at Centre for Policy Research, New Delhi recalled how the Madhya Pradesh government’s amendment allowing single license yards outside of mandis in 2002 led to widespread farmer strikes and huge resistance during those years.

“But over the years, the stronger mandis improved their competitiveness, upgraded systems and processes, besides recognising their unique strengths. Mandis also discovered its own comparative advantage during this process and interestingly many companies continue to buy both from farmers and mandis based on what their requirements were,” Krishnamurthy said.

She also added that people often equate APMC mandis with minimum support price (MSP) which is a misconception. “No mandis in this country guarantees MSP, only if the government buys in the mandi, the government should guarantee MSP. Most mandis are markets for private trade between private sellers and buyers.”

In his address, RG Chandramogan, MD, Hatsun Agro Product said while the milk cooperatives in Gujarat were formed to address the issues of unemployment, in Tamil Nadu the issue was about rapid urbanisation where farmers were looking for prosperity and not poverty alleviation.

He added that to bring prosperity in dairy farming, the company took several initiatives including reducing the basic cost to farmers, increasing the yield per animal using technology among others.

“We don't want him (farmers) to be financed by any local person so we forcibly brought all farmers to get directly paid by the bank even two years before demonitisation. Farmers were totally against us but in the next 6 months they understood the benefit,” Chandramogan said and added that “Today, bankers are waiting at farmer’s doorstep since their credibility has greatly increased.”

“We have addressed productivity, cost reduction and avoided middleman. Over the years, the loyalty factor started playing among the farmers,” he added.