Indian economy highly dependent upon agriculture. Over 70% of the rural households depend on agriculture. It contributes about 18% to the total GDP and provides employment to over 60% of the population. However, our farmers have not benefited much. One of the main objectives of the Government of India is Doubling The Farmers Income by 2022. Keeping this in view, National Cooperative Development Corporation, the NCDC organized a national workshop over webinar on the theme of 'New Ordinances: New Opportunities for Cooperatives' on Thursday.
In the workshop, several top-notch co-operators and a few top level officers including Secretary, Department of Agriculture, Co-operation and Farmers Welfare, Ministry of Agriculture & Farmers’ Welfare, Government of India Mr Sanjay Agarwal participated. Over 900 people from different states registered themselves. Around 250 were connected through Zoom and scores watched live on YouTube.
The Department of Agri, Coop & Farmers Welfare, GoI, the Department of Food & Public Distribution, GoI, the Government of Bihar, the Government of Gujarat, the Administration of UT of Jammu & Kashmir, the Government of Karnataka, the Government of Mizoram and the Government of Odisha was also associeted with this event.
The main discussion related to how Cooperatives can increase their storage capacity and keep the produce in godowns and how the working capital finance be extended against stored produce. The issue of private capital in the agriculture sector was also discussed threadbare.
The idea of organizing the webinar on the new ordinances was conceived by NCDC MD Mr Sundeep Nayak who, in his introductory remarks apprised the participants of the objective of the webinar. Speaking on the occasion Mr Nayak said, “There is a lot of opportunity for cooperatives especially PACCs to strengthen themselves. They can take advantage of new schemes and policies.”
Three ordinances namely-the Essential Commodities (Amendment) Ordinance, the Farmers’ Produce Trade and Commerce (Promotion and Facilitation) and the Farmers (Empowerment and Protection) Agreement on Price Assurance and Farm Services were taken up.
The keynote address and special address was given by Mr Sanjay Agarwal, Secretary, Ministry of Agriculture and Mr Sudhanshu Pandey, Secretary, Food and PDS respectively. Other speakers include, Mr L Chuaungo, Chief Secretary, Mizoram, Dr. Saurabh Garg, Principal Secretary, Odisha, Mr N Saravana Kumar, Secretary, Bihar and cooperators including Dileepbhai Sanghani, Chairman Nafscob, Mr Ramesh Vaidya, President, Mr Sahakar Bharati, Mr N Satyanarayana, CE, NCUI and others.
In his keynote address, Mr Sanjay Agarwal, Secretary, Ministry of Agriculture praised the role of cooperatives in agriculture and said, “There are over 95k PACCs in our country out of which 45k are financially sound and well managed. With the promulgation of three ordinances they can take the benefit to strengthen themselves and work for the benefit of farmers which help in doubling their income till 2022”, he said.
He emphasized on increasing the private capital in the agriculture sector which is very less. On the occasion, a presentation on creating a free and efficient agri eco system under the ordinances was also shown by him.
Agarwal further stressed on several schemes of the government including the Agri infra fund, scheme for 10k FPOs, digital and smart agriculture and others. "PACCs can take the benefit of the Agri Infra fund by establishing warehouses, pack houses, assaying units, cold chains, soil testing labs and others. The steps taken by the ministry are showing the encouraging result”, he concluded.
In his remarks, Mr Sudhanshu Pandey, Secretary, Food and PDS said, “In India the warehousing sector is totally neglected and this sector is not in the forefront. Besides, almost 70 percent of total agri warehousing capacity exists in the Public sector and the contribution of private players in this sector is very limited. In this regard, NCDC can play a big role in encouraging co-ops to construct godowns”, he underlined.
Besides, Mr Dileep Sanghani, NAFSCOB Chairman has called for modifications in the co-ops scheme launched by the government. The grant-in-aid for constructing the godowns for PACCs should be increased. Though, he praised the efforts of PM Narendra Modi to announce the scheme in the development of agriculture sector.
Sahakar Bharati President, Mr Ramesh Vaidya said the schemes are good but there is no proper implementation atground level. In our country FPOs should not become a parallel organization to PACCs they must be in coordination with PACCs. NCUI CE Mr N Satyanarana informed about the role of NCUI and said these three will help in doubling the income of farmers.
On the occasion, Mr L Chuaungo, Chief Secretary, Mizoram said in terms of agriculture and cooperative movement our state is very weak. Now with this new ordinance our country will see the quantum jump in terms of storage of food grains, processing and export of agriculture produce. Mr Saravana Kumar, Secretary, Bihar said all three ordinances focus on giving priority to cooperatives and PACCs. This will directly benefit the farmers.
There was also a Question and Answers session. The program was anchored by Ms Nandita Gupta, Jt. Secretary, DFPD, GoI. Mr P Prasad, Chief Director, NCDC proposed a vote of thanks.The concept paper of workshop on New Ordinances and New Opportunities for Cooperatives:INTRODUCTION:
Indian economy highly dependent upon agriculture. Over 70% of the rural households depend on agriculture. It contributes about 18% to the total GDP and provides employment to over 60% of the population. However, our farmers have not benefitted much. One of the main objectives of the Government of India is Doubling The Farmers Income by 2022. Keeping this in view, the Government of India have promulgated three ordinances to bring about the most awaited regulatory reforms in agriculture sector. Through these ordinances, the Government intends to liberalise the regulatory system in agriculture sector, provide freedom to farmers / traders to trade in farm produce at a site of their choice such as farm gates, warehouses apart from APMC throughout the country. Farmers are also given freedom to enter into legal contracts with traders, exporters, companies engaged in agricultural activities.THE THREE NEW ORDINANCES
(i) THE ESSENTIAL COMMODITIES (AMENDMENT) ORDINANCE, 2020:
The Essential Commodities Act, 1955 has been amended through this ordinance. The amendment would deregulate the supply, storage and trade from government control of the commodities such as cereals, edible oils, oilseeds, pulses, onions and potatoes except under exceptional circumstances such as war, famine, extraordinary price rise and natural calamity. Government can interfere only in case of 100% increase in retail price of horticulture produce and 50% in case of non perishable produces. In case units involved in processing/value chain government will not interfere up to the total installed capacity of the unit or total demand of export in case of exporter. The freedom to produce, hold, move, distribute and supply will lead to harnessing economies of scale and attract cooperative sector investment into the agriculture sector. It will help drive up investment in cold storages and modernization of the food supply chain resulting in development of economy.
Opportunities for cooperatives due to deregulation of storage, processing & export:
Storage: Societies can increase their storage capacity and keep the produce of farmers in these godowns and help the farmers to get the appropriate value at appropriate time for their produce. Societies can extend the working capital finance to the farmers against the stored produce.
Processing & Export: Societies can purchase produce of farmers at appropriate price and through sorting, grading, processing add value and sale/export resulting in additional income for societies as well as farmers. Due to synergy of economics the realised value of produce will be more and societies may distribute their additional profit among the members as dividend. This will increase credibility of the society among the farmers
(ii) THE FARMERS PRODUCE TRADE AND COMMERCE (PROMOTION AND FACILITATION) ORDINANCE, 2020:
Keeping in view of the concept one nation one market an ecosystem has been developed where the farmers and traders would enjoy freedom of choice of sale and purchase of2. THE NEW ORDINANCES AND NEW OPPORTUNITIES FOR COOPERATIVES
agricultural produce anywhere in the country. Now the farmers and traders can trade/sell their produce anywhere along- with the APMC. There is no fees for trading of agricultural produce. Any person holding PAN can trade with farmers/traders without any registration in agricultural produce. It has been made mandatory to pay the sale proceeds on the same day or within three days. To boost trading in electronic medium and to have the real time data cooperative society/FPO/any person with PAN can trade on electronic trading transaction platform. It also proposes to set up a separate dispute resolution mechanism for the farmers.
Opportunities for cooperatives due to freedom to sale of agriculture produce anywhere in the country:
Societies can sale the agricultural produce straightaway from their godowns to any wholesale traders/companies and also trade through electronic platform.
Societies will be in a position to bargain with the traders due to considerable quantity of agricultural produce. Apex state level societies may enter into future trades depending upon the storage quantity of agricultural produce stored in different societies of the state.
PAN is not mandatory for societies to trade.
(iii) THE FARMERS (EMPOWERMENT AND PROTECTION)
AGREEMENT ON PRICE ASSURANCE AND FARM SERVICES ORDINANCE, 2020
It aims at providing a national framework on farming agreements that protects and empowers farmers to engage with agri-business firms, processors, wholesalers, exporters or large retailers for farm services and sale of future farming produce at a mutually agreed remunerative price framework in a fair and transparent manner and thus eliminating intermediaries resulting in full realization of price. Farmers have been provided adequate protection. Sale, lease or mortgage of farmers’ land is totally prohibited and farmers’ land is also protected against any recovery. It also provides an effective dispute resolution mechanism with clear timelines for redressal thereof. It contains mechanisms which would transfer the risk of market unpredictability from the farmer to the sponsor.Opportunities for cooperatives due to allowing & legalising contract farming:
Cooperative societies can enter in an agreement with the wholesale trader/processor to supply agricultural produce in large quantity at appropriate rate. Since, societies have considerable amount of produce from their members they will be in position to bargain with the traders/companies to get the profitable price of the produce.
In case of fruits and vegetables, societies will be in winning position as fruits and vegetables do not have MSP like agricultural produce. Due to contract farming societies will be in a position to realise the profitable value of the produce.ROLE OF COOPERATIVES:
The inherent objectives of the three ordinances can easily be achieved through cooperatives. 85% of the farmers of the country are small and marginal having land holding less than 2 hectares. Small and marginal farmers do not have excess agricultural produce to sale after their own consumption and it is not feasible for them to take the produce to the market/city. If cooperative societies can come forward and collect the surplus of agricultural produce from members, store them and sell it to the processors/traders/exporters, then it will be profitable. Since due to these ordinances small and marginal farmers at their individual level can enter into any trade with agriculture business firms/processor /wholesale traders /exporters, but no such entity will not enter into any agreement with the small and marginal farmer as it is not practical, now the role of cooperative societies becomes more important, they can enter3. THE NEW ORDINANCES AND NEW OPPORTUNITIES FOR COOPERATIVES
into such agreements on behalf of their members depending upon collective amount of agricultural produce of particular variety.AGRICULTURE INFRASTRUCTURE FUND:
To make farmers self reliant under Atmanirbhar Bharat Abhiyan Hon’ble Prime Minister launched this scheme. It is Central Sector Scheme, though which ₹1,00,000 crore will be provided for funding Agriculture Infrastructure Projects at farm gate & aggregation points such as PACS, FPOs, Agriculture Entrepreneurs, Start ups, etc. It will help to mobilize a medium-long term debt finances for investment in a viable projects for Post Harvest Management Infrastructure and community farming assets through incentives and financial support. The scheme will be operational from 2020-21 to 2029-30. All loans under this scheme will have interest subvention of 3% per annum up to a limit of ₹2.00 crore. This subvention will be available for a maximum period of 7 years.AGRICULTURE MARKETING INFRASTRUCTURE (AMI) UNDER ISAM:
GBY/AMI sub-scheme of ISAM has been implemented since 2001. The guidelines of
the scheme have been changed in 2018 and it is operational up to 31.03.2021 or till the date of recommendations of the 15th Finance Commission comes into effect, whichever is earlier. This scheme envisages back ended capital subsidy for investment in eligible infrastructure for storage projects as well as infrastructure projects other than storage such as setting up farmers consumer markets, rural haats, primary processing like cleaning, drying, shorting, packing, stitching, waxing, ripening, refrigeration, etc. Further, mini dal mill, mini oil expeller are also eligible to get funded. The ancillary infrastructure up to 25% of project cost like parking shed, internal road, garbage disposal system, boundary walls, drinking water are also eligible under the scheme. The maximum ceiling of subsidy for general category of societies is ₹75.00 lakh and ₹25.00 lakh for storage infrastructure projects and for infrastructure projects other than storage respectively.NCDC ROLE IN CREATING STORAGE FACILITIES:
NCDC has played a vital role in creation of storage facilities in the country. As per the report of Doubling the Farmers Income Committee (Vol IV) the total storage capacity created in the country in different sectors was 165.74 million metric tonne of which 34.86 created by the ISAM(Coop+Private), 27.37% by SWC, 15.07 MMT (9.09%) by Cooperative Sector, 21.67% by FCI and 7.07 % CWC. NCDC has funded for creation of 16.51 million MT of the storage capacity to cooperatives. In the cold chain sector NCDC has created capacity of 9.66 lakh MT against a total capacity of 349. 56 lakh MT in the country.OBJECTIVES OF THE WORKSHOP
The overarching goal of the workshop on ‘THE NEW ORDINANCES AND NEW OPPORTUNITIES FOR COOPERATIVE SECTORS’ is to discuss the opportunities among the various stakeholders and brainstorm the various possibilities for promotion of entrepreneurship through cooperatives. At the same time, the workshop will identify the bottlenecks of the existing scheme of AMI sub scheme of ISAM at various levels and will aim at evolving options. The key beneficiaries of this workshop are the PACS, Processing Societies and other cooperatives. The workshop aims to augment the awareness about the new regulatory changes through the Ordinances from a business point of view and also come up with an actionable, time bound plan which will contribute towards attaining the vision of Doubling the Farmers Income by 2022. Specifically, the workshop would aim to develop a framework to use AIF fund & AMI scheme by the NCDC for maximise the benefits of cooperatives.
The outline of the workshop on remote video mode will be as follows:
A. Technical Sessions
i. New Ordinances: Impact on Cooperatives4. THE NEW ORDINANCES AND NEW OPPORTUNITIES FOR COOPERATIVES
ii. New opportunities arise due to regulatory changes
iii. Agriculture Infrastructure Fund
iv. AMI sub scheme of ISAM
v. Role of NCDC – 3Cs (Cooperative Corporate Collaboration)
B. Experience sharing
C. Way Forward