New farm laws focus on agri-marketing

The Centre recently enacted three agriculture-related legislations, despite agriculture being a State subject, given that trade and commerce fall under the Central jurisdiction. The new laws enable farmers to sell their produce to private buyers without red tape and cartels, benefit from contract farming and stock produce to sell at the right time at competitive prices.

Till now if a farmer attempted to sell his produce outside the Agricultural Produce Market Committee (APMC) or stocked his produce he violated the law of the land. These legislations attempt to correct this flawed policy environment and deregulate the farm sector by allowing the farmer to sell their produce outside the APMC markets.

Earlier, agricultural policies were skewed towards cultivation and increasing yield per acre, and ignored ensuring competitive prices for farmers’ produce. The State governments’ departments of agriculture/horticulture and the Ministry of Agriculture & Farmers Welfare, have not oriented farmers to factor the market, which led to poverty in the long term. This only aided the traders to benefit at the farmer’s cost.

Krishi Vighyan Kendras

Consider the 686 Krishi Vighyan Kendras in every district around the country that engage with farmers and advise them, equipped with a soil scientist, agronomist, entomologist, plant pathologist — but no resources for agri-marketing. The state government’s budget for agriculture/horticulture departments has allocations for production technology extension and subsidy delivery, not agriculture marketing.

Now that the Centre has enacted these new legislations, the State governments need to revamp the APMC regulatory framework, remove market fee or cess and mandatory documentation. Similarly, the collection of commissions from sellers is illegal in some States, but not in others. The earlier law stipulated that commission could be collected only from buyers and not sellers but this was grossly violated across the country. For instance, in Punjab and Haryana the law permits the collection of 2.5 per cent of the value of the commodity as commissions from farmers/sellers.

But in other States the collection of commissions from farmer-sellers was not only illegal but also fixed arbitrarily. This worked against the farmers’ interests and benefited the traders which the newly enacted legislation now eliminates as farmers can sell outside the APMC yard.

Grey areas

Perhaps the biggest challenge is that offline transactions outside the APMC market yards are not recorded anywhere which is a grey area. The sale/purchase data of commodities traded should be linked to communication platforms. The eNAM (national agriculture market) is an online trading platform for agricultural commodities. It facilitates farmers, traders and buyers with online trading in commodities. The platform helps in better price discovery and provides facilities for smooth marketing of their produce. Today the eNAM is linked only to 1,000 of the country’s 7,200 APMCs.

For instance, prices listed for specific commodities on the Agmark Net are not representative of prime markets which trade these commodities. The Agmark Net is an online portal which provides market information under the Directorate of Marketing and Inspection, a central agency.

To illustrate, in Karnataka, the prime market for red chillies is Byadgi APMC, Haveri district, but the practice to upload current price data on an hourly basis online does not exist. Therefore the dissemination of market information does not take place and hampers the price discovery process.

Today farmers lack a communication platform to disseminate prices for critical commodities across the country. For instance,there are no electronic display systems like those at bus stands/railway stations to inform farmers about prices across the 7,200 APMC yards/sub-market yards around the country.

Therefore the secrecy of market information works against the farmer’s financial interests considering 80 per cent of the trade in agricultural commodities is offline.

However, under the new Act, quantitative data of sale/purchase is not available, unlike earlier APMC transactions because billing is not mandatory under the new Acts.

The estimated 27,000 weekly markets or shandies in rural/semi-rural India have emerged as aggregation centres to feed major markets and eliminate the role of traders. Ideally, the price dynamics of demand/supply across these diverse markets should benefit the farmer-seller, but the fragmentation of these markets works against competitive prices.

Moreover, the lack of logistics and infrastructure like own transport and cold storage facilities compels the farmer to sell perishables on the same day. The new legislation aims to ensure transportation of agricultural produce anywhere in the country to promote the concept of ‘one country one market’ through the introduction of Kisan Rail from August 2020.

The inter-State railway connections at a nascent stage has proved a boon for farmers. As the Kisan Rail network expands it would integrate the surplus and scarce markets to ensure competitive prices for farmers.

The challenges

For farmers the challenges of cultivation arise from the vagaries of nature and labour shortage. Additionally, farmers need to sell their produce at competitive prices.

However, to do so they need to sort and grade their produce to adhere to quality parameters to meet market requirements. The officials of departments of agriculture/horticulture need to impress upon farmers the importance of sorting and grading their produce in fetching better prices at the mandi. Today this is a task that traders perform to their own advantage instead of the farmer doing so.

The new Act will partially put the APMC infrastructure to disuse. Therefore States which accept/implement the new legislation could consider support to Farmers Producers Organisations/private players to utilise/buy APMC infrastructure through denotification of specific areas.

In Bihar, the APMC Act was repealed therefore its infrastructure is in a state of disuse. Therefore, the State governments should opt for public-private partnership and use APMC infrastructure under the existing legal framework.

(Reddy is a former Professor of Agri-Marketing, University of Agricultural Sciences, Bengaluru; and Poovayya works with contract farmers and is an agriculture activist)

COMMENT NOW