Agricultural finance & marketing

Sol – 

  1. Farmer Producer Organization –
    • A legal entity formed by at least 10 farmers
    • Can be registered in Cooperative Societies Act, the Companies Act (Section 8), the Society Registration Act, 1860, and the Indian Trusts Act
    • Small Farmers’ Agribusiness Consortium (SFAC) is providing support for the promotion of FPO
    • In the Union Budget 2019-20, the Government announced the formation of 10,000 new Farmer Producer Organisations (FPOs)
    • Advantage – Low input cost, Better price discovery of product, better shock handling capacity, and better utilization of resources 
  1. Custom Hiring Center (CHC) – 
    • A unit comprising a set of farm machinery to make it easily reachable to small/marginal farmers at a concessional rate
    • To expand agricultural mechanization 
    • Ideally, one CHC is expected to cater to 4-5 villages
    • There are more than 1 lakh CHCs in India and more than 1000 in Rajasthan (Highest in Punjab)
  2. SATHI Portal
    • SATHI (SEED TRACEABILITY, AUTHENTICATION AND HOLISTIC INVENTORY) PORTAL 
    • Ministry of Agriculture & Farmers Welfare (MoA&FW) launched the SATHI Portal and mobile app 
    • Seed authenticity can be traced through a QR code system. 
    • The theme of ‘Uttam Beej – Samriddh Kisan’ 
    • Integrates – Research organizations, Dealers, Farmers, Certification agencies, etc 
  1. Fair And Remunerative Price –
    • FRP is the minimum price that mill owners are mandated to pay to sugarcane farmers 
    • It is announced at the recommendation of the Commission for Agricultural Costs and Prices, based on the cost of production 
    • Cooperative factories usually pay farmers a final cane price higher than the Centre’s FRP due to State-advised prices (usually higher than FRP) and the demand of farmer unions.

Sol –

In recent years, farmers primarily from Punjab, Haryana, and Uttar Pradesh have protested for the legal guarantee of the Minimum Support Price (MSP).

Arguments in Favor of Legal MSP

  1. Crop Diversification
    1. Incentive Removal: Legal MSP can remove the incentive to grow only MSP-supported crops like paddy, wheat, and sugarcane.
    2. Balanced Production: Encourages diversification, ensuring a variety of crops are grown to match demand.
  2. Self-Sufficiency in Edible Oils and Pulses: Ensuring remunerative MSPs for diverse crops can make the country self-sufficient in edible oils and pulses.
  3. Aligned Prices: If government and private prices align, farmers will not rely solely on the government for crop purchases.
  4. Remunerative Prices: Ensuring farmers receive fair prices is crucial for food security.
  5. Food Security and National Security: Avoid falling back into the “ship-to-mouth” import-dependent situation of the 1960s, ensuring national security and sovereignty.

Problems with the Legalization of MSP

  1. Market Equilibrium Disturbance
    • High Value or Crash: Legalizing MSP can disrupt market equilibrium, causing prices to fall below MSP during excess supply and leading to market crashes.
    • Delayed Purchases: Traders might wait to buy at lower prices later, worsening market conditions.
    • Shetkari Sangathana Incident: In 2018, Maharashtra’s MSP law led to traders halting purchases, harming farmers.
  2. Economic and Fiscal Implications: Critics argue that a legal MSP guarantee for all crops could be fiscally burdensome.
  3. Logistical Challenges: Expanding MSP procurement to include all crops would present logistical challenges, including the need for significant infrastructure development to store the procured grain​​.
  4. Supply-Side Inflation: Legal MSPs might stay high due to populism, reducing affordability and demand, leading to price crashes.
  5. International Trade Implications
    • Higher MSP than International Prices: High MSPs can reduce exports.
    • WTO Objections: Subsidized exports could face WTO objections.
    • Global Price Disparities: If global prices are lower than MSP, traders will avoid buying.
  6. Cropping Pattern Distortion → Shift to High-Yield Crops: Farmers may favor high-yield crops like paddy over sustainable options, leading to environmental harm and increased imports of neglected crops.
  7. FCI Procurement Issues: Increased FCI procurement can lead to stockpiling and eventual market dumping, causing losses.
  8. Black Market Growth: Small farmers might sell to traders at lower prices in the black market during excess supply periods.
  9. Climate Change Impact: Climate change affects produce quality, making uniform MSP impractical.

In conclusion, MSP is a policy designed for an era of scarcity. To address surplus, we need different measures. Building efficient markets and providing price or income support for efficient production is essential, rather than guaranteeing a price for every crop. 

Sol 

Use of e-technology and benefits: 

  1. Precision Agriculture–
    • The use of GPS, sensors, and IoT devices helps in optimizing inputs like water, fertilizers, and pesticides based on specific crop needs. 
    • Example – Navi Mumbai-based CropIn uses AI and data analytics to help farmers monitor crop health and optimize inputs. 
  2. Mobile Applications –
    • Provides farmers with real-time information on weather forecasts, market prices, and best farming practices. 
    • Example – Kisan Suvidha App- This app provides farmers with timely information on weather, market prices, and agricultural practices 
  3. Drones and UAVs (Unmanned Aerial Vehicles) and Robots
    • Used for aerial imagery, crop monitoring, and assessing crop health, precision spraying of fertilizers and pesticides
    • Example – Companies like AeroFarms
  4. Commerce Platforms –
    • Connects farmers directly with consumers, reducing reliance on middlemen and enhancing market access.
    • Example: AgroMarket online platform connects farmers directly to the buyers
    • E-nam, E-trading Platforms, etc 
  5. Smart Irrigation Systems
    • Automated irrigation systems that use data from weather forecasts and soil moisture sensors to optimize water usage. It reduces water wastage and enhances crop productivity
    • Example: Jain Irrigation provides smart irrigation systems that automatically adjust watering based on soil moisture, conserving water and boosting crop yields
  6. Blockchain Technology
    • Ensures traceability and transparency in the supply chain and land records
    • Example: The IBM Food Trust platform uses blockchain technology to trace the origin of its food products and ensure safety
  7. Negotiable Warehouse Receipt (NWR) system
    • It enables farmers to store their produce safely and preservation in warehouses
  8. Soil and Crop Health Monitoring
    • Sensors and satellite imagery are used to monitor soil moisture, nutrient levels, and crops, enabling farmers to make informed decisions regarding fertilizer application
  9. Geographic Information System
    • Ground leveling and better water drainage

Initiatives by the Government – 

  1. e-NAM (National Agriculture Market) – Digital platform integrating 1361 APMC Mandis across 23 States and 4 UTs to facilitate online trading of 203 agriculture and horticulture commodities. 
  2. Kisan Rin portal – launched in September 2023 to overcome challenges in the Modified Interest Subvention- Kisan Credit Card (MISS-KCC) scheme
  3. Kisan Suvidha App offers farmers real-time information on weather, market prices, expert advice, and best agricultural practices. 
  4. AgriStack—a digital ecosystem aimed at creating a comprehensive farmers’ database to provide personalized farm services such as crop advisory, insurance, and credit. 
  5. Digital India Initiative supports digital infrastructure development in rural areas, enabling farmers to adopt e-technology for better farming practices. 
  6. Pradhan Mantri Fasal Bima Yojana (PMFBY)– Uses remote sensing and drones to assess crop damage for insurance claims, speeding up compensation for farmers 
  7. SATHI Portal: Seed authenticity can be traced through a QR code system. 
  8. DBT – Direct transfer of subsidies into the farmer’s account

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