(Probable Question: Agriculture marketing in India requires wide-ranging policy reforms. Discuss.)
A robust ‘agricultural marketing’ policy is imperative in order to improve the situation of farmers in the country. and without such policy interventions, the aim of doubling farmers income by 2022 would be a pipe-dream.
Currently, ‘agricultural marketing’ in India suffers from policy distortions, fragmentation resulting from large number of intermediaries, poor infrastructure, lack of vertical integration and stranglehold of official mandis sanctioned by the Agricultural Produce Marketing Committees (APMC) acts of the states.
Associated problems with agricultural marketing:
Under the APMC acts, farmers are required to sell a large number of commodities in the vast majority of the states in a local mandi where intermediaries often manipulate the price. These same intermediaries then sell the produce to the next layer of intermediaries. Because mandis lack goodstorage and warehousing facilities especially when it comes to fruits and vegetables, substantial wastage occurs undermining the price received by the farmer. Mandis also charge multiple entry, exit and other fees. Therefore, it is essential that states genuinely reform their APMC acts. The Vajpayee government had originally initiated this reform via a model APMC Act but most states have implemented it only half-heartedly.
Long-term Steps that need to be taken:
- Reformed APMC acts should fully empower farmers to sell their produce to whomsoever they wish.
- Actors other than APMC mandis should be conferred the right to buy produce directly from the farmer and to set up alternative marketplaces thus creating competition and pave the way for the farmer to receive lucrative prices.
- Aggregators must be encouraged who would collect produce from farmers for sale in competitive marketplaces to assist farmers for whom it is neither feasible nor profitable to take their produce to such markets.
Short-term steps that may be taken:
- Following the recommendations of the committee on Encouraging Investments in Supply Chains (Dr. Saumitra Chaudhuri Committee) states may exempt perishables from the APMC acts thus accelerating the process and reducing wastage.
- The Essential Commodities Act may be amended to provide exemptions to certain categoriesof players such as exporters, food processors, multiple outlet retailers and large departmental retailers from applicability of stock limits. Currently, tight stock limits in many states discourage exports and development of vibrant domestic markets.
Source: NITI AAYOG Three Year Action Agenda, 2017-18 to 2019-20.