At the outset the Committee realised that farmers faced triple-whammy: very high risk due to constant exposure to elements of nature, adverse terms of trade and non-remunerative prices. These needed to be ameliorated. Committee looked at farming and farmers from one large perspective–remunerative/stable income across the board while ensuring food security with the active involvement of key stakeholders.
The core issues identified were: need to rely more on the commitment of farmers, who are the producers, and the market mechanism that influences consumption; protecting the farmer and the consumer against the vagaries of production and the market forces in order to enhance agricultural productivity and ensure fair prices; reduction in the cost of food grain procurement, storage, transportation and distribution; an efficient delivery system under which those in genuine need of subsidies and support are properly targeted and given sufficient access to food grains and effective intervention powers in the hands of the government in times of need to protect the interests of producers or consumers.
Committee suggested a series of policy initiatives. The emphasis was on withdrawal of all controls, except that of quality. “Triple pricing” was advocated in order to regulate the market and protect the producer, consumer and the trader. There will be a ‘parity price’ to fully compensate the farmers for a rise in the cost of inputs and their other necessities of life, a ‘support price’ below which prices will not be allowed to fall, and ‘intervention price’ beyond which prices would not be allowed to rise.
As soon as the price of food grains in the open market rises above the intervention price (already fixed), all stocks or part of it would be acquired by the government agencies on payment of “parity” price. If the price would fall below the support price, the farmers would have the right to sell their stocks to the government at the support price already fixed. This mechanism could be made to work effectively by establishing appropriate Food Security Regulatory Authorities invested with adequate powers to implement and monitor.
Under this policy mechanism, farmers will be assured of MSP and consumers reasonable and relatively stable cost. Traders will also know the limits within which they can operate. Small farmers will be saved from going in for distress sales, and the government will have the facility to quickly locate and acquire food grain stocks in times of need.
In short, Committee’s recommendations were meant to prevent food inflation while making the farmer stand on his feet and be his own boss instead of depending on government charity or market volatility.
A fresh law on the above lines is the only way out of the mess created by this government. But pray, will it heed to reason?
(The author is a former Army and IAS officer and was a member of the High-Powered Committee on Agricultural Policies and Programmes-1990)