Mooting suitable models for different commodities and regions, the council has called for fair terms for contracting parties and effective adjudication mechanism.

In its Economic Outlook for the current fiscal, the Prime Minister’s Economic Advisory Council has made an interesting observation on ‘Reforms in Agricultural Marketing’.

The council, headed by Dr C. Rangarajan, in the outlook presented last week has said that the Government should encourage suitable models for marketing agricultural produce for different commodities.

The council has reiterated the oft-repeated allegations of traders colluding to deprive farmers of fair prices. There are concerns over the opaque ways of price determination of agricultural produce and the council has called for open and competitive methods to determine rates for farm produce.

Online spot trading

Surprisingly, the council does not mention anything about online spot trading of commodities that is seen as a transparent method these days.

The council is also critical of States control over marketing of agricultural produce. It laments that while agricultural production is free of government controls, marketing of farm products are not.

It blames laws in States that bar direct marketing for the situation. Some State Governments have made it mandatory to market agricultural produce through designated markets only.

Accepting that the law was imposed with the intention of protecting poor producers from the machinations of traders and middlemen, the council regrets that the said objective has not been achieved yet.

What is unsaid here is that such a situation exists despite the Centre coming up with a carrot and stick policy. The Centre has promised increased allocation for horticulture projects in States where the Agricultural Produce Marketing Committee Acts are amended. Sadly, only a few States have gone ahead with amendments to the Acts.

Direct selling

The outlook points out to the freedom given to producers to dispose of their products directly to consumers directly in States such as Andhra Pradesh and Karnataka. Farmers have benefited from selling their products directly.

“More commonly, where the processors are directly linked with farmers under one or other type of contract farming arrangements, the producers have, generally, gained in terms of superior inputs, better prices and minimal market risks,” the council said.

It points out at the experience gained from different forms of contract farming in commodities such as sugar and milk and says that contract farming now covers a large number of commodities.

Suitable models

Mooting suitable models for different commodities and regions, the council has called for fair terms for contracting parties and effective adjudication mechanism. The council’s views are valid and a must for foreign direct investment in the retail sector. This will serve two purpose. One, it will help retail firms to source farm products directly. Two, it will ensure remunerative prices for farmers and thus encourage them to grow more.

Responses are invited from readers. They may be sent to agribiz@thehindu.co.in

(This article was published on August 19, 2012)
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