FOOD SECURITY, ESSENTIAL COMMODITIES LEGISLATIONS

AND PRICE MECHANISM

3.4- ECONOMICS- I

SUBMITTED BY:-
Anika Sharma
UID – UG19-16
Academic Year 2020-21
B.A.LLB (Hons)- II Year
Semester III (August -November)

SUBMITTED TO:-
PROF.(Dr.) SUMIT MALVIYA
(ASSISTANT PROFFESSOR OF ECONOMICS)

OCTOBER 2020

MAHARASHTRA NATIONAL LAW UNIVERSITY , NAGPUR

 TABLE OF CONTENTS

List Of Figures...........................................................................................................................2

Acknowledgement......................................................................................................................2

Abstract......................................................................................................................................4

Introduction................................................................................................................................4

Review Of Literature..................................................................................................................5

Research Questions....................................................................................................................6

Hypothesis..................................................................................................................................6

Research Objectives...................................................................................................................6

Chapter Brief..............................................................................................................................7

Chapter I- Food Security: Availability And Accessibility.........................................................7

Chapter II- Measures Taken For Food Access:........................................................................10

Public Distribution System..................................................................................................10

National Food Security Act, 2013........................................................................................12

Chapter III - Policy Changes:...................................................................................................15

Introduction To Bills............................................................................................................15

Effects Of These Provisions On Food Security...................................................................16

Eca: Reduce Inflation And Increase Exports.......................................................................20

Conclusion................................................................................................................................22

Descriptive Analysis............................................................................................................22

Suggestions..........................................................................................................................22

Bibliography.............................................................................................................................24

1
LIST OF FIGURES
Fig 1.1………………………………………………………………………………………….9

Fig 1.2………………………………………………………………………………………….9

Fig 2.1………………………………………………………………………………………...14

Fig 2.2………………………………………………………………………………………...15

Fig 2.3………………………………………………………………………………………...15

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ACKNOWLEDGEMENT

I express my sincere gratitude and indebtedness to all those people who assisted me in
successful completion of the project. Their invaluable support and guidance helped in the
successful completion of the Project.

I express my sincere thanks and heart full indebtedness to the Mr. Sumit Malviya, Assistant
Professor of Economics, Maharashtra National Law University, Nagpur, for being the
constant source of inspiration, knowledge and guidance all throughout my project.

I am equally indebted to my Parents and my Family members for unconditional support,

motivation and encouragement to do the challenging task. I deeply acknowledge their support
and inspiration.

I am most grateful to all the scholars and academicians whose research and writings have
made an immense contribution to my project.

I also thank all my friends who have more or less cooperated in completion of the project. I
acknowledge their support.

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 FOOD SECURITY, ESSENTIAL COMMODITIES LEGISLATION AND PRICE
MECHANISM

ABSTRACT
This project deals with the relationship between the food security, essential commodities
legislation and price mechanism. It takes into account that how despite having sufficient
production of the food grains in the country, the population is starving and malnourished. The
measures and policies formulated by government to ensure food security, on analysis finds
themselves in the dig of flaws. Further, three new bills are introduced bringing reforms in the
agricultural sectors but are found to ambivalent and ambiguous with presenting no clear view
regarding their effect on the economy, in general and agricultural sector, in particular.

INTRODUCTION

Food is the basic right of every human being in this world and it needs to be guaranteed at all
levels to all individuals irrespective of their economic status, class, caste etc., however we are
still battling to secure food for every person. India being the fastest developing economy,
making efforts to enhance technological framework, promote digitalization, develop space
programs, make business doing easy, and many more such advanced developments.
Although, availability of basic food requirements to all the sections of society, still needs to
achieved. It is pertinent that development in every sector of the economy and society should
run parallel and it is important for every country to advance in all these sectors as well for
standing internationally. But, these developments will be overlooked by the citizens as well
as international organization, if basic problems relating to food, clothing and shelter is not
available to everyone.

India has made numerous efforts, since independence in agricultural sector as well, for
ensuring food security to all the sections of the society, however, could not be attained. This
is not because of lack of production or non-availability of the sufficient produce to feed the
entire population, instead the problem lies in the way food security is perceived in a narrow
sense. Food security should be seen as a broader concept involving not only availability and
accessibility and along with this, government should focus on the ways and means through

4
which these goals are attained because in India we have surplus production of agricultural
produce but still farmers are distressed and many are hungry.

REVIEW OF LITERATURE
 Suresh Prabhu in his book “Food Security, Poverty and Nutritional Analysis (2009)”,
explains the importance of the collection and analysis of statistics and data in order to
develop policies relating to food security. It also teaches how the data collected is to
be analyzed for formulating suitable policies of food security, food utilization and
food access.
 Soraj Hongladarom in his book “Food Security and Food Safety for the Twenty-First
Century (2015)”, talks about the relationship between food and agriculture on one
hand and the socio-economic and cultural framework in which the food and
agriculture finds them on the other.
 James Edward Meade in his book “Planning and Price Mechanism (1949)”, explains
about the role of state foresight and intervention in guiding the economy from war to
peace, to prevent inflationary and deflationary pressures, to ensure equitable
distribution of income and property and to control anti-social rigging of the market by
private players.
 Parthasarathi Shome and Pooja Sharma in their book “Emerging Economies: Food
and Energy Security, and Technology and Innovation”, talks about the relevance
between agriculture and food security, energy security, technology and innovative
institutions with focus on six large economies including three Asian (China , India
and, Malaysia).
 L. Surulivel and S. Ramaswamy in their book, “Food Security In India” talks about
food security problems in India and despite having self-sufficiency, hunger and
malnutrition prevails and dynamics of social exclusion in the food security.
 The Economic Survey 2019-20, by Government of India providing the information
regarding the productivity and availability of produce, current trends in inflation,
Wholesale and retail price index, Volatility in Essential Commodities Prices and
various other statistical information relating to the year 2019-20.
 The Grain and Feed Annual 2019, prepared by Dr. Santosh K. Singh provides
comparative study of the production of wheat and rice in the last few years. Further,
including statistics regarding Minimum Support Price, buffer stock and policies to
manage stock by selling through various food security programs.

5
  The article titled “Understanding the Distribution of BPL Cards: All-India and
Selected States” by F. Ram, S.K. Mohanty and Usha Ram, provided information
about the distribution of BPL cards by the households in various social and economic
settings is analyzed.
 Annual Report 2018-19, Department of Commerce, Government of India, proving
statistics and information regarding the trade in agricultural produce within the
country and outside the country and global economic trade.
 The Article titled “ Exported To Death” by Robert E. Scott, provides that how the
deregulation by the government of agribusiness in America led to the pathetic
condition of family-farmers and small farmers and promoted private players.

RESEARCH QUESTIONS :

 Is food security equivalent to the food availability or food production?

 What are measures taken to achieve food security and the reasons for their
ineffectiveness?
 What should be the policy changes to ensure food security and whether the three farm
bills are conducive to it?

HYPOTHESIS: India has not achieved all the components of food security but is paving
way towards achieving them.

RESEARCH OBJECTIVES:

 To analyze the data of the agricultural production in the country its relevance to the
food security.
 To Study various policies of the government undertaken until now for ensuring food
security.
 To look into the three farm bill introduced and find out their economic impacts on the
agricultural sector and food security.
 To suggest various policies that should be adopted in order to achieve SDG 2030 of
achieving zero hunger.

6
CHAPTER BRIEF
Chapter I – It deals with India has achieved all the components of food security and
substantiating the reasoning with the figures.

Chapter II- Measures of Government taken in order to achieve food security and their
effective implementation.

Chapter III- what will be the effects of three new farm bill in the food security domain of the
country.

CHAPTER-I

FOOD SECURITY: AVAILABILITY AND ACCESSIBILITY

Food is a basic need for the survival of an individual and to avail food security is the basic
right of a human being. In the Supreme Court case of PUCL v. Union of India, 1 it is urged to
include ‘right to food’ under Article 21 of the Indian Constitution granting the status of
fundamental rights, which are non-derogatory, and further extending the scope of right to life.
As a result, there is a need to look into an exact definition of food security as it is flexible
concept applicable at national, regional and individual level. At the 1996 World Food
Summit, food security as been defined as “ Food security exists when all people, at all times,
have physical, social and economic access to sufficient food which meets their dietary needs
and food preferences for an active and healthy life. This explanation of food security is
widely accepted and used.2 On the basis of the definition three core determinants of food
security are as follows:

1. Food Availability
2. Food Access
3. Food utilization

Food Availability: This relates only to the supply and availability of food at the national
level with no information regarding the consumption patterns. It indicates annual production,
1
Sakshi Balani,(2013) Functioning of the Public Distribution System, PRS Legislative Research,
https://www.prsindia.org/administrator/uploads/general/1388728622~~TPDS%20Thematic%20Note.pdf(
(accessed on 9th Oct. 2020, 11pm).
2
Suresh Babu, Prabuddha Sanyal, Food Security, Poverty and Nutrition Policy Analysis, Academic Press
(2009).

7
changes in stock s of foods and its imports and exports. It do not provide for the data relating
food security at the household level.

Food Access- It refers to either the physical access to food in the market or economic access
at the household level. The physical access to the food depends on the availability of food at
national and regional level, related infrastructure such as roads and market outlets to buy the
food. The economic access is determined by the purchasing power of the household and
existing level of prices of the food which depends on the physical access of the food.

Food Utilization- It looks into the nutritional value of the food consumed and health benefits
conferred from the intake of the food. The consumption of food in both quality and quantity
must be sufficient to meet the nutrition and energy requirements and is basic measure to
estimate food utilization. 3

India has achieved food availability and became self- sufficient in the production of food
grains in the mid-1990s and since then, it is continually been able to produce enough to feed
its entire population. It is world’s largest producer of pulses, millets and, milk and the second
largest producer in rice, wheat , sugarcane, groundnuts, vegetable fruit and cotton. There is
increase in the production trends of wheat and rice, since 1990 – 2019. 4 In 2019, for the third
consecutive year record wheat harvest is upcoming due to favorable growing conditions.
Wheat and rice is mainly considered because they are the two major staple food grains and
form major part of various food security policies of the government. The figures below
presents the similar picture.

3
Ibid.
4
Hunger Amid Abundance: The Indian Food Security Enigma, Future Direction International,
https://www.futuredirections.org.au/publication/hunger-amid-abundance-the-indian-food-security-enigma/
(accessed on 10th Oct. 2020, 2pm).

8
 Fig.1.1

Fig 1.2

Despite such high record production, India still face starvation and hunger. The reason being
lack of food access. In order to, deal with this issue, numerous measures have been
undertaken to make basic food requirements available to the poor sections of the society and
will be explained in detail below. despite producing highest record in three years till in the
year 2018 there 8,82,000 deaths of children below five -years of age due to hunger and
5
starvation says “State of world’s children 2019 report”. A recent estimate figures that 1.5
5
https://scroll.in/latest/940851/in-india-8-8-lakh-children-under-five-years-highest-number-in-world-died-in-
2018-says-unicef#:~:text=The%20report%2C%20which%20was%20released,under%2Dfive%20deaths%20in

9
million children a year die of hunger, 4500 a day and one-third which can be avoided if they
didn’t go to bed hungry. 6

India lacks in food utilization as well as indicated by Comprehensive National Nutrition

Survey 2016-2018, which found that 35% of children under five were stunted, 22 percent of
school-age children were stunted and 24% of adolescents were thin for their age. India, in the
year 2019 stands at rank 102 out of 117 countries and continues to slide down. In 2014, India
ranked 55 among 77 countries.7 This is another obstacle in the food security accomplishment
which is to be resolved through policy formulations such as mid-day meal program, Poshan
Abhiyan etc.

CHAPTER II

MEASURES TAKEN FOR FOOD ACCESS:

PUBLIC DISTRIBUTION SYSTEM
In the late 1930s, Public Distribution System evolved during World War II as war-time
rationing measure. Initially, the distribution through the system is based on the imports of
food grains, till 1960s. However, in the 1960s, the government established Agriculture Prices
Commission and Food Corporation of India to procure food grains domestically and storage
of the grains for Public distribution System. By 1970s, it has become an universalized
subsidized food distribution system. Further, revamped in the year 1992 to improve access to
food to people in hilly and inaccessible areas, to target poor. The basic objectives of this
system is to provide essential consumer goods such as wheat, rice, sugar and kerosene at
subsidized price in order to prevent all consumers, without any specific target group, from the
impact of rising prices and ensure food security in the nation. 8 Under this system government
purchases from farmers at Minimum Support Price and distribute through fair price shops.

Further, in the year 1997, PDS was evolved and took the form of Targeted Public
Distribution System with significant focus on the poor. Under this system the beneficiaries
are divided into two categories:
%20India.&text=The%20report%2C%20titled%20%E2%80%9CState%20of,in%20the
%20%E2%80%9Cserious%E2%80%9D%20category.
6
Starvation Death in 2018, https://indianexpress.com/article/opinion/columns/starvation-deaths-in-india-global-
hunder-index-unicef-poverty-national-health-mission-5276194/.
7
Colin Todhunter, (2019) The Paradox of Food Scarcity Amid Abundance In India and What Needs to be Done,
Outlook Poshan, https://poshan.outlookindia.com/story/poshan-news-the-paradox-of-food-scarcity-amid-
abundance-in-india-and-what-needs-to-be-done/343202 (accessed on 8 Oct. 2020).
8
Public Distribution System, criminallawstudiesnluj.wordpress.com (accessed on Oct. 11, 2020, 5pm).

10
 1. Households Below Poverty Line (BPL)
2. Households Above Poverty Line (APL).

On the basis of this division, government issues two types ration cards to the households.
There exist different eligibility criteria for the issuance of the card and the benefits conferred
due to holding the cards also differs and favors BPL households. 9

The issuance of BPL ration cards entitle the household to procure 10 to 20kg food grains per
family per month at 50% of the economic cost, whereas the APL cardholders gets the same at
100% of the economic cost. Further, only the BPL families gets sugar at subsidized rates and
the APL cardholders gets wheat and rice at a scale of fixed rate depending upon the
availability, which is not the case with BPL. 10

In the year 2000, Antyodaya Anna Yojana has been launched which targeted the poorest of
the poor. When in a National Sample Survey, it was found that 5% of the total population in
the country is unable to procure two square meals and thus making TPDS more focused.
Under this scheme, once the families are identified as eligible, they are issued Antyodaya
Ration cards and are made entitled to procure up to 35kg of wheat and rice at highly
subsidized prices of ₹3 per kg for rice and ₹2 per kg of wheat. 11

NATIONAL FOOD SECURITY ACT, 2013

Lastly, in the year 2013, National Food Security Act was enacted and relied heavily on the
TPDS to provide food delivery as legal entitlement to poor households. This makes right to
food a justiciable right. There has been a suit continuing in the Supreme Court relating to
granting “right to food” a fundamental right under Article 21 of the Indian Constitution. 12 The
provisions of the act are as follows:

The TPDS will cover 75% of the rural population and 50% of the urban population with the
steady entitlement of 5kg per person. This act will also constitute the Antyodaya Ann yojana
households and will guarantee the entitlements as earlier.

9
Difference Between APL and BPL Cards, https://tnepds.co.in/difference-between-apl-bpl/ (accessed on Oct.
11, 2020, 6pm).
10
Different Types of Ration Cards and Benefits, Cleartax, https://cleartax.in/s/ration-cards-types-benefits
(accessed on Oct. 11, 2020, 4pm).
11
Antyodaya Ann Yojana, Department of Food & Public Distribution, Ministry of Consumer Affairs,
Goernmnet of India, https://dfpd.gov.in/pds-aay.htm.
12
Supra Note NO. 6.

11
Further, moving towards food utilization, the act provides nutritional support to women and
children. The pregnant women, lactating mother and children between the age of 6 and 14
will be provided meals in accordance with the nutritional norms under Integrated Child
Development Services, Mid-Day Meal Scheme. Higher nutritional norms has been specified
for the children up to 6 years of age.

Direct Benefit Transfer has also been introduced, to provide maternity benefits of not less
than ₹6000 to pregnant and lactating women and in case of inability of government to
provide the entitled beneficiaries the food grains or meals then they will be provided food
security allowance.

The act also specifies about assistance to states by meeting the expenditure incurred in the
intra-state transportation and margin of fair price shops dealers, through which the
distribution is directly made to the consumers, as per the guidelines devised for the purpose.
Along with this, due attention have been paid to the transparency and accountability, thus,
made provisions for the disclosure relating to PDS, social audits and setting up of vigilant
committees.

In addition to this, provisions for the Grievance Redressal Mechanisms at the national and
state level to deal with malpractices. The penalty provisions for public servant or authority, in
condition of non-compliance with the relief recommended by District Grievance Redressal
Officer. 13

These are the policy adopted for ensuring regular food security but in case of contingencies,
the government maintain buffer stock. This is the stock of certain essential commodities and
necessities such as wheat, pulses etc. which is used to offset price fluctuation and deal with
unforeseen circumstances such as natural calamity, war, pandemic etc. The stock is although
not distinguishable from the operational stocks that is used to distribute food grains the
regular TPDS and other welfare schemes.14

FLAWS IN THE MEASURES:

1. Leakage : It refers to the food grains not reaching the entitled beneficiaries. According to
the 2011-12 survey, the leakage in PDS is estimated about 46.7%. Leakage can be in
13
National Food Security Act, 2013, https://dfpd.gov.in/nfsa.htm. (accessed on 12th Oct. 2020, 2pm)
14
Buffer Stock, Manifest IAS, https://www.manifestias.com/2020/07/11/buffer-stocks/#:~:text=Buffer%20stock
%20of%20food%20grains,Other%20Welfare%20Schemes%20(OWS)%2C. (accessed on 5th Oct. 2020, 10pm).

12
 three forms: (i) Damage in transit to the food grains (ii) the food grains being diverted to
the non-beneficiaries through the issue of the ghost cards,(iii) exclusion of the people to
whom the food grains have to be conferred but are not beneficiaries. 15
In a recent survey, it has been found about 27% of the households holds BPL card which
is near to the Planning Commission estimates on Poverty in 1999-2000 (26% based on
mixed recall basis). The holding of BPL cards by wealth quintile suggests that 39%
amongst the poorest, 37% among the poorer, 32% among the middle, 21% among the
richer and 7% among the richest households possess the BPL Cards. On compilation, it is
found that only 2/5th of the poor households and 1/5th of the non-poor households possess
BPL cards.16 This implies a significant portion of poor population is excluded from being
the beneficiaries of these schemes.
Further, the exclusion errors, which refers to percentage of abandoning of the entitled
beneficiaries because of them not holding the cards. It has reduced from 55% in 2004-05
to 41% in 2011-12. Though the exclusion has reduced but is still significant. However,
the inclusionary errors, refers to inclusion of people not entitled to the benefits and take
undue advantages, has increased from 29% in 2004-05 to 37% in 2011-12. 17

Fig.2.1

15
Demand for Grants 2018-19 Analysis: Food and Public Distribution, PRS Legislative Research,
https://www.prsindia.org/parliamenttrack/budgets/demand-grants-2018-19-analysis-food-and-public-
distribution#:~:text=Leakages%20in%20PDS%3A%20Leakages%20refer,grains%20not%20reaching
%20intended%20beneficiaries.&text=Exclusion%20errors%20occur%20when%20entitled,do%20not%20have
%20PDS%20cards.(accessed on 6th Oct. 2020, 6pm).
16
F. Ram, S.K. Mohanty, Usha Ram, Understanding the Distribution of BPL Cards: All-India and Selected
States, economic &Political Weekly, 2009, Vol.44, No.7,(pp. 66-71)
17
Supra Note No. 13

13
2. Storage: The storage capacity for procured food grains is not in the compliance with the
increase in quantity of procurement. There has been a huge increase in the procurement
quantity from 19.6 million tonnes in 2008 to 82.0 million tonnes in the year 2012 but no
increase in the storage capacity can be seen neither owned nor hired. 18
As of year 2017, the storage capacity is 725 lakh tonnnes, of which 359 lakh tonnes is
with FCI and 366 lakh tonnes with states. The total stock for that year 2017 was 555
million tonnes. According to the CAG reports it has been found that states also lack
adequate storage capacities, although in the year 2015, 233 godowns have been approved
in Maharashtra but only 93 got completed. In Assam, where exists sufficient storage but
condition are not good for storage. The CAG pointed that in last four out of five years, the
stock of food grains in the central pool has been larger than the storage capacity.19

Fig. 2.2
In the year 2018-19, the government planned to procure 35 million tonnes of wheat,
which is more than the storage capacity of government-owned facilities. In the absence of
appropriate storage facilities, the grains get spoiled due to pest and water. It has been
recorded that between the year 2011 and 2017, 62000 tonnes of stored grains, mainly rice
and wheat has been destroyed due to pest invasion and exposure to rain. 20 The figures
below depicts the gap between the actual and desired storage capacity:

18
Supra Note No.1
19
Demand for Grants 2018-19 Analysis: Food and Public Distribution, PRS Legislative Research,
https://www.prsindia.org/parliamenttrack/budgets/demand-grants-2018-19-analysis-food-and-public-
distribution#:~:text=Leakages%20in%20PDS%3A%20Leakages%20refer,grains%20not%20reaching
%20intended%20beneficiaries.&text=Exclusion%20errors%20occur%20when%20entitled,do%20not%20have
%20PDS%20cards.(accessed on 6th Oct. 2020, 6pm).
20
Supra Note No. 4.

14
 Fig. 2.3

CHAPTER III - POLICY CHANGES:

INTRODUCTION TO BILLS:

The three bills has been introduced and passed in the Parliament relating to the reforms in the
agricultural sector i.e., Farmer’s Produce Trade and Commerce( Promotion and Facilitation)
Act, 2020, The Farmer (Empowerment and Protection) Agreement of Price Assurance and
Farm Services Act, 2020 and the Essential Commodities(Amendment) Act, 2020.21
The first bill provides for ecosystem to the farmers and traders to sell and purchase the farm
produce outside the registered mandis under the States’ Agriculture Produce Committee
Market. Besides this, the bill promotes freedom in intra-state and inter-state trade of the
farmer’s produce and facilitate a system of electronic trading. 22
The second bill also known as “Contract Farming Bill”, aims to provides the opportunity to
have written agreements between farmers and sponsors(private players) without mandating
them. This bill explicitly excludes leasing of land and disallow the sponsor from erecting
built structure on farm land. This bill seeks to support the players at the lower stream of the

21
https://www.livemint.com/news/india/president-kovind-gives-his-assent-for-three-farm-bills-passed-by-
parliament-11601210482225.html. (accessed on Oct.13, 2020, 9pm).
22
What is Farm Bill 2020: Pros and Cons of Three Bill Centre Introduced,
https://timesofindia.indiatimes.com/india/what-is-farm-bill-2020-pros-cons-of-three-farm-bills-centre-
introduced/articleshow/78180231.cms. (accessed on Oct.13, 2020, 10pm)

15
supply chain, by enabling then to have written contracts, outside the ambit of any ‘state act’
or Essential Commodities Act. 23
The bill amending the Essential commodities Act, 1955, provides for regulation of supply,
production and distribution of certain essential commodities such as cereals, pulses, potatoes,
onions, edible oilseeds, and oils, only under the extraordinary circumstances such as war,
famine, flood etc. Also includes restrictions on stockholdings by allowing stockholdings only
when prices trigger exorbitantly. For instance, in case of horticulture produce 100% increase
in retail in the immediately preceding 12 months or over the average retail of last 5 years.
Whichever is less. In case of perishable goods, it is 50%. Provided the provisions gives
exemption to processors and value chain participants or orders relating to PDS.

EFFECTS OF THESE PROVISIONS ON FOOD SECURITY

Non-Compliance of NFSA

The undermining of APMC mandis overrides schedule 3 of National Food Security Act,
2013, states that the government ensures food security by measures that protecting the right
of small and marginal farmers by bringing in land reforms, developing minor and small
irrigation systems, providing remunerative prices, power and crop insurance 24 but the bill
ignores the interests of the small and marginal farmers who do not hold the capacity to sell
their produce outside the APMCs as they lack bargaining power when they have to
independently deal with big companies and cannot afford transportation costs and also have
to repay the loan to creditors. The APMCs will closed as traders and farmers will be inclined
to trade in the open market in order to avoid taxes that need to be paid for selling food grains
in Mandi. 25

Lack of Data Availability

23
Explained: What the New Farm Bills About, Financial Express,
https://www.financialexpress.com/economy/explained-what-the-new-farm-bills-are-all-about-and-why-being-
opposed/2086681/. (accessed on Oct.14,2020, 1am).
24
Section 31 and Schedule III, National Food Security Act, 2013.
25
https://www.counterview.net/2020/09/farm-bills-centre-pushing-75-crore.html., (accessed on Oct.9,2020,
8pm).

16
Under the Act, Sec. 117(1) and (2) provides for price information and market intelligence and
also uses the term “transparency” multiple times, but does not have a clear mechanism to
record, collect and collate data, resulting in all transactions in the new trade areas becoming
invisible and the whole system opaque. The only proof of the transaction will be the receipt
that farmers are supposed to get upon delivery but it also depends wholly on the buyer and
ability of farmer to insists for the same. Similarly, the record of stockholdings will also
become invisible as registration and reporting is not mandatory, which is necessary in case of
warehouses under Warehouse Development and Regulatory Authority.
This absence of data is major cause of concern. The public data procured through these
mandis have been of great significance for the governments, for instance, in case of
Competition Commission of India inquiring into the secret and illegal trade of onions in
Lasalgaon and relied heavily on the data collected by APMC mandis and used the data to
identify the periods when the retail prices are not in consonance with expected prices in the
prevailing conditions.26 The unavailability of recorded data prevents clear identification of
needs for important decisions, especially on issues concerning trade policy and food security.

Chaotic Price Mechanism

Earlier, the APMC market provide reference for prices to the private players outside the
mandis. This price is in consonance with Minimum Support Price decided by the government
and if as the government claims the APMC will continue to operate, then APMC will
continue to guide the price in the market, thus defeating the purpose of the act to get rid of the
non-transparent price discovery mechanism of the APMCs. If the APMC does not influence
and guide the price, the price setting will depends to a large extent on the bargaining power of
farmers vis-à-vis the buyer. This system seems to be as disturbing and more chaotic than the
one it seeks to replace.27

Eliminating the Intermediaries

Further, the APMC leads to widening gap between the retail and wholesale price of the
produce sold, for instance, In Maharashtra APMC rules clearly states that the agriculture
produce can sold only at the APMC registered mandis to prevent the exploitation of the

26
Sudha Narayanan, Is this Market Reform Indian Agriculture Needs?, The India Forum,
https://www.theindiaforum.in/article/three-farm-bills. (accessed on Oct.8,2020, 6pm).
27
https://www.financialexpress.com/india-news/farm-bills-wont-affect-minimum-support-price-says-agriculture-
minister-in-rajya-sabha/2087520/. (accessed on Oct.9, 2020, 10pm).

17
farmers. This law is not pragmatic and is poor in enactment because it leads to monopoly of
market players or middlemen. There is chain of distribution, from the wholesalers in the city
to the retailer or peddlers. There exists rise in price of ₹4 to 5 at every tranche, the result is
that the vegetables purchased at ₹2to 3 per kg from the farmers is sold at the price of ₹20-25
per kg to the urban consumers.28 Thus, neither the consumer is guaranteed food security nor
the farmer getting adequately paid.

Abolishing APMC Failed:

The APMC Act has been abolished in Bihar in 2006 and presented both benefits and
drawbacks but drawbacks seems to outweigh the benefits. 29With the abolition of agriculture
markets, the roadside wholesale markets have come in every part of the state with direct
trading between the farmers and buyers with no regulations and intervention by APMC
commission agents, which forms a cartel. However, due to absence of APMC, the farmers are
unable to get the Minimum support price(MSP) for their produce and also the production
reduced. For example. This year the farmers got ₹1000-1300 per quintal against the MSP of
₹1,850 for the produce of maize and for wheat , also, they got 10-15% lesser the MSP. Along
with this, wheat procurement was only 5,000 tonnes compared to 13 million tonnes of
Madhya Pradesh, which has not abolished APMC and 39 million tonnes nationally. 30Thus,
reflecting that APMC abolition was not successful.

Deregulation Failed in America

These bills promote private players in the farming business and deregulate the farmers by
reducing the role of APMC, who used to purchase the farmers’ produce as per the Minimum
support price set by the government. Such deregulation has been promulgated and promoted

28
The New Farmers’ Bill and It’s Effects, Times of India, https://timesofindia.indiatimes.com/blogs/economic-
update/the-new-farmers-bill-and-its-effects/.
29
Vijay Swaroop, 14 Yrs on, APMC Abolishment Yields Mixed Results in Bihar, Hindustan Times,
https://timesofindia.indiatimes.com/blogs/economic-update/the-new-farmers-bill-and-its-effects/.
30
https://www.livemint.com/opinion/columns/lessons-from-bihar-s-abolition-of-its-apmc-system-for-farmers-
11600962615201.html.

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in the United States of America in the year 1996 has failed, especially, for small family
farmers.
The bill introduced in the U.S.A. was named, Omnibus Farm Bill was a huge failure. The
U.S. farm trade balance declined by more than $13 billion between 1996 and 1998, the prices
have plummeted. August U.S. corn price fell from $4.30 per bushel in 1996 to $1.89 in 1998
or, say reduced by 56%. The prices of wheat decreased from $4.57 per bushel in 1996 to
$2.46 in 1998, which is around reduction in price of 46%. 31
These deregulation and export dependence together led to the extinction of numerous family
farmers. Along with this, U.S. agriculture got concentrated in the hands of the large farms
and national and multinational companies.

Suppress Small Farmers

Similarly, the ‘Contract Farming Act’, claiming to support the downstream players in the
supply chain, seems to fallacious because major corporates will find it difficult to manage
and deal with 10,000 of small farmers, thus, they will prefer dealing with fewer large farmers.
The smaller farmers can organize themselves into Farmer Producer Organizations but these
organizations are co-opted by the large firms and businesses who control logistics and retails
as participants in their supply chains. For instance, in the 1990s, Central Arecanut and Cocoa
Marketing and Processing Co-operative Limited (CAMPCO) was using its chocolate factory
to produce for Nestle, but the Nestle does not want to deal with the cooperatives instead
wished to take over the factory to produce for the Nestle, as a result, agreement soured
between the parties. The B2B model of business is coming up in place of B2C , the B2B is
less challenging for agribusinesses as compared to B2C. 32 For instance, the firms will further,
acts as intermediaries among the farmers and large retails and the purpose of
disintermediation and bringing the farmers in the mainstream is defeated, however, it is
further promoting reintermediation.

Storage Capacity Managed

31
Robert E. Scott, Exported To Death : The Failure of Agricultural Deregulation, (1999), Briefing Paper,
Economic Policy Institute.
32
Sudha Narayanan, Is this Market Reform Indian Agriculture Needs?, The India Forum,
https://www.theindiaforum.in/article/three-farm-bills. (accessed Oct.10, 2020, 5pm).

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Despite these drawbacks, the act in a long run may resolve a major problem relating to the
storage capacity of grains in the government granaries. The Acts encourages local
entrepreneurs, they can directly make contacts with farmers and acquire produce and can
establish mini mills in their districts to cater to local demands.
The end point of agribusiness are acquired by the corporates because B2C channels are
owned by them. The mandis prevents the direct trade of agribusiness firms with the farmers
as in mandis they have to go through the traders, despite the firms willing to deal with
farmers, they are unable to do so because they didn’t have any option to avail the produce
directly from the farmers. This act will encourage them to get closer to the farmers and avail
maiden access to their produce and invest in cold chains near the farmgate.33

ECA: REDUCE INFLATION AND INCREASE EXPORTS

The amendments to the Essential Commodities Act has limited the regulations prices by the
government to only certain extraordinary circumstances such as flood, war, famines etc. This
will help in containing inflation and to promote exports. Earlier, whenever the prices of
various primary food items such as cereals, pulses, oilseeds, edible oils, onions and potatoes,
exorbitantly rise, the government regulate the prices to make it affordable for the general
public but due to such regulation demand in proportion to the supply increases significantly,
thus leading to further rise in inflation. 34 The stockholding limits also restricted to prevent
hoarding, black marketing, however, instead of curbing these malpractices, it cut down
exports and despite having surplus availability of the produce as ECA limits the quantity of
stock, in addition to this, as ECA can anytime limit the stock under ECA the sellers buy
lesser quantities as compared to their usual capacity, causing farmers to suffer losses during
surplus production of perishables. 35
Taking the example of drugs and healthcare industry, constituting over 30,000
pharmaceutical companies with 10,000 manufacturing sites, resulting in extensive
competition but government still regulates prices of 847 medicines. It decides the ceiling on
the basis of cost structure of a cross section of industry and allow inflationary price increases.

33
Sohini Mitter, Farm Bill 2020: How they Benefit Farmers, agritech startup and private players,
https://yourstory.com/2020/10/farm-bills-2020-benefit-farmers-agritech-startup-agri-warehouse.
34
Zia Haq, Decding the Impacts of ECA Amendments, Hindustan Times,
https://www.hindustantimes.com/india-news/decoding-the-impact-of-eca-amendments/story-
zytnowEInD30QSyIE8oPbK.html.
35
Harikishan Sharma, Redefining Essential Items: Why It was Needed, Who It will Impact, Indian Express,
https://indianexpress.com/article/explained/simply-put-redefining-essential-items-6608203/.

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They are not just reference prices but also acts as maximum selling price of the drugs. 36It,
thus, ensures that the access to all the essential medicines in the list is stable while holding a
reasonable competition level. Similarly, certain regulation on the essential food items should
also applied to have a great of combination of stability and competition.

CONCLUSION
Descriptive Analysis-
India has achieved the first component of food availability and produces surplus to satiate the
local demand and can, further, export the excess produce to other countries. For food access
and food nutrition, various policies and schemes are launched and even amended over time
with changing scenario. These policies, however, did not lead to expected results due to
various drawbacks and limitation relating to the implementation. The policies while drafted
aim towards positive outcomes but the end results present altogether different scenario due to
the malpractices of dealers, consumers and various other intermediaries. Recently, new
policies have been introduced to achieve holistic food security by empowering the farmers
and reducing the intervention by the government. The effects of these policies explained
above implies that policies when implemented in the market, the negative implications for the
farmers and consumers that follow will outweigh the benefits accrued. The government
continued to formulate such policies, despite, knowing that such framework when earlier
applied by certain states in India and other countries of the world, it failed to produce
expected results, instead receded the existing development. Therefore, policies should be
made taking into account all the aspects and individuals at different level in the entire
agricultural economy.

Suggestions-
36
Chandru Chawla, Farm Bills: A Death Knell On India’s Food Security, The Citizen,
https://www.thecitizen.in/index.php/en/NewsDetail/index/9/19404/Farm-Bills---A-Death-Knell-on-Indias-Food-
Security.

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The policies formulated to ensure food security focuses mainly on whether the required
agricultural production is achieved and targets are met, however, it ignores the conditions
under which it is produced and distributed. National food security targets are often complied
with by sourcing food environmentally destructive and exploitative conditions, and are
backed by subsidies and policies that destroy local food producers but provide advantages to
the large agribusiness corporations. Thus, in order to achieve sustainable food security and
eliminate hunger in real sense, the government should pave way to achieve Food
Sovereignty.
Food Sovereignty refers to “ right of peoples to healthy and culturally appropriate food
produced through ecologically sound and sustainable methods, and their right to define their
own food and agriculture systems”. 37 It will bring the section of society those who produce,
distribute and consume in the mainstream of food system and policies superseding the
demands of market and corporations. It also promote local and national economies and
markets and strengthens peasant and family farmer-driven agriculture, which is very much
prevalent in India, and also food production, distribution and, consumption based on
environmental, social and economic sustainability. 38
The maiden step towards achieving food sovereignty is to consolidate the agricultural market
of the country and work for “One Nation – One Market”, thus shifting the agriculture from
state list to concurrent list. This will provide everyone with honest, accurate information and
open and democratic decision-making. These rights form the basis of good governance,
accountability and equal participation in economic, political and social life, free from all
forms of discrimination.

37
Food Security vs Food Sovereignty, What’s the Difference?, https://changeforchildren.org/wp-
content/uploads/2016/06/Food-Security-vs-Food-Sovereignty.pdf.
38
https://viacampesina.org/en/india-food-sovereignty-in-manipur/#:~:text=The%20term%20%E2%80%9CFood
%20sovereignty%E2%80%9D%20was,to%20define%20their%20own%20food%2C.

22
BIBLIOGRAPHY-

BOOKS:

 Suresh Prabhu, FOOD SECURITY, POVERTY AND NUTRITIONAL ANALYSIS,

2009, Academic Press, p.14.
 Soraj Hongladarom, FOOD SECURITY AND FOOD SAFETY FOR THE
TWENTY-FIRST CENTURY, 2015, Springer-Verlag Singapur, p.18.
 James Edward Meade, PLANNING AND PRICE MECHANISM, 1949, MacMillan
Company, p.20.
 Parthasarathi Shome and Pooja Sharma EMERGING ECONOMIES: FOOD AND
ENERGY SECURITY, AND TECHNOLOGY AND INNOVATION, 2015,
Springer, p.134.
 L. Surulivel and S. Ramaswamy, FOOD SECURITY IN INDIA, 2019.

ARTICLES:

 T. Thangalakshmi and V. Suthacini, “ Food Security In India: Issues and Suggestions

To Improve the Public Distribution System”, SHANLAX INTERNATIONAL
JOURNAL OF ECONOMICS, Vol.7, No.4, 2019, pp 36-40.

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  F. Ram, S.K. Mohanty and Usha Ram, “ Understanding the Distribution of BPL
Cards: All-India and Selected States”, ECONOMIC AND POLITICAL
WEEKLY, Vol. 44, No.7, 2009, pp. 66-71.

 Dr. Santosh K. Singh, India Grain and Feed Annual, GLOBAL AGRICULTURAL
INFORMATION NETWORK, Report No. IN9025, 2019.

NEWSPAPER:

 ECONOMIC TIMES
 THE HINDU
 THE HINDUSTAN TIMES
 INDIA TODAY
 TIMES OF INDIA

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