The Department of Economic Research, State Bank of India (SBI) released its research report titled SBI Ecowrap, in which 5 important agricultural reforms have been proposed.
Main Point
SBI published its report in the backdrop of withdrawal of three agricultural laws.
Proposed improvements
SBI has proposed the following 5 agricultural reforms:
Quantity Guarantee Clause : In the form of price guarantee instead of Minimum Support Price (MSP) that farmers are demanding, the government can ensure a “Quantity Guarantee Clause” for a period of 5 years. This clause will make it mandatory to “procure the percentage of production of crops (which are currently being procured) equal to the percentage of the previous year” along with safeguards in exceptional events like floods, droughts etc.
Floor Price Auction : The MSP should be converted into the floor price of the auction on the National Agriculture Market (eNAM). However, this will not solve the problem completely as the current data shows that the average model prices in eNAM mandis are lower than the MSP of all Kharif commodities.
APMC infrastructure : The government should work to strengthen the APMC market infrastructure, reduce monetary losses. According to SBI estimates based on a government report, the monetary loss for grains due to crop and post-harvest losses is around Rs 27,000 crore.
Contract Farming Institution : SBI has proposed to set up contract farming institute in India. Contract farming has been instrumental in providing producers in many countries access to the market and supply chain with price stability and technical support. For example, in Thailand, market certainty (52%) and price stability (46%) were factors that caused farmers to engage in contract farming.
Symmetric Procurement : SBI proposes to ensure a symmetric procurement across the states. Procurement of food grains has been asymmetric, with the top paddy producing states like West Bengal (1st) and Uttar Pradesh (2nd) witnessing minimum procurement.
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