Move to delist fruit, veggies from APMC Act hailed

Congress Vice-President Rahul Gandhi’s policy prescription to delist vegetables and fruit from the Agriculture Produce Marketing Committee (APMC) Act in the 12 Congress-ruled States by January 15 will benefit both farmers and organised retailers. It may help contain the price rise in these products, which are the key factors behind high food inflation.

The proposed delisting of perishables will give the farmers freedom to sell their produce directly to processors, aggregators and traders outside the mandi. Retailers have, for long, demanded structural changes to augment growth in the farm sector.

“It was long overdue and is part of the structural reforms,” said Ashok Gulati, Chairman of Commission for Agricultural Costs and Prices (CACP), referring to the proposed delisting of fruit and vegetables from APMC. However, implementing the reforms in the public distribution system may be a tough call and may take at least two years. Further, to bring down cereal inflation, the government should liquidate 10-15 million tonnes of wheat, he said.

“It will help farmers and could possibly bring down the costs to consumers,” said Pradipta Sahoo, Head of Fruit and Vegetables Business at Mother Dairy.

Purchasing directly from farmers for retailers would mean reducing the intermediaries, thereby bringing down spoilage of fruit and vegetables. On an average, fruit and vegetables pass through six to seven layers of middlemen before reaching the manufacturers or consumers.

A recent ICRIER report on the food processing industry estimates that 15 to 25 per cent of the total produce sold through the APMC route gets wasted due to multiple intermediaries and poor mandi infrastructure.

The Confederation of Indian Industry had recommended changes in the APMC Act to put the farm sector in a mission mode. It had also demanded that farmers be given freedom to sell their produce directly to a food processing company, a consolidator or a retailer.

Agriculture marketing is a State subject. Though the Centre had finalised a model APMC Bill and circulated it to various States and Union Territories in 2003 for implementation to reform the agri-marketing system, not many States have implemented the same.

Arpita Mukerjee, professor, ICRIER, says, “Delisting of fruit and vegetables from the APMC Act is a positive step as only 7 per cent of the total fruit and vegetables sold is through the mandis. Even though organised retailers could buy directly from the farmers, yet they had to pay the mandi charge. The delisting will benefit organised retailers as also food processing firms.”

Several organised retailers that Business Line spoke to said this would streamline the procurement process and consumers will be benefited in the long run, as inflation will be tamed and supply chain bottlenecks will be eased.

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