E-chaupal opportunity

The ongoing stir by mandi traders in Madhya Pradesh against the direct sale of farm produce by farmers through ITC's e-chaupals is nothing more than resistance to a new form of competition.

The traders' main problem is with the transparency and fair play that internet-based trading ensures. While farmers are understandably happy, the traders are (equally understandably) peeved at the loss of business.

Indeed, one of the chief objectives of setting up regulated markets was to ensure smooth, hassle-free and fair marketing and thereby to eliminate any scope for exploitation of farmers.

In reality, though, these regulated markets have become little more than an instrument of revenue collection for state governments.

What is needed is a well-conceived package of agricultural marketing reforms to protect the interests of both sellers and buyers.

The inter-ministerial task force that reviewed the present agricultural marketing systems in the country had, in its report submitted two years ago, set out an elaborate agenda for reforms.

It mooted the deregulation of mandis and attracting private investment for the creation of marketing infrastructure, paving the way for the corporate sector to undertake direct marketing.

Such a system will enable growers to tailor their produce to users' needs, and get them better returns. However, these measures cannot be implemented unless state agricultural produce marketing laws are suitably modified. Unfortunately, this is something that many states are reluctant to do.

Their fear, understandably, focuses on the loss of revenue after mandis get deregulated. This explains why some of the states which have chosen to amend their agricultural marketing laws have done it only half-heartedly.

Madhya Pradesh is no exception. Though the Digvijay Singh government had altered the state law in 2000, the new statute failed to ensure uniform trading norms in the old and new markets.

Of course, it provided for mandi samities to give licences to private parties to set up purchase centres outside the mandis by paying Rs 10,000.

Apart from this, it neither made open auction of stocks mandatory nor brought down mandi taxes to reasonable levels. Also, it did not make it mandatory for the mandi samities to provide reliable market intelligence to farmers.

It is largely because of this that farmers prefer to sell through ITC's e-chaupals, where they get better prices and save on taxes as well.

It is therefore time to persuade the states to amend their agricultural marketing laws without further loss of time. The Centre has already circulated to the states the draft of a model marketing law. This has all the necessary provisions to modernise the agricultural marketing system.

It even addresses the contentious issue of market charges by mooting a single-point levy of a market fee, instead of charging for the same commodity at multiple points at different stages of a transaction.

The model law also has provisions for lending the necessary legal sanctity to contract farming, to instill confidence among farmers and user industries in such a system.

The states need to realise that marketing reforms would help plug misutilisation and theft of mandi taxes and will also boost the volume of transactions. As such, the state governments' revenue may well increase, rather than decrease.