Without suitable laws, it is difficult to attract the private sector
As the farm laws were hanging for a long time, the Prime Minister decided to withdraw them.
A majority of farmers outside Punjab, Haryana and western Uttar Pradesh will see this step as a setback. After the protests started, there was uncertainty for the corporate sector in taking investment decisions in the farm sector.
Corporates were apprehensive about the future of the three laws. At least now they will be able to take a decision. It is, nevertheless, a setback in efforts to bring FDI into the sector.
However, when fresh discussions start, a conducive environment will be created that will be helpful for the agriculture sector.
Indirect or hidden contract farming has been happening in Punjab, Haryana and western UP in paddy, wheat and sugar-cane on behalf of the government as farmers are able to sell their produce at fixed price. But other parts of the country are waiting for contract farming to happen in other crops. There was scope for expansion of areas under contract farming in these farm laws..
Also, as many Opposition-ruled States were saying they would not implement these laws, the Prime Minister did the right thing in deciding to repeal them.
With regard to the other major demand of legalising the minimum support price (MSP) system, it was not there in these farm laws and should be dealt with separately.
The country’s leadership synchronises the reforms required and political needs. Instead of legalising MSP, there can be an income insurance. When prices of a certain crop fall, farmers can be protected through insurance similar to crop insurance where compensation is paid for crop damage. Agriculture has to be a profitable business venture like what farmers in grapes, bananas, dairy and poultry sectors have experienced. This MSP model is not the solution for the entire country.
There is a concept of negotiable warehouse receipts but unless and until there is adequate availability of storage space, where would the farmers keep their produce?
Warehouse, cold storage and processing are methods to stabilise crop prices and to expand in these areas, there has to be investment in agri-infrastructure. Unless and until laws are suitably made or changed, there is no chance to attract the private sector.
(PK Joshi is a member of the SC-appointed committee on farm laws; as told to Prabhudatta Mishra)