Reforming Indian agriculture has always been a Sisyphean task with governments

abandoning their reformist zeal the moment political considerations intervene. The
NDA regime�s decision to go back to age-old measures such as stock-holding limits
to arrest the recent price spiral in pulses, is a case in point. It was only last
year that the same government enacted landmark amendments to the Essential
Commodities Act that sought to give up powers to regulate the supply of essential
commodities in order to encourage private investments in the agri-supply chain. The
amended Act, whose operation has been stayed by the Supreme Court, had allowed
stock-holding limits only in times of war, famine, grave natural calamities or
�extraordinary� price rise. Given that pulses prices have climbed by 15-20% in a
year, it is moot if this drastic response was merited. Not surprisingly, the pulses
trade is up in arms against the stringent stock-holding limits imposed now.
Stock-holding limits, raids on suspected hoarders or tinkering with import tariffs
do not do much to resolve fundamental demand-supply mismatches or seasonal
shortages. The Centre needs to consider long-term policy fixes. To better
anticipate upcoming imbalances, the Centre needs to greatly improve its market
intelligence and forecasting ability on agricultural output and demand trends.
Today, production estimates put out by industry bodies as well as official agencies
at the beginning of the kharif and rabi seasons are ballpark at best, with actuals
bearing little resemblance to the forecasts. The Agriculture Ministry�s third
advance estimates in May, for instance, upped the FY22 pulses output forecast to
255 lakh tonnes from 244 lakh tonnes in the second advance estimates, despite the
kharif output coming in at just 85 lakh tonnes � 20% short of target. To better
reflect ground realities, official agencies need to monitor acreage, rainfall, pest
build-up and consumption on a granular basis. In sensitive commodities such as
pulses and oilseeds, systematic capture and monitoring of import contracts will
help gauge pipeline inventory. Finally, remunerative prices to the farmer is key.
Annual increases in Minimum Support Prices of crops need to be calibrated to
evolving market moves. Timely creation and disposal of buffer stocks and a Price
Stabilisation Fund were instrumental in lifting pulses output from 163 lakh tonnes
to over 250 lakh tonnes between FY16 and FY18, and such steps need to be renewed.
In the long run, for farmers to receive early warning signals on an upcoming supply
glut and to make timely shifts in cropping patterns, a well-developed national spot
market in agri-commodities that transmits timely price information is critical.
This calls for efforts to take e-NAM to its logical conclusion and encourage
producer and actual-user participation in commodities trading.
Reforming Indian agriculture has always been a Sisyphean task with governments
abandoning their reformist zeal the moment political considerations intervene. The
NDA regime�s decision to go back to age-old measures such as stock-holding limits
to arrest the recent price spiral in pulses, is a case in point. It was only last
year that the same government enacted landmark amendments to the Essential
Commodities Act that sought to give up powers to regulate the supply of essential
commodities in order to encourage private investments in the agri-supply chain. The
amended Act, whose operation has been stayed by the Supreme Court, had allowed
stock-holding limits only in times of war, famine, grave natural calamities or
�extraordinary� price rise. Given that pulses prices have climbed by 15-20% in a
year, it is moot if this drastic response was merited. Not surprisingly, the pulses
trade is up in arms against the stringent stock-holding limits imposed now.
Stock-holding limits, raids on suspected hoarders or tinkering with import tariffs
do not do much to resolve fundamental demand-supply mismatches or seasonal
shortages. The Centre needs to consider long-term policy fixes. To better
anticipate upcoming imbalances, the Centre needs to greatly improve its market
intelligence and forecasting ability on agricultural output and demand trends.
Today, production estimates put out by industry bodies as well as official agencies
at the beginning of the kharif and rabi seasons are ballpark at best, with actuals
bearing little resemblance to the forecasts. The Agriculture Ministry�s third
advance estimates in May, for instance, upped the FY22 pulses output forecast to
255 lakh tonnes from 244 lakh tonnes in the second advance estimates, despite the
kharif output coming in at just 85 lakh tonnes � 20% short of target. To better
reflect ground realities, official agencies need to monitor acreage, rainfall, pest
build-up and consumption on a granular basis. In sensitive commodities such as
pulses and oilseeds, systematic capture and monitoring of import contracts will
help gauge pipeline inventory. Finally, remunerative prices to the farmer is key.
Annual increases in Minimum Support Prices of crops need to be calibrated to
evolving market moves. Timely creation and disposal of buffer stocks and a Price
Stabilisation Fund were instrumental in lifting pulses output from 163 lakh tonnes
to over 250 lakh tonnes between FY16 and FY18, and such steps need to be renewed.
In the long run, for farmers to receive early warning signals on an upcoming supply
glut and to make timely shifts in cropping patterns, a well-developed national spot
market in agri-commodities that transmits timely price information is critical.
This calls for efforts to take e-NAM to its logical conclusion and encourage
producer and actual-user participation in commodities trading.
Reforming Indian agriculture has always been a Sisyphean task with governments
abandoning their reformist zeal the moment political considerations intervene. The
NDA regime�s decision to go back to age-old measures such as stock-holding limits
to arrest the recent price spiral in pulses, is a case in point. It was only last
year that the same government enacted landmark amendments to the Essential
Commodities Act that sought to give up powers to regulate the supply of essential
commodities in order to encourage private investments in the agri-supply chain. The
amended Act, whose operation has been stayed by the Supreme Court, had allowed
stock-holding limits only in times of war, famine, grave natural calamities or
�extraordinary� price rise. Given that pulses prices have climbed by 15-20% in a
year, it is moot if this drastic response was merited. Not surprisingly, the pulses
trade is up in arms against the stringent stock-holding limits imposed now.
Stock-holding limits, raids on suspected hoarders or tinkering with import tariffs
do not do much to resolve fundamental demand-supply mismatches or seasonal
shortages. The Centre needs to consider long-term policy fixes. To better
anticipate upcoming imbalances, the Centre needs to greatly improve its market
intelligence and forecasting ability on agricultural output and demand trends.
Today, production estimates put out by industry bodies as well as official agencies
at the beginning of the kharif and rabi seasons are ballpark at best, with actuals
bearing little resemblance to the forecasts. The Agriculture Ministry�s third
advance estimates in May, for instance, upped the FY22 pulses output forecast to
255 lakh tonnes from 244 lakh tonnes in the second advance estimates, despite the
kharif output coming in at just 85 lakh tonnes � 20% short of target. To better
reflect ground realities, official agencies need to monitor acreage, rainfall, pest
build-up and consumption on a granular basis. In sensitive commodities such as
pulses and oilseeds, systematic capture and monitoring of import contracts will
help gauge pipeline inventory. Finally, remunerative prices to the farmer is key.
Annual increases in Minimum Support Prices of crops need to be calibrated to
evolving market moves. Timely creation and disposal of buffer stocks and a Price
Stabilisation Fund were instrumental in lifting pulses output from 163 lakh tonnes
to over 250 lakh tonnes between FY16 and FY18, and such steps need to be renewed.
In the long run, for farmers to receive early warning signals on an upcoming supply
glut and to make timely shifts in cropping patterns, a well-developed national spot
market in agri-commodities that transmits timely price information is critical.
This calls for efforts to take e-NAM to its logical conclusion and encourage
producer and actual-user participation in commodities trading.