Welcome reforms

Topics farm products | APMC | e-mandi

Steps taken by some states to open up agricultural marketing to the private sector are indications of a new need-based trend that is likely to endure. By issuing an Ordinance to allow establishing private agricultural markets, Madhya Pradesh has become the second state, after Punjab, to break the state monopoly over revenue-generating agricultural markets. Punjab has re-framed the rules under its Agricultural Produce Marketing Committees (APMC) Act to clear the way for privately-owned farm markets and direct out-of-mandi, transactions between growers, consumers, and other end-users of agri-products. Many other states have also taken some small, yet path-breaking, measures to reform agricultural marketing. For instance, warehouses and cold storages have been granted “deemed mandi” status in Uttar Pradesh, Uttarakhand, Andhra Pradesh, Telangana, and Madhya Pradesh. Cooperatives and farmers’ producer organisations (FPOs) have been permitted in most states to trade directly on the electronic National Agricultural Market (e-NAM) without going through the APMC mandis. Moving more or less in the same direction, states like Himachal Pradesh, Uttarakhand, and Gujarat have allowed marketing farm products without any licence. Tamil Nadu has waived market fees on notified farm products. 

These moves may have been triggered by the need to de-congest mandis in view of the Covid-19 pandemic, but they are well-judged marketing reforms to pare the hegemony of APMCs over agricultural trade and mitigate the exploitation of farmers by middlemen. Besides, they create an enabling atmosphere for private investment in rural marketing infrastructure, which has failed to expand in tandem with growth in farm production. At present, there is only one regulated market (read APMC mandi) in an area as vast as around 500 square km, on average. The recommended norm is one proper mandi in 80 square km to ensure easy access to farmers. Inadequate competitive and transparent marketing avenues are the key cause for large-scale sales of farm goods at below officially fixed minimum support prices (MSPs) and the erosion of profitability of agriculture, which supports the livelihood of nearly half the country’s population.

The mooted marketing regimes in Madhya Pradesh and Punjab would enable traders, exporters, agro-processors, and others to set up agricultural mandis independent of the APMCs. These markets, moreover, would have a level playing field vis-à-vis the existing regulated mandis to offer them competition, which has sorely been missing till now. The Madhya Pradesh’s Ordinance, which seems relatively progressive, stipulates a unified licence and a single-point levy of mandi fees to facilitate seamless and hassle-free trading within the state. It also provides for inter-state transactions to ensure a wider market and better price discovery for the benefit of farmers. The notable point in the Punjab’s amended marketing order, on the other hand, is the provision for setting up exclusive markets, in small enclosures or even in the buildings within the existing mandis, for specific commodities like fish, fruit, vegetables, and flowers. A large multi-commodity private market, spanning over 10 acres, would have to have facilities like auction floors, shops, godowns, pre-cooling chambers, and arrangements for cleaning, packing, grading, and electronic display of prices, besides basic sanitation amenities. Such moves can be expected to strengthen and modernise the country’s agricultural marketing infrastructure and the farm-to-fork value chain. The gainers would be both producers and consumers.

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