The Hindu Business Line : Reform the farm market

Even as the Government is busy fighting a seemingly losing battle against stagnating agricultural output, welcome efforts are on to improve the marketability of farm produce. One of the ways being considered is freeing growers from the decades-old restriction of selling at government designated market yards or mandis. Model rules under the State Agricultural Produce Marketing (Development and Regulation) Act 2003 are being formulated. Representations hav e been made to throw open the agri-produce marketing system, allow direct purchase from the field, and encourage contract farming on a large-scale. It may be rather tempting, in the name of liberalisation and freedom to farmers, to dismantle the extant marketing system But there is the danger that it may, willy-nilly, expose growers — mostly small and marginal — to the vagaries and ruthlessness of the free market. Without intending to dilute the need for reforms in the produce marketing system, it must be stated that there is strong case for an approach — cautious and calculated — that would advance the interests of growers without putting them entirely at the mercy of the market, especially the new crop of large corporate buyers.

It would be naïve to believe that buyers are here to protect farmer interests and pay the most remunerative prices. On the other hand, corporates cannot also be faulted for their sales and profit maximisation objectives. Reality should, therefore, visit decisions. Farmers must have the freedom, of course, to sell their produce to anyone who pays the asking price, but the mandis must be there as well offering the institutional marketing assurance. For the same reason, caution i s necessary in considering suggestions for setting up unregulated or unmonitored private market yards. The benefit of high consumer prices has seldom flowed back to primary producers; and even in the liberalised system under consideration, it is unlikely to. Indeed, the situation calls for building-in checks and balances into the process that would allow marketing freedom, yet monitor transactions that may be loaded against growers. The rationale of the mandi system, set up decades ag o, has not become irrelevant. It is simply that the system has failed to evolve with the changing times and needs. Agri-produce marketing has unfortunately got bogged down in State- and district-level politics; the system must be depoliticised. This is possible by encouraging stakeholder participation.

The existing 7,500 marketing yards have to be upgraded by building approach roads, warehouses and facilities for primary grading/sorting of produce. Importantly, information technology tools should be deployed to deliver price and market information to growers, who given time, the opportunity and training, will turn savvy traders. Delivery-based forward trading can be introduced for a number of agricultural commodities, something that would ensure expanded physical trades rather than speculation-driven, cash-settled transactions. There is also a need to rationalise — reduce, in many cases — taxes and market fees.

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