Indian Economy, 5th edition (35 page)

Nevertheless, there have been some achievements in leading states like Maharashtra, Karnataka, Andhra Pradesh and Gujarat since the Model APMC Act 2003 has been implemented in those states. Some state governments have granted licences to the private sector for setting up of markets and direct purchase from the farmers in order to provide alternative marketing channels. There is considerable potential for agricultural markets to be competitive. As the APMC was created to protect the interests of farmers, it will be in the fitness of things to give farmers the choice of going to the APMC or not. In the light of this, the need is to pursue further reforms in the state APMC Acts.

e-choupal
33

The e-
c
houpal, the first private sector initiative by the private sector in agricultural marketing, is a business platform consisting of a set of organis-ational subsystems and interfaces connecting farmers to global markets. This common structure can be leveraged to procure/provide a host of products and services for the farmer as a producer as well as a consumer. The e-choupal business platform consists of three layers, each at different levels of geographic aggregation. Each of the three layers is characterised by three key elements:

(a)
t
he infrastructure (physical or organisational) through which transactions take place,

(b)
t
he entity (person or organisation) orchestrating the transactions, and

(c)
t
he geographical coverage of the layer.

The first layer consists of the village-level kiosks with internet access (or e-Choupal), managed by an ITC-trained local farmer (called a Sanchalak) and within walking distance (1–5 kilometres) of each target farmer. The relatively sparse population density in rural India justified the location of one e-Choupal per cluster of five villages. The second layer consists of a bricks-and-mortar infrastructure (called hubs) managed by the traditional intermediary who has local knowledge/skills (called a Samyojak in his new role) and within tractorable distance (25–30 kilometres) of the target farmer. The ITC chose to operate the platform on the following three business principles:

(a)
Free information and knowledge which ensures wider participation by the farmer.

(b)
f
reedom of choice in transactions (farmers, after accessing information at the e-Choupal, are free to transact their own way).

(c)
t
ransaction-based income stream for the Sanchalak by tying his revenue stream to the transaction (on a commission basis).

Trifed

The Government established TRIFED (Tribal Co-operative Marketing Development Federation of India Ltd.) in August 1987. The basic aim of TRIFED was to save tribals from exploitation by private traders and to offer them remunerative prices for their minor forest produce and surplus agriculture products. TRIFED started functioning in April 1988. TRIFED has also been declared an important agency for collecting, processing, storing and developing oil seeds products. TRIFED plays the role of an agent of FCI for Government purchase of wheat and rice. It is also an agent of agriculture and cooperation department of Government for purchase of cereals, pulses and oil-seeds. Agriculture Ministry gives aid to TRIFED for compensation loss incurred due to price fluctuations.

Nafed

NAFED (National Agricultural Co-operative Marketing Federation of India Ltd.) has been established in co-operative sector at national level for marketing of agriculture products.

Storing facilities for
Agriculture Products

To promote storing facilities for agriculture products, National Co-operative Development & Warehousing Board (1956) and Central Warehousing Corporation (1957) were established. State Warehousing Corporations were also established. Presently FCI has its own warehouses.

Agricultural Credit

Three types
34
of loans are provided to Indian farmers to meet their financial requirements—

(a)
Short term loans

(b)
Medium term loans

(c)
Long term loans

Short Term Loans

Short term loans are provided for a period of less than 15 months to meet out expenses of routine farming and domestic consumptions. This type of loan is demanded by farmers for purchasing seeds, fertilisers and for meeting out family requirements.

Medium Term Loans

Medium term loans are provided for a period of 15 months to 5 years to purchase agricultural equipment, animals and for land improvements.

Long Term Loans

Long term loans are provided for a period of more than 5 years. This type of loan is taken by the farmers to purchase land and expensive agricultural equipment and for repayment of old loans.

Source of Loans

The Indian farmer can acquire the above types of loans from two sources:

(a)
Non-institutional sources like moneylenders, landlords, big businessmen, etc
35
.

(b)
Institutional sources like commercial Banks, Co-operative Banks and Government sources.

Policy on agriculture credit aims at progressive institutionalisation of credit agencies for providing credit to farmers for raising agricultural production and productivity. Agricultural credit is disbursed through a multiagency network consisting of Co-operatives, Commercial Banks and Regional Rural Banks (RRBs).

COMMODITY FUTURES MARKET

The commodity futures market facilitates the
price discovery
process and provides a platform for
price risk management
in commodities. Currently, 113 commodities are notified for futures trading of which 50 are actively traded in five national and 16 commodity specific
exchanges
. Agricultural commodities, bullion, energy, and base metal products account for a large share of the commodities traded in the commodity futures market. The total value of trade in the commodity futures market rose significantly in 2011 compared to that of the previous year due to increased awareness, the advent of new commodity exchanges, increase in global commodity prices, and improved regulation.

To strengthen and broad base the market, the Forward Markets Commission (FMC), which is
the regulator
for commodity futures trading under the provisions of the Forward Contracts (Regulation) Act 1952, has taken many initiatives
36
:

(i)
Conducted awareness programmes during 2011 such as a media campaign under the
Jago Grahak Jago Programme
about the Dos and Don’ts of trading in the commodity futures market;

(ii)
Police training programmes in the states of Madhya Pradesh, Chhattisgarh, Tamil Nadu, and Delhi with regard to dabba trading/ illegal trading;

(iii)
A massive awareness and capacity-building programme for various stakeholder groups, with primary focus on farmers.

(iv)
On the regulatory front, the FMC undertook measures for the development of the commodity futures market which include ensuring more effective inspection of members of the exchanges on regular basis and in a comprehensive manner covering all aspects of regulatory regime;

(v)
bringing out a guidance manual for improving audit practices, prescribing penalty structure for client code modification and for executing trade; and

(vi)
granting exemptions for short hedge for soyabean/oil futures, issuing directives for segregation of client accounts.

FARM WASTE DEBATE

A recent study
37
, undertaken by the
Central Institute of Post-Harvest Engineering and Technology (CIPHET)
, a government-run institute, has estimated the value of farm waste in India at Rs 44,000 crore (at the prices of 2009), that is around 7% of the total produce which is much lower than the oft-stated 40% level. Although cereals, such as wheat and rice, pulses and oil seeds accounted for around two-thirds of the wastage, the loss in case of fruits and vegetables was the highest at up to 18% of the total produce.

Attending the causes of storage and processing facilities, something the GoI is emphasising, this level could come down significantly and can serve great purpose in helping the economy to fight the repeated price shocks of the past two years in case of fruits, vegetables and foodgrains to a great extent.

The losses take place in almost all stages of farming but
the study
looked at harvesting, collection, grading, cleaning, packaging, transportation and storage. If cultivation was also included the loss would figure would be much higher. The GoI has said that availability of better technology and their adoption has brought about a reduction in losses.

Irrigation

The Planning Commission
38
classifies irrigation projects/schemes in India on the following lines :

1.
Major Irrigation Schemes
—Those with cultivable command areas (CCA) more than 10,000 hectares.

2.
Medium Irrigation Schemes—
Those with cultivable command areas (CCA) between 2,000 and 10,000 hectares.

3.
Minor Irrigation Schemes—
Those with cultivable command area (CCA) upto 2,000 hectares. Expansion of irrigation facilities, along with consolidation of the existing systems, has been the main part of the strategy for increasing production of foodgrains.

With a view to ensuring early completion of projects for providing irrigation benefits to the farmers,
Rural Infrastructure Development Fund
(RIDF) has been in operation since 1995–96. The Government launched
Accelerated Irrigation Benefits Programme
(AIBP) in 1996–97.

The Accelerated Irrigation Benefit Programme (AIBP) was launched during 1996–97 to give loan assistance to the States to help them complete some of the incomplete major/medium irrigation projects which were in an advanced stage of completion.

NATIONAL FOOD SECURITY
MISSION (NFSM)

The NFSM, launched in 2007, is a
crop development
scheme of the Government of India that aims at additional production of 10, 8, and 2 million tonnes of rice, wheat, and pulses, respectively by the end of 2011-12. The Mission interventions consist of
39
:

(a)
seeds of improved variety

(b)
soil ameliorants

(c)
plant nutrients

(d)
farm machines/implements, and

(e)
plant protection measures

In addition, a special initiative under the name of the
Accelerated Pulses Production Programme
was initiated in 2010 to boost the production of pulses by active promotion of technologies in 1,000 clusters of 1,000 ha (hectare) each.

Considerable achievements under the NFSM have been recorded during the course of implementation of the programme such as new farm practices, distribution of seeds of high yielding varieties of rice, wheat, pulses, and hybrid rice, and treating area with soil ameliorants to restore soil fertility for higher productivity. Through targeted interventions, the mission has already achieved, a year in advance, 25 millions tonnes of additional production of foodgrains exceeding the target of 20 million tonnes of production set for the terminal year 2011-12, of the 11th Plan.

MACRO MANAGEMENT OF
AGRICULTURE (MMA)

The MMA was revised in 2008 to improve its efficacy in supplementing/complementing the
efforts of the states
towards enhancement of agricultural production and productivity
40
. It also provides opportunity to draw upon agricultural development programmes out of ten sub-schemes relating to crop production and natural resource management, and give it the flexibility to use 20 per cent of resources for innovative components.

The revised MMA scheme has formula-based allocation criteria and provides assistance in the form of grants: loan to the states/UTs on 90:10 ratio basis, except in case of the north-eastern states where the central share is 100 per cent grant.

RASHTRIYA KRISHI VIKAS
YOJANA (RKVY)

The RKVY was launched in 2007-08 for incentivising states to enhance public investment to achieve 4 per cent growth rate in agriculture and allied sectors during the 11th Plan
41
. The RKVY format permits taking up national priorities as sub-schemes, allowing the states flexibility in project selection and implementation. The sub-schemes include –

(i)
Bringing Green Revolution to Eastern Region;

(ii)
Integrated Development of 60,000 Pulses Villages in Rainfed Areas;

(iii)
Promotion of Oil Palm;

(iv)
Initiative on Vegetable Clusters;

(v)
Nutri-cereals;

(vi)
National Mission for Protein Supplements;

(vii)
Accelerated Fodder Development Programme;

(viii)
Rainfed Area Development Programme; and

(ix)
Saffron Mission.

The RKVY links 50 per cent of central assistance to those states that have stepped up percentage of State Plan expenditure on agriculture and allied sectors. States have indeed increased allocation to agriculture and allied sectors from 4.88 per cent of total State Plan expenditure in 2006-07 to 6.04 per cent of in 2010-11
(as per the Revised Estimates, Economic Survey 2011-12).

ISOPOM

The centrally sponsored ISOPOM (Integrated Scheme Of Oilseeds, Pulses, Oil Palm, And Maize)
42
have been under implementation during the Eleventh Plan in 14 states for oilseeds and pulses, 15 for maize, and 9 for oil palm. The pulses component has been merged with the NFSM with effect from 1 April 2010. Oilseeds are raised mostly under rainfed conditions and are important for the livelihood of small and marginal farmers in the arid and semi-arid areas of the country.