Agricultural Marketing, MSP, Land Reforms, Food Security and Farm Subsidies in India Notes for UPSC: e-NAM, APMC, PDS, NFSA, FCI, PM-KISAN and Farm Laws Explained

Agriculture employs close to half of India's workforce, yet it contributes only about one-sixth of the GDP. The problems of the farmers: low and unstable prices, poor markets, small land holdings, high input costs and the weather risk, are the heart of the debate on the Indian economy. For UPSC, this chapter has four connected parts: land reforms, agricultural marketing, the Minimum Support Price (MSP) and procurement, and the food security and the subsidies. The Prelims asks about the schemes and the institutions (MSP, e-NAM, NFSA, FCI, PM-KISAN), and the Mains asks about the farm laws, the MSP debate and the doubling of the farmers' income. These notes give a clear explanation of each part, with the committees, the schemes, the issues and the way forward.

Why This Topic Is Important for UPSC

This is one of the most frequently asked topics in the economy section, and it also overlaps with the Geography (agriculture), the Polity (federalism, since agriculture is a state subject), the Social Issues (poverty and hunger) and the Ethics (the farmer distress). It is a reliable theme for the Essay and the GS III answers. Read it along with our notes on the Agriculture Economy, Indian Agriculture and Green Revolution and Water Resources, Irrigation and River Interlinking in India.

Land Reforms in India

After independence, the Constitution allowed the states to take the steps to remove the inequality in the ownership of the land. Land reforms have four main components:

Other efforts include the Bhoodan movement of Vinoba Bhave (1951), in which the landlords were asked to donate the land, and the Gramdan movement. The land reform laws were put in the Ninth Schedule to protect them from the legal challenges. The problem today is the fragmentation of land: more than 85 per cent of the farmers are small and marginal, owning less than two hectares, which limits mechanisation and the income. Land records have been digitised under the Digital India Land Records Modernisation Programme, and some states have started land-leasing laws to allow the tenants a legal security.

Agricultural Marketing: How It Works

Agricultural marketing includes the gathering, grading, storage, transport and sale of the produce. The main problems are the weak market access for the small farmers, many middlemen, the lack of storage and processing, the distress sales after the harvest and the lack of price information. The solutions tried by the government include the following.

• Regulated markets (APMC mandis): The state-run markets set up by the Agricultural Produce Market Committee Acts to protect the farmers from the exploitation. Though useful, they sometimes created monopolies and the high commissions.
• e-NAM (National Agriculture Market, 2016): An online trading platform that connects the mandis across the country, improves the price discovery and allows the farmers to sell the produce to buyers in other states.
• Cooperative marketing: Societies such as NAFED (national level) and the state federations.
• Warehousing: The Warehousing Development and Regulatory Authority (WDRA, 2007) regulates the negotiable warehouse receipts, so that farmers can get a loan on the stored produce.
• Farmer Producer Organisations (FPOs): The scheme of 2020 to form and promote 10,000 FPOs, so that the small farmers can collectively buy inputs and sell outputs.
• Operation Greens: The scheme to stabilise the supply and prices of the tomato, onion and potato.
• The Model laws: The Model APMC Act (2003), the Model Contract Farming Act (2018) and the Model Land Leasing Act (2016) were suggested to the states.

The Farm Laws of 2020: A Case Study

In 2020, Parliament passed three laws: the Farmers' Produce Trade and Commerce Act (to allow the trade outside the APMC mandis), the Farmers (Empowerment and Protection) Agreement on Price Assurance and Farm Services Act (contract farming) and the amended Essential Commodities Act (to remove the stock limits). The supporters said that the laws would give the farmers more choice and attract investment. The farmers' organisations feared the end of the MSP and the mandi system, and a long protest followed. The laws were repealed in 2021. For the Mains, this is a good example of the need for consultation with the stakeholders in the agricultural reforms, and the federal aspect, as agriculture and markets are state subjects.

Minimum Support Price (MSP) and Procurement

The MSP is the price at which the government is ready to buy the produce from the farmers, to protect them from a fall in the prices. It is announced for 22 mandated crops (cereals, pulses, oilseeds and commercial crops), and a Fair and Remunerative Price (FRP) is set for the sugarcane. The recommendation is made by the Commission for Agricultural Costs and Prices (CACP, 1965), and it is approved by the Cabinet Committee on Economic Affairs (CCEA). The government has announced that the MSP is at least 1.5 times the cost of production (A2+FL), while the Swaminathan Commission had recommended the C2 cost plus 50 per cent.

Food Security: NFSA, PDS and FCI

• The National Food Security Act, 2013 (NFSA) gives the legal right to the subsidised food grains to about 75 per cent of the rural and 50 per cent of the urban population (the priority households and the Antyodaya families), with 5 kg of grain per person per month (35 kg for the Antyodaya families). Under the PM Garib Kalyan Anna Yojana, this grain is given free of cost.
• The Public Distribution System (PDS) is run jointly by the Centre (procurement, storage and the allocation) and the states (identification of the beneficiaries and the distribution through the fair price shops).
• The Food Corporation of India (FCI, 1965) procures, stores and distributes the food grains and maintains the buffer stock. The Shanta Kumar Committee (2015) recommended the restructuring of the FCI and the shift to the cash transfers.
• Reforms include the One Nation One Ration Card (portability of the ration), digitisation of the ration cards and the use of the Aadhaar.

Subsidies and Support Schemes for the Farmers

The Mains Angle: Doubling Farmers' Income and Way Forward

The government aimed to double the farmers' income by 2022, with the committee headed by Ashok Dalwai. The key ideas included raising the productivity, reducing the cost, improving the price realisation, increasing the cropping intensity and promoting the allied activities (dairy, fisheries and horticulture). Challenges: the small holdings, climate risk, rising input costs and the weak markets. A good answer proposes: the diversification, the investment in storage, processing and the supply chain, the stronger FPOs and the cooperatives, the technology (digital advisory and market platforms), the better insurance and a rational support system that is not limited to the rice and wheat. Mention also that the reforms must respect the federal structure.

Previous-Year Style Practice

• Which body recommends the MSP? Answer: The Commission for Agricultural Costs and Prices (CACP).
• Which platform connects the mandis online? Answer: The e-NAM.
• Which Act provides the legal right to the subsidised food grains? Answer: The National Food Security Act, 2013.
• Which committee recommended C2 plus 50 per cent for the MSP? Answer: The Swaminathan Commission (National Commission on Farmers).

Frequently Asked Questions (FAQ)

What is the MSP?

The Minimum Support Price is the price at which the government is ready to buy the crops from the farmers.

How many crops are covered by the MSP?

22 mandated crops, and a Fair and Remunerative Price for the sugarcane.

Who recommends the MSP?

The Commission for Agricultural Costs and Prices (CACP).

What is e-NAM?

The National Agriculture Market, an online trading platform for the agricultural produce launched in 2016.

What is the NFSA?

The National Food Security Act 2013, which gives the legal right to the subsidised food grains.

What is the role of the FCI?

The Food Corporation of India procures, stores and distributes the food grains and keeps the buffer stock.

What is PM-KISAN?

The scheme that gives Rs. 6,000 a year in three instalments as income support to the farmers.

What are the main components of land reforms?

Abolition of the intermediaries, tenancy reforms, ceiling on the landholdings and the consolidation of the holdings.

Who started the Bhoodan movement?

Vinoba Bhave in 1951.

Were the farm laws of 2020 repealed?

Yes, they were repealed in 2021 after the farmers' protests.

What is an FPO?

A Farmer Producer Organisation, a collective of the farmers to improve the bargaining power.

How is this topic asked in UPSC?

As the schemes, institutions and the committees in the Prelims, and as the analysis of the MSP, the market reforms and the farmer income in the Mains.