Agriculture Economics Prelims cum Mains

Cooperative federalism is a must for agricultural reform

Onus of agriculture reforms on States:

  • Policy reforms in the farm sector have not yielded the anticipated outcomes.
  • Agriculture being a state subject, the central government formulates policy guidelines, advises, and allocates funds.
  • However, the onus of proper implementation of farm and market reforms lies with state governments.

Poor state of Agriculture marketing in India:

  • In many parts of India, farmers do not have the right to make the first sale of their produce outside the regulated market yards.
  • There is no freedom for a farmer or entrepreneur to establish a private market yard/private market managed by a person other than a market committee.
  • Similarly, both corporates and farmers show reluctance to enter contracts for the production and marketing of farm products.

leads to inefficiency and exploitation:

  • The consequence is a marketing system that is inefficient and leads to the exploitation of farmers by intermediaries.
  • Most states do not have a unified single trading licence valid across the state or Union territory. This means farmers are also exploited through a non-transparent and multipoint levy of a market fee.


Some efforts made to reform agri marketing:

  • The centre, in an attempt to deregulate and privatize the agricultural marketing system, has ushered in a series of structural market reforms in the last few years.


  • The launch of e-National Agriculture Market (e-NAM) is a step in the right direction for enhanced transparency in trading and better price discovery.
  • It provided multiple choices to farmers in selling their commodities online and in markets of their choice..

Model Agricultural Produce and Livestock Marketing Act:

  • The government also introduced the Agricultural Produce and Livestock Marketing (Promotion and Facilitation) Act, 2017.
  • The Act provides for alternative marketing channels, direct marketing, and setting up of private markets, farmer-consumer markets and commodity markets.
  • It allows declaring warehouses /silos/ cold storages as market sub-yards to promote agriculture marketing.

Model contract Farming and Services Act:

  • In May 2018, the agriculture ministry released the Agricultural Produce and Livestock Contract Farming and Services (Promotion & Facilitation) Act, 2018.
  • The Act, in addition to contract farming, provides for service contracts all along the value chain, including pre-production, production and post-production.

Uprgrading rural haats into Agri Markets:

  • In the interim budget of 2019, the government of India announced that it would develop and upgrade the existing 22,000 rural haats into Gramin Agricultural Markets (GrAMs).
  • Further, GrAMs, electronically linked to e-NAM and exempted from regulations of Agricultural Produce Marketing Committees (APMCs), will provide farmers with the facility to sell directly to consumers and bulk purchasers.


But adoption of these reforms by States has been slow:

  • The above policy reforms have the potential to deregulate the agriculture marketing system by ushering in large-scale efficiency gains.
  • However, progress in the adoption of many of these market reforms at the state level has been painfully slow.
  • Each state has its own set of priorities, socio-economic and political realities, budgetary compulsions and agro-climatic nuances, many of which come in the way of aligning the state policy with the national policy.


Land leasing reforms needed:

  • Tenant farmers, oral lessees, share croppers or benami farmers make up an estimated one of every five farmers.
  • They face hardship in accessing credit and crop insurance. They are also deprived of the relief benefits provided by the Indian government for crop losses and damages caused by natural calamities.
  • Land leasing also needs to be reformed.
  • Most states either have legally prohibitive land leasing laws or adopt restrictive practices in different forms.
  • Various aspects w.r.t land leading that need to be looked into include:
    • Lease period
    • Landowners’ right of resumption
    • Conditions for its termination
    • Tenants’ right to pre-emptive purchase of leased land
    • Conferment of ownership rights on tenants
    • Recording of leases
    • Rent regulations

States must take initiative:

  • Land leasing reforms, if carried out by state governments, will contribute immensely towards inclusive growth.
  • An expert committee on land leasing constituted by the NITI Aayog had come out with the Model Agricultural Land Leasing Act, 2016.
  • However, it has been adopted fully in only a few states of India so far.


Agri Export Policy calls on States to act:

  • The new Agri Export Policy exhorts greater involvement of state governments.
  • States must take steps in creating agri-logistics and infrastructure, developing product specific clusters, promoting good agricultural practices and working on quality assurance systems.
  • It also pushes for marketing reforms for doubling agricultural exports to $60+ billion by 2022.


Cooperative federalism in agriculture:

  • Cooperation between the Centre and the states is a must for the expeditious implementation of reforms in the agriculture sector.
  • Hence, a structured mechanism based on the philosophy of cooperative federalism is the need of the hour.

Can take lessons from other mechanisms to promote federalism:

  • There are several examples of successful cooperative federal institutions in India.
  • The most prominent of them include the Inter State Council (ISC), five Zonal Councils, NITI Aayog, the Finance Commission and the recent GST Council.

Learning from US’ NASDA:

  • We require a dedicated federal and cooperative body for the agriculture sector on the lines of the National Association of State Departments of Agriculture (NASDA) in the US, for instance.
  • NASDA works towards forging partnerships and creating a consensus among state departments of agriculture, the federal government and other stakeholders to achieve sound policy outcomes.
  • One of the objectives of the institution is to develop a spirit of teamwork and cooperation among federal, state and territorial agencies with respect to programmes that relate to agriculture.



  • It is time we worked towards creating a truly cooperative and federal entity for the quick implementation of reforms in India’s agriculture sector.



GS Paper III: Economy


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