Private agro yards allowed in Karnataka

Karnataka notifies amendments to APMC Act.

The much awaited amendments to the Agricultural Producing Marketing (APMC) Act 1966, paving the way for wholesale trading of agricultural commodities by private players, have been notified by Karnataka. With this, the APMC yards have lost their monopoly over trading in farm produce (both business-to-business and business-to-consumer).

The state executive committee, headed by Governor Rameshwar Thakur, on Wednesday, approved the implementation of the amendments, which have been incorporated in the Karnataka Agricultural Produce Marketing Rules 1968.

Accordingly, companies like Metro Cash & Carry can now buy agricultural commodities (vegetables and fruits) from farmers and sell them to other retailers. However, relief has been given to the Yeshwanthapura APMC.

According to the notified rules, another agricultural produce marketing yard cannot be set up within a 25 km radius of the Yeshwanthapura APMC. Consequently, the Metro Cash & Carry outlet at Yeshwanthapura cannot trade in agriculture produce while its Kanakapura Road outlet can.

Farmers have the option to continue selling their produce to APMC yard or opt for any other private operator. The Whitefield APMC, set up by Union government entity NDDB's Safal, will not enjoy any special dispensation like the Yeshwanthapura APMC.

According to experts, the amendments will provide leading private players in wholesale commodity business opportunity to set up their own yards.

"Typically, trading of agricultural commodities accounts for close to 25 per cent to 30 per cent of the total business for any big retail player. So far, the big players were missing this share. Now, they can look for this market share by entering into direct contracts with the farmers," a market research analyst said.

One of the main reasons for amending the APMC Act was that farmers benefitted less at the APMC yards, which were dominated by middlemen and agents. There was a huge disparity in the buying and selling rates and agents stood to gain the most.

Though the erstwhile JD(S)-BJP government introduced the bill in the legislature in July 2007 to amend the APMC Act-1966, opposition from within the cabinet and from traders and farmers' organisations forced the then chief minister H D Kumaraswamy to put it on the backburner.

Though Kumaraswamy argued that it would help the farmers in gaining remunerative prices for their produce, some of his cabinet colleagues opposed it as they had interests in the agro-produce trading business.

The amendment act was eventually passed by the assembly but the government collapsed before it could notify the fresh rules under it.

The wholesale traders at APMC yards alleged that the proposed amendment would destroy the existing trade infrastructure since it did not restrict purchase and trading to notified areas, which was the most important provision in the original Act.

The traders, who even shut down the APMC market at Yeshwanthapura and other regulated markets across the state for several days in 2007 to protest the amendment, alleged that the government would facilitate the entry of multinational corporations who would monopolise trade.

This apart, the traders alleged that the amendment, which facilitated contract farming, would only help farmers with large land holdings and not the small farmers.

However, the notified amendments are also aimed at improving the condition of the small and marginal farmers. They will be eligible for short-term advances to avoid distress sales.

The maximum amount of advance has been raised from Rs 50,000 to Rs 2 lakh. The period of advance has been enhanced from 90 days to 180 days and the interest free period from 30 days to 90 days.

In an effort to increase the performance level of the market committees, financial powers have been delegated. Provision has been made to utilise the services of consultants in the preparation of plans and estimates, preparation of budgets, enhancement of expenditure limits to take up urgent works to modernise the existing APMC yards.