Agri ministry proposes corpus fund to develop market infrastructure

The ministry of agriculture proposes to create a corpus fund for development of marketing infrastructure in the states.

According to the ministry officials, the department of agriculture marketing has sought the views of the states on this for speedy development of the market infrastructure. This is significant as the total post harvest losses of agriculture commodities is pegged at Rs 44,000 crores at 2009 wholesale prices as per the ministry estimates.

As per the proposal, these APMC market yards should be upgraded either with viability gap funding or subsidy by treating them as infrastructure projects and thus to attract foreign direct investment or external commercial borrowing.  To start with the investment in marketing infrastructure under flagship scheme of the ministry of agriculture, Rashtriya Krishi Vikas Yojana (RKVY) may be increased to 10-15% from the existing level for those states which are implementing these market reforms.

These proposals are aimed to bring down the transaction costs for the farmers who suffer post harvest losses in various commodities ranging from  4-6% for cereals and pulses, 6-18% for fruits  and 9-12% for vegetables.

In order to promote contract farming and private participation the proposal is to exempt these contract farming sponsors and direct marketing licensees from stock limits up to six months of their requirement.  A district level authority may be set up for registration of contract farming and neither the APMC should be the registration authority for neither contract farming nor market fee should be levied under it.The states should encourage small and marginal farmers group or associations for contract farming.  Besides, no solvency certificate or bank guarantee may be required from the private sponsors or operators.

In order to develop the market infrastructure, the ministry also proposes a complete restructuring of the board structure of the APMC markets. As per the  structure,  the chief executive of the market committee may be appointed from outside the cadre of existing APMC personnel  and the post of director of marketing as a regulator be segregated  from the post of managing director of the agriculture marketing board .

States should delink the compulsory requirement of shop/ space for registration of traders and market functionaries for increasing competition in the yard. Besides the private markets should be treated at par with the existing APMC and licensing and registration procedure should be simplified.

According to official sources, the compulsory requirement of owing a shop or go down has led to monopoly of these licensed traders and this is acting as a major entry in existing APMCs for new entrepreneurs, thus preventing competition.   Studies further indicate that covered and open auction platforms exit only in two-thirds of the regulated market while only one fourth of markets have common drying yard. Cold storage units exit in less than one tenth of the markets and grading facilities in less than one- third of the markets. Even electronic weigh bridges are available in very few markets.