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Model APLM Act 2017: Key to Boost Farmers’ Income

Q. What is the difference between New Model APLM Act 2017 and the old one?

Ans: First, the new model act is not the innovation over the APLM. It is a refurbished one and it is called the Agriculture Produce and Livestock Marketing, (Promotion and Facilitation) Act 2017. As the name indicates it addresses all the components of agricultural sector, so far as marketing is concerned, it looks at all the field crops including the high value crops. It also includes livestock, dairy, fishery etc. Apart from that it also looks at spices, herbal medicines and medicinal plants. So that everything that a farmer grows can be bought into the ambit of agriculture marketing and he is helped to realize good value on his agriculture produce.


Q. Fruits and Vegetables are taken out of the Act. What is the objective behind this move?

Ans: Earlier, the marketing system in the country was or even today is dominated by the government led APMCs. Now what we are trying to do is to provide alternate marketing channels while APLMs shall continue but we should also facilitate alternate marketing channels in the private sector. Likewise, the farmer has a choice; he is not bound by any single market. He can go to any market at any place and sell anywhere he wants to and whomever he wants to. So that he is able to realize better price on his produce. It is not enough to enable discovery of an appropriate rate in the market. Once the market rate is discovered, the farmer share must be as high as possible which means that we should create a system of disintermediation. That means we remove the intermediaries unless they are adding some particular value to the produce which is transferred to the consumer. So when we say we would like to deregulate foods and vegetables, what we are saying is creating an alternate option, either they can be traded on all the market platforms within the market area and then it is regulated by the concerned marketing board.


Q. Don’t you think traders may take undue advantage of this provision?

Ans: No, that is not true. The act contains provisions to bring about regulations of different markets within the government sector or private sector. In fact now what we have done is to distinguish the roles and responsibilities of two authorities at the state level. One is the Managing Director of the marketing board that is the government led markets who shall serve as the CEO of all the APLM’s which are government led but his role shall be to look after those government markets and create an efficient system. Apart from him, there shall be one regulator in the nature of a director agriculture marketing who shall be the regulating authority that means he will give licenses, renew the licenses and regulate and ensure that all marketing channels are adhering to the provisions of the new act. So now what happens with this is whether the market is in the private sector or in the government sector, they all can approach director agriculture marketing who is an independent body and it is not a conflict of interest. Different multiple channels that we are creating would have a level playing field and there shall be a regulation in terms of what fees to be levied , how much to be levied, how to conduct the trade so that there is price discovery system through an open, transparent and objective system of auction, for example. All these practices shall be continued to regulate whether in the private market or be it in the public sector.


Q. Is there any provision to accommodate e-NAM in the present act?

Ans: Yes, e-NAM is basically to create unified national agriculture marketing. Today, the entire country or the state has been fragmented into different geographical areas. So with that, the number of traders has got limited. The area has got limited and so that the resultant competition has got compromised. Now what we are saying is that we should now be able to create a state wide single market and thereafter a nationwide single market. So now we have taken away the power of the APMCs to give the trader’s license. That trader license shall be given by the director of agriculture marketing and it will be a single trader license. Entire state shall be declared as one single market and not fragmented into markets of different APMCs. This is a step closer to creating unified agriculture market. So now the objective of government of India is to create a national agriculture market. That will became much easier because all will have single trader license, single point of levy and single regulatory system at the state level. So national agriculture market will, of course, have to depend upon requirement of technology because if we would like to integrate one market located in one corner of the state and another market located elsewhere. They can be integrated only trough technology platform. So the new act allows using an electronic platform to bring two markets or more than two markets together. Now in the current system the number of traders participating in an auction is confined to the number of traders registered in that particular market. We will be moving now towards more competitive environment where price discovery happens to the advantage of the farmers. Another good point is that new act now allows as many electronic platforms as possible. It is not necessary that only government of India e-NAM platform will work. It is possible for states, possible for private people to develop electronic platforms and offer it to the market, whether they are in the government sector or in the private sector and then all of them get integrated through a national platform. So there is competition and there is no monopoly of one single market, no monopoly of one single electronic platform.


Q. Do you think there should be a central legislation in line with GST on agriculture marketing? The APMC Act 2003 has not been fully adopted by several states. What’s your view?

Ans: It is not necessary. The model APMC act 2003 has done a good work. It has created an environment in the states that we need to go for more liberalized marketing environment and a large number of states have adopted many reform majors. But now, based on the last 14 years of the experience and considering the new challenges, we felt that we should have another improvement towards that. Now what it does is in order to ensure that the reforms

intended through the act are not compromised through restrictive rules, we are putting as many provisions as possible in the act. For example: we are saying that there should be a cap on the market fee. It shall be one and half percent for fruits and vegetables and two per cent for food grains. When you put this kind of cap, then the rules will not be able to compromise with the provisions. So the restricted practices that the state governments may have adopted through rules which actually disabled setting up of alternate marketing channels will now be addressed through this new marketing act.


Q. Do you believe all states will adopt this new Act?

Ans: Yes, we are sure and we are going to support them. We are planning to have orientation and training program on the provisions of the new act through our own institute like NIAM, which is placed in Jaipur, and DMI located in Delhi. So we will organize orientation program for all the states and explain to them the spirit and purpose of this new act.


Q. What will happen to the mandis who have already joined the e-NAM platform? Will they have to change further as per the new Act?

Ans: There is nothing to change in fact. The three pre-requisites required to enable particular mandi to on-board an electronic platform have now been reemphasized in this act. These three, as you know, are there shall be a single point of levy of market fee. That means once the market fee is levied at the first point of transaction then at the second and subsequent transaction points, there shall be no market fee. Second one is there should be single license. The trader doesn’t have to buy license at every market. Third is the provision to trade on the electronic platform. So these prerequisites have been now reemphasized in a clearer manner in the new act. So the states or the mandis who are already onboard will continue to do it. The states which have not amended will now take this particular template and amend their act. So it is a continuous process.


Q. Do you have any guideline for appointment of professionals to manage the mandi system since it requires certain skill to deliver?

Ans: This is a matter of procedures and process of implementation. That doesn’t have to be addressed through this act. Yes, we agree that we require skilled manpower to handle the IT enabled platform. So they are able to handle the process of discovering the price of electronic platform. The government of India provides Rs75 lakh assistance for hardware expenditure and setting up of the assaying lab. We give them free software and then we also train the manpower and continuously monitor them so that handholding is already there. And what we expect that these market themselves also generate their own revenues. They should realize the value of electronic platform and build the capacities of their manpower and reorient themselves discovering price for the farmers.


Q. You have allowed warehouses and cold chains to operate as regulated markets. What is the idea behind it?

Ans. The idea is that India is a very vast country and the agricultural surplus is increasing with better production technology. Today, a mandi serves an average area of 485sqkms. That means a farmer has to travel long distances to reach a mandi and that is adding to transaction cost because transportation cost is involved there. We would like a mandi as close as possible to the farm gate. The idea was even as recommended by Prof Swaminathan, there should be one mandi for an average of 80sqkm. We need to promote a large number of markets. Therefore, now not only government but also private people can set up mandis. Simultaneously there are different places like cold chain, cold storages, dry storages and silos where commodities are stored for different purposes by the farmers and different agencies. They can also be notified markets under the new act. So with this what happens is that this enables the farmer to access a mandi or a market place as close as possible to his farm gate and then come and discover a price for his commodity.


Q. Agriculture is a very politically sensitive subject. How difficult was it to draft the new Act?

Ans. No, it has not been difficult, but it has been of course challenging. It has been a very interesting and exciting experience. Right from day one, we are very clear that it has a partnership basis. It is not that we know better than the state government or somebody else. The idea was to pick up inputs from all sources. We had the benefit of an existing APMC act. We had also a committee of state agriculture marketing ministers which was set up in the year 2010 by our own ministry. The committee submitted the report in 2012 and made a series of recommendations. We took all these inputs and also sought inputs from different ministries. We also had inputs from all state governments, public feedback and had discussions with experts in agriculture marketing including NITI Ayog and Professor Ramesh Chand, Member, NitiAyog. We interacted with people from trade bodies who are actually dealing with these things and all of this helped us to draft this new Act. Our own committee consisted of officers from our own ministry that is our own department, animal husbandry department and also food-processing department and also representatives of the state governments. So it was the partnership between state government and central government. Everybody was taken on the board. The meeting with all state principal secretaries of the agriculture marketing at the Neetiayog in October 2016 also helped us in a great way.


Q. There are certain difficulties in inter-state trading on e-NAM platform. What is your take on that?

Ans. Yes, the act that we have now proposed is going to be a state act and the state is bound by its own jurisdiction. How do we resolve the issue of creating a national trader license is something that is beyond this particular act. So we are looking at how a central act can be brought about. We had referred our proposal to the law ministry. They said that under entry 42 of the constitution, we can possibly bring about something under current list. Possibly we can have a central trader license on the line of national permit under the motor vehicles act. What happens is that traders can take a national license and start trading across the state governments. However, within the existing act that we have proposed, the state director can allow the licensee of another state to participate in the transaction within his own state.


Q. Do you think the new Act will enable farmers to increase their income?

Ans: Certainly, it has laid out a very strong ground for a competitive and transparent system of price discovery. We know that marketing system has been opaque in our country. It has been restrictive. With the new act, we are now aiming to create a very liberal, progressive and reform oriented marketing system. When we have alternative marketing system, then the farmer is not bound by the one particular market. We have seen this happen in the telecom sector, we have seen that in the air services. Once competition increases, monopoly practices will break and the focus is on customer satisfaction. I’m sure that this is going to trigger a new competitive environment and help the farmer in realizing better price on the produce he brings to the market. It is a known that with good marketing intervention, a farmer’s income improves by around 20 to 30%. I think agro processing will also get a trigger through the new marketing system. All these provisions will certainly enable a farmer to realize better value.