The Centre has formed a committee of state ministers to initiate a process for evolving a competitive and vibrant system to give the much needed boost for agricultural marketing reforms.
The committee, to be headed by Maharashtra minister for marketing and cooperation Harshwardhan Patil, would comprise ministers of agriculture and agricultural marketing from Orissa, Chandigarh, Gujarat, Uttarakhand, Madhya Pradesh, Andhra Pradesh, Assam, Karnataka and Bihar.
Patil told Business Standard that there was a persistent demand for expediting reforms in agricultural marketing in order to facilitate private sector investment. Although states had launched marketing reform programmes, the Centre is of the view that the pace of implementation has been varied across the states.
“The committee under my chairmanship is formed as per the consensus arrived at the conference of state ministers held in April 2008. The committee will persuade various state governments and administration of union territories to implement the reforms in agriculture marketing through adoption of model Agriculture Produce Marketing Committee (APMC) Act and model APMC Rules,” Patil said.
“The committee would also suggest further reforms necessary to provide a barrier free national market for the benefit of farmers and consumers. It would recommend measures to effectively disseminate market information and to promote grading, standardization, packaging and quality certification of agricultural produce.”
The Centre’s decision is considered crucial with post harvest losses accounting for an estimated 10 per cent of food grain production and 25 per cent of fruit and vegetable production. Less than 2 per cent of fruit and vegetable production is processed.
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Furthermore, the present marketing system is characterized by long, fragmented supply chains and high wastages which is also deficient in providing fair share of consumer price to producers and for ensuring high quality and hygiene of the produce.
A government official, who did not want to be quoted, said there was an urgent need for an alternative marketing structure that provides multiple choices to farmers for selling their produce, along with a comprehensive solution to meet key needs of stakeholders.
According a recent report by Motilal Oswal, implementation of the model APMC Act would boost farm incomes considerably over a period, because there exist a huge gap in the consumer prices and farmer realizations, primarily due to presence of intermediaries. It is estimated that such price differences are as high as 40-60% of the consumer price. Reduction of intermediation costs would reduce consumer prices and improve realization for the farmers.
Contract farmers, who get assured prices, technical inputs and credit from companies, has the potential to improve yields and the quality of farm produce. “We estimate that 10 per cent cumulative increase in production and realizations could enhance farm incomes by more than Rs 50,000 crore, boosting the rural economy and demand potential substantially,” the report said.
The report said agri-marketing reforms, when implemented could have significant implications on food processors and retailers.