Significance: A NITI Aayog member recently emphasised that it is essential to bring agriculture marketing into the Concurrent or Union list to benefit farmers. Most States have welcomed the proposal to move agriculture marketing into either the Concurrent or Union list from the State list as this will guarantee remunerative prices to farmers. However, some major States continue to offer stiff resistance saying this will pave the way for the death of agriculture and is against the spirit of cooperative federalism.
Problem with past strategy of agricultural development:
- No focus on farmers income: Past strategy did not involve any explicit recognition to raise the income of farmers. It did not involve any measures to promote the welfare of farmers. The net result is that farmers’ income remains low which is evident from the high poverty incidence among farm households. NSSO data on consumption expenditure survey more than one-fifth of rural households with agriculture as self-employment were having income level less than the poverty line.
- Lack of focus on income disparity: Deteriorating disparity between the income of a farmer and non-agricultural worker constituted the infamous agrarian distress in the rural parts of India. It was mainly caused due to the non-sensitive policy decisions which did not focus on price realisation of farmers and actual profit they earn by cultivation. It ultimately leads to increase in a number of farmer suicides and coincided with the sharp slowdown in agricultural growth rate.
Current issues in agriculture marketing:
Agriculture as an economic activity is subjected to serious risk of natural conditions and price risk. At every level from the international, national and local level there exists a number of problems related to Agriculture Marketing. The main problems are:
- No common trade language: Different set of standards/specifications for agricultural commodities are followed by different organizations in the country. The standards laid down in the Prevention of Food Adulteration (PFA) Act are the National Standards. Besides this, there are AGMARK Standards, Bureau of Indian Standards (BIS), Standards followed by Army, standards fixed by Warehousing Corporations and those by Food Corporation of India for procurement purposes. It is a major deterrent for evolving a competitive agricultural marketing system in the country.
- Variation in Market Charges: As per the APMC Act of the States, every market Committee is authorized to collect market fees from the traders in the prescribed manner on the sale of notified agricultural produce brought by the farmers or traders in the market area at such rates as specified by the State Government. The number of commodities brought under the ambit of regulation varies from state to state. The market fee varies between 0.50 percent in Gujarat to 2 percent in Punjab and Haryana. It creates income inequality between farmers.
- Neglect of Rural Markets: There are more than 21000 rural periodic markets, which have remained outside the process of development. Most of these markets lack the basic minimum facilities.
- Essential Commodities Act: Though Central Government removed all restrictions on storage and movement of commodities, many State Governments are still enforcing several control orders under the EC Act. These control orders give rise to rent-seeking by the enforcement functionaries at the border checkpoints creating artificial barriers on the movement and storage of agricultural commodities.
- Infiltration: Infiltration of the traders or intermediaries in the guise of farmers cause losses to agricultural producers in the country.
- Grading Infrastructure: Grading at primary market level is grossly inadequate. As per Planning Commission Report, there are only 1968 grading units at the primary level which is below the required levels. The facilities created in market yards continue to be inadequate. The market committees have not popularized the cleaning, grading and packaging of agricultural produce on a sufficient scale before the sale by the farmers.
Agricultural Produce Market Committee Reforms:
- Elimination of multiple licenses: Single licence and single point of levy of the market fee is proposed at the State level and then Centre plans to gradually move towards a single licence and single point of levy of market fee at the national level. It aims to remove disincentives for farmers and traders to trade across the country as they will not have to shell out more money.
- Electronic Trading: NAM is proposed as a pan-India electronic trading portal which seeks to network the existing APMC and other market yards to create a unified national market for agricultural commodities. NAM is a virtual market but it has a physical market at the back end. It enables buyers situated even outside the State to participate in trading at the local level.
- Quality certification: The model Act mandates establish ‘State Agricultural Produce Marketing Standards Bureau’ for Grading, Standardization and Quality Certification. It also provides for abolishing commission of agent system. Payments will be made for facilities such as grading, sorting, and processing.
- Special Markets: A notification of Special Markets or Special Commodities Markets in any market area for specified agricultural commodities will be operated in addition to existing markets. Also, Contract Farming is emphasised to provide for compulsory registration of all contract farming sponsors, recording of contract farming agreements, resolution of disputes.
As per Committee of State Ministers in-charge of Agriculture Marketing to Promote Reforms, only 16 States have amended their Act and only six states have notified the amended Rules. There are some States which do not have APMC Act and some have partially amended their Act. The Model APMC Act does not go far enough to create a national or even state level common market for agriculture commodities. The Act retains the mandatory requirement of the buyers having to pay APMC charges even when the produce is sold directly outside the APMC area.
Conclusion: Private investment on a massive scale needs to be invited to upgrade and build large storage and warehousing systems that are climate resilient. However radical reforms will be possible only when agricultural marketing is brought under the Concurrent or Union list with the consent of the States. The country will achieve food security only when the income of farmers is secured and doubled.