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Friday, June 14, 2024
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Agriculture Marketing Reforms

Gokul Patnaik

In the light of Modi Government’s resolve to double the farmers’ income by 2022, there is a growing consensus on the urgent need to accelerate the pace of reforms in agriculture sector in India.  Though agricultural marketing structure has been progressively liberalized with amendments of many anachronistic regulations of the 1960s and 70s, it still remains a moribund and highly regulated structure. 

The recommendation of the Expert Committee for Agricultural Marketing 2001 and the Inter-Ministerial Task Force 2002 conveyed some far-reaching recommendations which resulted in the framing of the Model APMC Act in 2003. However, the implementation of the Model Act by the States has been tardy. While Bihar repealed the Act altogether some other States have only made piece-meal amendments. As a result, the desired impact has not been felt.

Agricultural marketing structure in India still remains fragmented with too many intermediaries resulting in high cost of goods and services.  The infrastructure for storage, sorting, grading and post-harvest management is inadequate and private sector is unwilling to invest in logistics or infrastructure under prevailing conditions.  Mandi staff is mostly ill-equipped and untrained and market formation is not accessible. The system has given rise to a class of intermediaries known as commission agents or Arhtias. Over a period of time, the Mandies have become dens of the Arhtias, by the Arhtias and for the Arhtias. The crux of the matter is that the price setting mechanism is not transparent and farmers suffer.

India has a number of agro-climatic zones and the Indian farmer can grow almost every crop.  The advent of new technologies empowers him to use the resources optimally and produce at par with the best in the world. However, in the face of archaic marketing system controlled by a host of intermediaries, he does not get the just price for his produce.

The Government of India has put out a Model APMC Act yet again and invited public comments on it.  The draft has many welcome novel features.  It recommends a single unified license for trading within a State and abolishes demarcation of market area in trading.  For the first time, it recognizes the rights of the farmer to sell his produce to whom, where and when he wants to.  It also enables declaration of warehouses ,silos and cold storages as market sub yards; albeit after obtaining a license for the same.  The proposed Act also recognizes virtual markets and places electronic trading platforms on the same footing as market yards of APMCs. It also seeks to promote direct marketing by allowing interface between farmers with processors, exporters and bulk buyers.

Will the new Act help resolve all the problems of the current agricultural marketing system?  Although the Act has gone a long way to solve certain glaring issues, it falls short in some ways.  The areas within municipality has been excluded except in consultation with the local board.  As in many States many markets fall within the areas under Municipalities, Gram Panchayats and other local bodies, it would mean operation of a parallel structure or multiple parallel structures. This can be avoided by taking over the markets owned by local bodies and paying them adequate compensation or a revenue share. At the very least., the provisions regarding “Regulation of Trading” proposed for APMC markets could be extended to municipal markets.

As the whole State has been declared as a single market for trading, the delination of the market area for election of committee members does not make sense. This would give rise to avoidable petty politics at the local level which has resulted in many states often superseding the Market Committees .Some states have even mandated that the members of the Market Committees would be nominated by the government which goes against the principles of democracy.  It would be better if the committee members are elected from amongst the users of the market i.e. those who are selling their produce in the market or trading in it. Producers, traders and market functionaries could be constituted into separate electoral colleges.

Marketing is essentially a service activity.  Therefore, it will be better if “User Fee’ is charged for utilizing the services of the market rather than a market fee which is more in the genre of a tax.

The draft Model Act makes an attempt to improve the operational conditions of the APMCs by recommending that the Secretary or CEO of the APMC and Accountant should be professionally qualified.  It would have been better if a professional and trained cadre of personnel could be constituted to man these posts; and more importantly these key posts be made transferable to prevent avoidable corruption.

We also feel that the payment or non-payment of market fees are basically civil functions and its breach should not be construed as a criminal act. Section 113 of the proposed Model Act lays down that any contravention of the provisions of the Act would be punishable with simple imprisonment which may extend to six months or with fine up to five thousand rupee. While we do not advocate any contraventions of the Act, we feel that monetary fine should be sufficient for minor breaches. For any serious offence of a criminal nature like fraud, cheating or defalcation, CRPC and other laws of the land can be resorted to.

Both the Central as well as the State Governments should now make serious efforts to build a conducive environment so that private sector is encouraged to invest in providing hard infrastructures such as warehouses, cold storages and packing & grading centers as well as soft services like assaying, quality inspection, providing logistics and market information services. The overall objective is to improve the efficiency of agricultural markets and reducing transaction costs so that the farmers are empowered and can get the best realization for their produce and we reach a step nearer to the goal of doubling farmers’ income.

(The author is ex-chairman APEDA and currently the Chairman of Global AgriSystem Pvt Ltd. Views expressed are personal.)


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