Three States allow free trade of agriculture produce outside mandis, without any levy

Rajasthan, Gujarat and Karnataka are now among a handful of States that allow free trade outside mandis, without charging any fees for the same, thus kicking off reforms in agricultural trade.

In most big States, agri trade is regulated with Uttar Pradesh and Madhya Pradesh issuing licenses and charging mandi fees even for direct buying from farmers. In the Union Territory of Chandigarh, direct buying from farmers is not allowed at all.

When the Centre brought in the controversial farm laws, one of the main arguments was to allow farmers “freedom to sell” anywhere and it was also claimed that the opposition to the reforms were from Punjab, Haryana and western Uttar Pradesh. However, an exhaustive study of current agricultural trade shows that a few States have taken cue from the now-abandoned farm laws and started reforms in trade of farm produce. However, in most States, this remains mired in obduracy to accept reforms.

“It is good that States continue to decide on this issue and are not divided on political lines. But, any reforms in agricultural marketing at the all-India level will be dependent on the results of the current Assembly elections in five States. However, what is more important is to make a Central law on inter-State movement of ‘food stuff’ which is under concurrent list and that will facilitate trading,” said former Union Agriculture Secretary Siraj Hussain.

Mandi charges

Mandis across States charge different fees, cess or user fees and it is uniform everywhere except Gujarat and Maharashtra where the local Agricultural Produce Market Committee (APMCs) are empowered to fix rates, which vary from crop to crop between 0.5 and 6 per cent. For de-regulated commodities, mostly fruits and vegetables, traders and companies are allowed to buy outside mandis without paying any charges. But most of the States collect 1 per cent user charge, collected from buyer, if fruits and vegetables are sold inside mandis.

“It (mandi fee) is a revenue model for all the States which they will never want to forego, though they know that it is adding to the overall costs of food items. Besides, the location of mandi is also such that traders who are buying in the mandis are also selling the stuff there itself, mainly in fruits and vegetables as retailers flock there. That is why many States levy user charge for de-regulated stuff since mandi fees cannot be collected from those items,” said Anil Dwivedi, a trader in Delhi’s Azadpur mandi.

Chandigarh had received 86,082.10 tonnes of commodities in its two mandis during April-February of the current fiscal, which is higher than the whole of 2020-21. The arrivals dropped nearly 40 per cent last year to 75,752 tonnes from the 2020 levels due to the pandemic. The local administration charges 2 per cent mandi tax.

On the other hand, Punjab charges 6 per cent mandi tax (including development cess) on wheat and paddy (non-Basmati) while it is between 1-3 per cent for Basmati, maize, cotton, fruits and vegetables. Haryana charges 4 per cent on wheat, paddy, arhar, sesame and green fodder, and 1-3 per cent on other commodities. Uttar Pradesh levies 1-1.5 per cent mandi fees/user charges (including cess) on all commodities.

Hussain said while the direct purchase from farmers should continue, States should also collect data on how much commodities are traded at what prices to frame their policies as the main objective is to help farmers realise better prices for their crops.

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