MARKET REFORMS&

FOOD SECURITY POLICIES IN

INDIADr. D. L. MAHESWAR

Vice-ChancellorUniversity of Horticultural Sciences,

Bagalkot20-02-2016

INDIAN AGRICULTURE HAS MADE RAPID STRIDES SINCE INDEPENDENCE

From food shortages and import

to self-sufficiency and exports.

From subsistence farming

to intensive and technology led cultivation.

Today , India is the front ranking

producer of many crops in the world.

Ushered in through the

green, white, blue and yellow revolutions

State Production (million tonne) Yield (kg/ha)Uttar Pradesh 50.05 2474Punjab 28.90 4409Madhya Pradesh 24.24 1622Andhra Pradesh 20.10 2641Rajasthan 18.30 1364West Bengal 17.05 2732Haryana 16.97 3854Maharashtra 13.92 1198Bihar 13.15 1971Karnataka 12.17 1622Tamilnadu 8.49 2396Odisha 8.33 1617Gujarat 8.21 1917Chattisgarh 7.58 1532Assam 4.94 1952Jharkhand 4.19 1874Uttarakhand 1.78 2001Others 6.38All India 264.77 2101

AREA, PRODUCTION AND YIELD OF FOOD GRAINS IN 2013-14

DEMAND IS DRIVEN BY POPULATION GROWTH AND LAND SCARCITY

19602 people

2005>4 people

People fed per hectare(2.47 acres = 1 hectare)

2030>5 people

19502.5 billion

20056.5 billion

2030 >8 billion

World Population

MARKET REFORMS

INDIA IS THE FRONT RANKING PRODUCER OF MANY COMMODITIES

MilkLargest Producer

~132.40 Mn T

F & V#2 in the world

243.47 Mn T

Food Grains#2 in the world(255.36 Mn T)

Cattle / buffaloesLargest in the world

304.42 million

TeaLargest Producer

(0.96 Mn T)

Sugarcane# 2 in the world(338.96 Mn T)

Goat & Sheep212.10 million

FisheriesMarine: 3.275 Mn TInland : 5.744 Mn T

CHALLENGES OF AGRICULTURAL MARKETING

To provide Multiple and Competitive Marketing Channel

Attract Large scale investments for building Post-Harvest infrastructure

To create adequate and efficient Marketing Infrastructure

To empower farmers with Market Information

Agricultural Markets in India as on 31.03.2014

5,964 Wholesale Markets in India

28,000 Rural Primary Markets (about 15% are regulated markets)

2,483 Principal Regulated Markets

7,100 Regulated Market Sub-yards

• Need for Regulated Markets within 5 sq. km radius whereas average all India availability is 462.19 sq. km only.

PHASES OF REFORMS Pre-liberalization

Post-liberation

2003 onwards

PRE-LIBERALIZATIONRegulation of marketing practices - legal and regulatory measures

Licensing LeviesStocking limitsMovement restrictions

Creation of cooperative credit institutionsNationalization of banks & institutional credit flow to the farmers

Creation and expansion of physical and institutional infrastructure

POST-LIBERALIZATION & REFORMSLifted Allowed Continued

•Storage controls•Small scale reservation•Credit control •Ban on futures trading

• Ban on foreign Investment Bulk handling and storage•Licensing system

• Ban on set up of private wholesale markets •Movement restrictions

• Bulk handling and storage (BHS) by private trade•Contract farming

• Direct purchase from farmers outside market yards

• Entry of organized retail trade

• Export and import Liberalized

• Minimum support prices

• Levy on rice mills and sugar factories

VITAL AREAS OF REFORMS AS PER MODEL APMC ACT 2003

• Establishment of private market yards / private markets managed by a

person other than a Market Committee;

• Establishment of private yards and direct purchase of agricultural produce

from agriculturist by a person other than a Market Committee (Direct

purchasing from producer).

• Establishment of consumer / farmers market by a person other than

Market Committee (Direct Sale by the producer to the consumers).

• Provision of Contract Farming.

• Single registration / license for trade transaction in more than one market.

• To promote and encourage e-trading.

• Single point levy of market fee.

VARIOUS REFORMS INITIATED• Suitable amendments in the State APMC Acts to facilitate efficient

and alternative marketing channels for farm produce

• Progressive dismantling of controls and regulations under EC Act to evolve a national integrated market for agri-produce

• Law for implementing Negotiable Warehouse Receipts System passed by the Parliament

• Enactment of an Integrated Food Law to promote quality and single window regulatory system

• Allowing futures trading/ electronic spot trading in agricultural commodities for better price risk management and price discovery

MAJOR REFORMS THROUGH MODEL APMC ACT

Central Government circulated Model APMR Act to State Governments for adoption in September 2003 and Model Rules in November 2007

Establishment of Private/ Co-operative markets/ Farmer-consumer markets/ Direct marketing

Safeguarding interest of the farmers through provisions for Contract Farming

Single point levy and payment of market fee/ Single point registration of functionaries

PPP in management & extension activities/ Promotion of e-trading/ Electronic Spot Exchanges

Encouraging professional management in APMCs Promotion of Grading and Standardization.

WHY FURTHER REFORMS IN INDIA

Country is still home to a-fifth of the world’s

undernourished population

More than 50 percent of women and nearly 80 percent of

children are victims of anemia

Nearly 57 percent of pre-school children suffering from

vitamin A deficiency

19 percent of India’s children were deteriorated

38 percent stunted and 46 percent were underweight

VARIOUS REFORM MEASURES INITIATED

Amendments in the State APMC Acts to facilitate efficient and alternative marketing channels for farm produce

Progressive dismantling of controls and regulations under EC Act

Law for implementing Negotiable Warehouse Receipts System

Enactment of an Integrated Food Law to promote quality & single window regulatory system

Allowing futures trading in agricultural commodities for better price risk management and price discovery

REFORMS THROUGH MODEL APMC ACT Setting up of special commodity markets PPP in management & extension activities/ Promotion of

e-trading Encouraging professional management in APMCs Provisions for Contract Farming Single point levy of market fee / Single point registration of

functionaries Establishment of Private markets / Farmer – consumer

markets / Direct marketing Powers to State Government for exemption of market fee Setting up of State Marketing Extension Cells / State

Agricultural Produce Standards Bureaus.

STATUS OF APMC ACT AMENDMENTS

States / UTs having amended Acts :

1. Andhra Pradesh

2. Arunachal Pradesh

3. Assam

4. Chhattisgarh

5. Goa

6. Gujarat

7. Himachal Pradesh

8. Karnataka

9. Madhya Pradesh

10. Maharashtra

11. Nagaland

12. Orissa

13. Punjab / UT of Chandigarh

14. Rajasthan

15. Sikkim

16. Tripura &

17. Uttar Pradesh

PRIVATE MARKET / DIRECT MARKETINGEstablishment of private market yard and

direct purchase from farmers States Which have adopted the suggested provision :

1. Andhra Pradesh2. Arunachal Pradesh3. Assam 4. Goa 5. Gujarat6. Himachal Pradesh7. Karnataka 8. Madhya Pradesh

9. Maharashtra 10.Nagaland 11.Orissa12.Punjab / UT of Chandigarh13.Rajasthan14.Sikkim 15.Tripura 16.Uttar Pradesh

CONSUMER/ FARMER MARKET

Establishment of Consumer / Farmer market

States Which have adopted the suggested provision :

1. Arunachal Pradesh

2. Assam

3. Goa

4. Gujarat

5. Himachal Pradesh

6. Karnataka

7. Madhya Pradesh

8. Maharashtra

9. Nagaland

10. Punjab / UT of Chandigarh

11. Rajasthan

12. Sikkim

13. Tripura

14. Uttar Pradesh

CONTRACT FARMING

Contract farming agreement system

States Which have adopted the suggested provision :

1. Andhra Pradesh2. Arunachal Pradesh3. Assam 4. Chhattisgarh5. Goa 6. Gujarat7. Karnataka 8. Madhya Pradesh

8. Maharashtra 9. Nagaland 10.Orissa11.Rajasthan12.Sikkim 13.Tripura 14.Uttar Pradesh

REFORMS TO MEET

Increasing population pressureIncreasing threat of climate change leading to food availability

Soaring pricesFood vs Fuel debateTrade policiesChanges in Consumption Patterns

MARKET REFORMS FOR - National unified market platform for marketing

Adoption of Model Act by all States

APMC to promote primary value addition instead of just collecting market fees

Encourage and enabling environment for post harvest processing

Efforts in the direction of organizing farmers farmer /aggregation /farmer producer companies

Encourage PPP/ FDI investment in agriculture

MARKET REFORMS FOR -Transparent price setting mechanism

Organized retailing and food processing

Venture capital in agriculture

Changes in land lease act

Agri-business enterprise as satellite centers in rural areas

Investment in roads is the to alleviate poverty

MARKET LIBERALIZATION FOR HORTICULTURE REVOLUTION

• Fruits and vegetables gives 4-10 times the return from other

crop groups (Cereals, pulses and oil seeds)

• 1 % shift in area from non horticultural crops to horticultural

crops adds 0.46 % points to growth rate of agriculture sector

• Food demand indicates that 1 % increase in per capita

expenditure results in 1.9 % and 1.02 % increase in demand of

fruits and vegetables

• Large deficiency of fruits and vegetables in Indian diet

• India’s import of fruits is rising by 20 % per year

• The above indicators suggest that demand side prospects for

fruits and vegetables are very bright

MARKET LIBERALIZATION FOR HORTICULTURE REVOLUTION

• Recently some states have brought perishable fruits and

vegetables out of purview of APMC Act

• The practice of marketing, required by market regulation has

prevented application of e-commerce in fruits and vegetables.

• Market regulations constrain online purchases from

farmers/producers which can be of immense benefit to

producers as well as consumers

• With similar milk market conditions India can achieve

horticulture revolution in a much shorter period than white

revolution

MARKET LIBERALIZATION FOR HORTICULTURE REVOLUTION

• Taking fruits and vegetables out of APMC Act and make their

sale and purchase completely free

• Horticulture producer companies or organizations

• Free marketing of horticultural produce will attract lot of

investments in horticultural processing and value chains

• Technology are highly favourable for horticulture revolution at

small farms

• Policy support required for market liberalization, producers

organization and processing

FOOD SECURITY

TREND OF FOOD PRODUCTIONYear Food

Production (mt)

Population (million)

Per capita availability

(per day grams)1950 50.8 361 3951960 82.0 439 4691970 108.4 548 4691980 129.6 683 4551990 176.4 846 4762000 201.6 1000 4542010 244.7 1150 437

2014-15 257.07 1213 511

GROWTH SCENARIO

Increase in population 1.5 per cent(16 million)

Increase in total food production 230 per cent/annum

Increase in net availability per capita 10 per cent

Decrease in Undernourished population

25 to 20 per cent

Reduction in household poverty line Came down to 28 per cent

Decrease in house hold hungry 17.3 to 2.5 per cent

GLOBAL FOCUSWorld Food Summit – 1996Millennium Development Goals- 2000

Reducing hunger, Food insecurity, Malnourishment and Poverty

THE NATIONAL FOOD SECURITY

BILL, 2013

According to FAOFood security is achieved when all people at all times have physical and economic access to food that is sufficient to meet dietary needs for a healthy and productive life

Food Security Index (FSI)Rank No.

State FSI Rank No.

State FSI

1. Punjab 63 10. Uttar Pradesh 37

2. Kerala 59 11. Rajasthan 363. Haryana 58 12. Madhya

Pradesh31

4. Maharashtra 50 13. Assam 265. Tamilnadu 48 14. Odisha 246. Karnataka 46 15. Chhattisgarh 24

7. Andhra Pradesh

42 16. Bihar 18

8. Gujarat 40 17. Jharkhand 129. West Bengal 39

Basics of Food Security Availability of food at national level on

sustainable basis (depends on growth of food production)

Physical & Economic access of all households to food

Utilization of available food by individuals

ENABLING FACTORS Improvement in yield resulted from

advancements in technology Land reforms Irrigation Seed, fertilizer, agro-chemicals & farm

implements distribution (input subsidies) Expansion of the National Agricultural Research

System (NARS) Strengthening and expansion of Agricultural

Education and Training System The diversion of low-yielding crops to high-value

produce

PHYSICAL ACCESSExpansion of road networks, creation of primary market yards, and building-up of storage facilities in the rural areas

Expansion of network of public distribution system helped in reaching cereals to deficit and geographically difficult regions

ECONOMIC ACCESS It is 2nd important pillar of Food security – Ability

to acquire available food from earnings and transfers

The increase in retail prices of two staple food items (rice and wheat) has been lower than the increase in per capita income

Improved availability of staple food at the declining real prices has contributed to improved nutritional-security

FOOD POLICIESPrice Policy and Support for Farmers (MSP, fertilizer,

electricity, irrigation)

Public Distribution System (PDS) of CerealsBuffer Stocking of rice and wheat Distribution of subsidized cereals Supplementary Nutrition Programme (SNP) Mid-Day Meals (MDM) for school Children Food for Work, Employment Guarantee and Right to

Food (SGRY/MGNREGA)

FOOD POLICIES Decentralization of procurement & distribution

through PDS Measures to improve Nutrition programmes- ICDS

& MDMS• Nutrition counseling, adequate nutrition &

health education• Increased spending on infant & young child

nutrition• Micronutrient supplements & low cost

nutritionally balanced menu Income increasing wage measures

PRODUCTION POLICIES Increased investment in agriculture to boost

productivity Legalizing land lease Investment in dryland, soil water conversation,

harvesting solar power for agriculture Investment in Integrated farming Investment in high value horticulture

crops (diversification) Increased investment in post-harvest Investment in private extension

Future directions & Reforms

THE FUTURE WE WANT…Remunerative Agriculture: Integrated Farming Systems, Conservation AgricultureSelf-sufficiency in Pulses and reduced edible oil importsPrecision farming and due farm mechanisationReduced Harvest and Post-harvest lossesEfficiency, Equity & EmpowermentComprehensive Agri-Biosecurity

The Future We Want…

Resilient crop varieties and animal breeds Enhanced Input Use Efficiencies Comprehensive Agri-Biosecurity Precision farming & Farm mechanization Reduced Harvest and Post-harvest losses Quality Human Resource

Food - Feed - Fodder - Fibre - Fuel - Fish - Flower - Fruit

Focus Health & Employment Youth & Women Enhance Efficiency &

Reduce Costs Water & Energy Diversify & Enhance

Income Process & Prosper

Carbon Sequestration

THE FUTURE WE WANT…Need for greater International Co-ordination between FAO, WFP, IFAD and World bank

More effective governance of Agriculture and Food security at global level

Millenium Development Goals (MDG) with regard to food and nutrition needs critical reviews.

Reaching Sustainable Food Security for All by 2020

Getting the Priorities and Responsibilities Right

I n t e r n a t i o n a l F o o d P o l i c y R e s e a r c h I n s t i t u t e

THANK YOU