Thursday, April 26, 2012

Dr. JP Asks PM to Focus on Liberating Agriculture

Lok Satta Party President Dr. Jayaprakash Narayan has urged Prime Minister Dr. Manmohan Singh to abandon ad hoc and antediluvian policies in respect of three commodities – food grains, cotton and edible oils – which have let down the farmer and posed long-term dangers to the economy.

In a letter to the Prime Minister today, Dr. JP said that trade in agricultural commodities should be fully and irrevocably liberalized so that farmers get the best prices that markets can offer, and the price signal will boost long-term production.

Dr. JP wrote the letter in the context of the Prime Minister convening a meeting of the Agriculture and Food Ministers on April 30 to sort out differences between them on export of agricultural produce.

Dr. JP pointed out that although the rest of the economy has largely been liberated from the clutches of license-permit-control-quota raj, "thanks largely due to your stewardship of the economy during 1991-96," agriculture is still subject to arbitrary and unjustified controls.

The farm sector has been going through a severe crisis with input and labor costs going up significantly and prices of agricultural commodities falling at the farm gate.

Dr. JP said that although food grain production has been registering secular, long-term growth and per capita consumption falling on account of shift to fruits, vegetables, eggs, milk and meat, the Government of India is pursuing only ad hoc policies on exports. "For years, grain exports have been banned even as our grain stock is rotting. Thanks to your intervention, in late 2011, rice exports have been allowed. However quotas are imposed and ad hoc policies pursued."

Cotton farmers are in distress because even in a good year, they are not able to generate surpluses. "Despite record production, the Government unabashedly pursues a policy calculated to depress prices, and imposes quotas and stops exports at will on the ground that the Indian textile industry needs raw material. We cannot ask the already crisis-ridden farm sector to forcibly sell at low prices to enhance the profits of a few in the industry. If farmers switch over to other crops on account of low prices of cotton, there will be a long-term shortage and price increase, adversely affecting the economy."

Dr. JP pointed out that instead of giving incentives to boost edible oil production the Government of India is facilitating duty-free imports. "If a moderate duty of, say 10%, is imposed on edible oil imports, and if that revenue is ploughed back to oilseed farmers as incentive to boost production, within a few years we will not have shortages. Yet, ad hoc policies are now making India forever dependent on imports."

Dr. JP told the Prime Minister that depressed prices will force more and more farmers to leave farming (already crop holidays are being declared in Andhra Pradesh), or make them move rapidly from crop to crop in the quest for better incomes leading to volatility in prices.

Dr. JP suggested that trade in agricultural commodities be fully and irrevocably liberalized. Simultaneously, the minimum support price (MSP) mechanism should be continued to act as a safety net to farmers until economic freedom yields satisfactory results. Massive investments and technology should be brought into storage, supply chain and agro-processing.

"A comprehensive policy should be evolved to leverage our strengths in agriculture (11% of world’s agricultural land, sunshine, good rainfall, and strong agrarian tradition), and make it an engine of growth and earner of export revenue, not a drag on the economy."

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