Monday, May 16, 2011
Dr Ashok Gulati, chairman, Commission for Agricultural Costs and Prices (CACP), says liberal agri-reforms with more involvement of private players will help begetting progressive changes in the market. Gulati particularly stresses on building an intelligent market agency to expediting the decision making process during critical market situations. Excerpts from the interview..
What is the role that you would want Commission for Agriculture Costs and Prices (CACP) to play pro-actively under your chairmanship in the coming days?
First and foremost, I would like to see that the MSP (minimum support price), which is announced by the government for various agricultural commodities, after taking into consideration the recommendations of the CACP, is effective and actually paid to the farmers. There are reports even in the current marketing season that wheat is being sold at 10 to 15% below the MSP in several markets in Gujarat, Madhya Pradesh and Uttar Pradesh. This does not auger well for incentivising peasantry to adopt new technologies and raise their productivity. Nor does it lend credibility to the government’s price policy.
What are the immediate agri-reforms would you like to see taking place in agriculture?
Market reforms in agriculture need to be put on a much higher priority than is the case currently. This is required not only in the case of commodities like rice and wheat, but also perishable commodities like fruits and vegetables. We need to make the value chains much more efficient so that a larger part of the consumer’s rupee can pass on to the producers. This requires changes in laws (such as Agricultural Produce Marketing Committee (APMC) and Essential Commodities Act (ECA) and also investments in value chains, like logistics and storage.
How has the government responded to your demand for de-linking of procurement price with the MSP? What are the challenges in standardising rule of this kind?
MSP is supposed to be the “minimum” support price, but unfortunately in many commodities, most notably rice and wheat, this has also become the procurement price. I would urge the government to liberalise markets of these commodities so that farmers can get the market price and the procurement agencies should buy at the market price in full competition with private trade. That was the original idea of the Agricultural Prices Commission when it was founded in 1965. We need to revive that spirit.
How do you suggest to address the problem of excessive hoarding and middlemen, which distort the food prices in the country?
The rules of the game in the market economy are different. You do not go about beating the traders (hoarders) with a stick! What you need is a good market intelligence agency which continuously monitors the situation for sensitive commodities, say 10 to 15 commodities, and alerts the government well in time of any impending crisis. This agency collates information on production, stocks, prices, trade, etc. and can suggests the government when to unload stocks and when to build stocks; when to lower or raise import duties, all with a view to keep relative stability in food system. Absolute stability is neither possible nor perhaps desirable. Currently, we lack such an agency in the country, and many a time, even when the government knows reasonably well of the coming deficit or deluge of surplus, the policy action is very slow. There is a need to expedite the decision making process to align it with the emerging market situations.
Are you in favour of complete abolishment of the APMC Act and prefer to have a completely new Act which would actually address the market hassles for farmers and other stakeholders?
To start with, at least fruits and vegetables need to be de-listed from the APMC. In due course, we have to encourage direct buying by processors and organised retailers from the producer companies.
How do you propose to involve private players in agr-reforms?
Already there are various PPP ( Public-private partnership) models in building storage capacity, in extension work, and so on. The space for the private sector needs to be enlarged within the agriculture system, from provision of inputs (seeds, irrigation, fertilisers, pesticides, etc.) to buying and storing of outputs from farmers, grading, packing, and moving it to urban areas. All along the supply lines, private sector can play an important role, and I feel the government should tap the potential of our private sector by making it a strong ally. It will need some regulation, but excessive controls breed corruption and slow down the process of investments and growth. We need to give some fresh air and breathing space to the private sector in agri-systems.
Do you have a tentative plan in mind to bringing about transparency in prices and establishing a market forecast on which exports could be based?
As I said above, we need a market intelligence agency, which is currently missing. It will be a dream come true, if CACP can fill that vacuum!