Contract farming won’t lead to farmers losing land; ethanol-from-rice policy on the cards: Gadkari

29 December 2020, New Delhi, IN: Amid the farmer’s protests against the Centre, transport and MSME minister Nitin Gadkari on Monday sought to allay fears that contract farming will lead to large corporations snatching away farmers’ land. He also suggested more flexibilities in the Rs 3-lakh-crore loan guarantee programme for MSMEs, professionals and larger entities in 27 stressed sectors to improve slowing offtake.

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Companies don’t get to own the land, just like “you don’t become the owner of a car by travelling in an Ola or Uber vehicle,” he said at the Idea Exchange Programme of the Indian Express Group.

Confusions about the farm Bills are being created by vested interests. The Bills free farmers from various shackles and allow them to sell their crops wherever they want, just like any other producer, Gadkari stressed.

Given that the market prices of several farm commodities have trailed the minimum support prices (MSP), Gadkari pitched for diversification from certain traditional crops, where the country has huge surplus stocks, to biofuels like ethanol. This will not just cut excess stocks of these commodities (rice, corn and cane by-products like sugar) and prevent the prices from any irrational slide but also open alternative avenues for the farmers to boost their earnings, Gadkari added.

As for crop diversification, the government has been considering a proposal to allow ethanol production from surplus rice, and not just from cane juice or molasses.

If the proposal is finally implemented, it will be for the first time that the country will be using grains fit for human consumption to manufacture biofuel, industry executives say. This also signals a fundamental shift in the approach of the government that had in the past refrained from such a move for fear of jeopardising food security. Given that the country has become self-sufficient in rice production, allowing only a part of the surplus stocks for ethanol production makes much sense, according to government officials.

“We are targeting to raise the annual value of domestic ethanol production from about Rs 20,000 crore to Rs 1 lakh crore in a few years,” Gadkari had said in June.

The minister said he has written to finance minister Nirmala Sitharaman to make the Rs 3-lakh-crore guaranteed loan programme more flexible to further improve offtake. Just like commercial banks, urban co-operatives should also be allowed to tap the Emergency Credit Line Guarantee Scheme (ECLGS) for on-lending, he added.

After a speedy pick-up in initial months, the pace of sanctions under the ECLGS has slowed since November. As of December 4, banks and NBFCs sanctioned Rs 2.06 lakh crore to about 8.1 million borrowers, mostly MSMEs, since the scheme’s rollout on June 1. Of this, an amount of Rs 1.59 lakh crore was disbursed.