Agricultural marketing suffers from inefficiencies and infrastructural inadequacy. Marketing operations lack transparency and are marked by high price volatility. The much-needed market intelligence, especially price information, is not readily available to most farmers. Needless curbs and controls, including movement restrictions, further constrain free and fair trade. As a result, barring those who produce wheat and rice in the areas covered under the government’s price support operations, farmers do not get appropriate prices for their produce. The gap between the prices received by producers and those paid by consumers is untenably wide.
Though the process of marketing reforms was initiated almost a decade ago, the progress has been tardy. The Centre had circulated among the states a Model Agricultural Produce Marketing Committee (APMC) Act in 2003 and asked them to amend their APMC laws accordingly. It provided for the setting up of private markets, direct deals between the growers and end-users of agro-commodities, including out of mandi transactions, and legalisation of contract farming. The ultimate objective was to attract private investment in constructing market yards and creating the post-harvest value chain comprising cold stores, warehouses and logistics infrastructure. Some of these measures were meant for high-value and perishable produce, such as fruit, vegetables and livestock products, which contribute substantially to food inflation.
However, though many states have altered their marketing laws on constant prodding from the Centre, most of the amended laws do not conform strictly to the spirit of the Model statute. Vested interests in retaining the present mandi system along with virtual monopoly of the APMCs over the farm produce marketing are too strong to allow the needed legal changes.
A committee of the states’ ministers in charge of agricultural marketing, constituted to set things right by suggesting measures to speed up marketing reforms, released its first report in September last year. The report was largely disappointing. Contrary to expectations of quickening the reforms process, it mooted a 10-year perspective plan that would help strengthen backward and forward linkages in agricultural marketing. The key issues remain unaddressed or under-addressed. These concern the expansion and modernisation of marketing facilities, improvement in marketing information communication and linking small producers with efficient marketing channels.
Clearly, the task of establishing more markets with necessary supportive infrastructure and market information dissemination network requires massive investment, which the government alone cannot bear. Private participation is a must and is, indeed, required to facilitate competition. But private investment of this magnitude is unlikely to come about in the absence of a favourable legal framework and policy environment. The tendency to put controls and curbs on trade, storage, processing and movement of agro-goods needs to end.
Such a need has in fact been underscored even by the Planning Commission’s working group on horticulture for the 12th Plan. It has minced no words in stating that the present model of marketing reforms, which seeks to create space for a new set of modern markets to operate along with the much less transparent APMC regulated markets, is unlikely to attract much private investment in modern marketing infrastructure. The group has maintained that the private and APMC markets can coexist only if a common “standard operating procedure” is introduced for all markets, including the existing ones.
Though this seems a sane suggestion, the catch here is that the existing APMC mandis are unlikely to adopt such an operational code unless they are legally forced to do so. This would mean initiating another cycle of amendment of state APMC laws, which – going by the past experience – will inevitably be a time-consuming process.
A better course, perhaps, would be to consider enacting a central law for agricultural marketing that overrides the state laws. Such an approach has been adopted in some other sectors that fall in the states’ jurisdiction under the Constitution. Besides, the outmoded Essential Commodities Act, which, despite its substantial dilution, continues to be part of the statute book as an enabling measure for state governments to put various kinds of trade-deterrent restrictions, must be abrogated.
