The Bharat brand scheme aims to stabilise prices for consumers and ensure fair compensation to farmers. However, its impact will be limited due to State laws
Last year in July, the Union Government launched a Scheme of selling chana dal at a subsidised rate under the Bharat brand call it Bharat Chana. This was followed by launch of Bharat Atta in November 2023 and Bharat Rice in February 2024,
Under the Scheme, the Food Corporation of India (FCI) – a central agency whose prime responsibility is to procure, store and distribute food grains to meet the needs of beneficiaries covered under the National Food Security Act (NFSA) – buys the cereals from the farmers and sells to the National Agricultural Cooperative Marketing Federation of India (Nafed), National Co-operative Consumers’ Federation of India (NCCF). The Nafed/NCCF make these available to the consumers at a price that is lower than the market price.
The agencies sell Bharat brand products directly to the general public through 24,000 retail stores and mobile vans owned by them. In addition, they use ecommerce platforms such as Amazon, BigBasket, Flipkart, Blinkit, ONDC (Open Network for Digital Commerce) – and modern retail stores viz. Reliance Fresh, More etc Recently, Nafed and NCCF have been asked to procure wheat ‘directly’ from the farmers albeit at MSP sans any cap on the quantity of purchase mainly from poorer states such as Bihar, Rajasthan and eastern Uttar Pradesh to complement supplies from the FCI.
What was the need for Bharat brand?
Even as the Union Government is taking care of a vast section of the poor and vulnerable population by giving free foodgrain under the Pradhan Mantri Garib Kalyan Anna Yojana (PMGKAY), others not so poor particularly those in the middle income class are bearing the brunt of inflation in food prices. Indeed, they are the ones who buy their requirement from the market place where the prices are high. The current price of rice ranges from Rs 40 per kg to Rs 110 per kg. For wheat flour and chana dal, the prices are Rs 40 per kg and Rs 100 per kg respectively.
The Centre wants to provide relief to this class by making Bharat brand products available at cheaper rate Bharat Rice: Rs 29 per kg; Bharat Atta: Rs 27.5 per kg and Bharat Chana Dal: Rs 60 per kg. This is fine. But, moot question is: why should the market price be high in the very first place?
The question is all the more relevant when we consider that the price received by the farmer is substantially lower than the price paid by the consumers. For instance, MSP of wheat notified by the Centre is Rs 22.7 per kg (the price received by farmers in many places especially where the agencies don’t undertake purchase operations is much less) against Rs 40 per kg for wheat flour paid by consumers; in some markets it is even higher at Rs 50 per kg. The mark up can’t be justified by cost of processing wheat plus handling cost etc?
The consumers paying more and farmers receiving less has to do with structural flaws in the marketing of agri-produce. Agriculture marketing is carried out under the respective state laws viz. APMC (Agricultural Produce Market Committee) Act which have varying provisions. This hampers free movement of products across states. Within a state also, there are several market areas called APMC Mandis, each having its own market regulations. Farmers in a given area can sell their crop only at the designated mandi. This leads to fragmented markets thus hindering free flow of goods even within the state.
At the mandi, a cartel of licensed traders and commission agents (known as artiyas in local parlance, their job is to facilitate transactions between farmer and the buyer) rules the roost. The duo ensures that the farmer gets a low price besides facing other adversities viz. rejections, weighing less, delayed payment, etc. Levies such as market fees, artiyas commission, rural development cess (RDC) etc further add to their woes. The capacity of APMC mandis is extremely limited. Barely 6 percent of farmers — mostly rich with larger land holdings — are able to sell their crop at the mandis which is picked up mostly by the FCI and other State agencies apart from a few licenced traders.
These mandis have literally nothing to offer to the majority of small and marginal farmers (they constitute nearly 86 percent of all farmers) who are forced to come to private local markets, where sales are legally barred. At these local (albeit unauthorised) markets, they end up selling their produce to the very traders who dominate the APMC mandis, at throwaway prices. The latter has the blessings of corrupt bureaucrats and politicians (in many cases, they or their kin also masquerade as traders) and hence, won’t face any action for violating the law. It is this institutionalised ‘strangulation’ of the hapless farmers — by mandating sales only at designated mandis, denying them entry at those mandis and giving them no other option to sell — that lies at the root of their not getting a fair price. By cornering an overwhelming share of the total supplies, a few traders form a cartel and charge exorbitant prices from the consumers; these prices bear no relation whatsoever to what they pay to the farmers, nor these can be justified by the cost incurred on handling, storing and transportation.
What has been done to address this flaw?
In April 2016, the government launched e-NAM (electronic National Agriculture Market). e-NAM seeks to create a unified market via online trading platform both at the state and at the national level. However, to enable a farmer sell her crop on the platform, the approval of designated APMC mandi to which she is tied as — per the extant State regulations — is necessary. At the other end, a trader intending to make purchase on the e-NAM platform needs to have a single trading licence that is valid for the entire state/pan-India license. The states also need to amend their laws to provide for e-trading in agri – produce.
Thus, e-NAM will work if only the States want it. The results say it all. Since launch, less than one-fifth of 6,946 regulated wholesale APMC mandis are integrated to the e-NAM platform. Only 12.5 percent of the total 140 million farmers are registered on e-NAM portal. Moreover, just 12.3 percent of the total value of annual trade in agri – commodities (excluding dairy and meat products) of Rs 600,000 crore is transacted on the portal.
In 2017, Modi-government passed a Model Agricultural Produce and Livestock Marketing (Promotion and Facilitation) Law. Besides giving more options to farmers for selling, it provided for giving traders a ‘single pan-State licence’ for buying from anywhere in the State. But, the majority of the states showed no interest. In September 2020, the Centre enacted three central farm laws which allowed it to regulate inter-State trade and intra-State trade and enable purchase of specified farm commodities directly from farmers anywhere in the country. The laws legitimised sales to private traders, processors, aggregators, exporters and so on. But, these had to be withdrawn following farmers’ protests. Now, it has come up with Bharat brand scheme to help rein price to consumers and ensure fair price to farmers. This too can only make a marginal impact as long as agri-trade remains shackled by the State laws.
(The writer is a policy analyst; views are personal)
https://www.dailypioneer.com/2024/columnists/address-the-root-cause-to-stabilise-food-prices.html
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