Centre might identify 50 mandis in 10 states for reform

Aim to gradually extend to all others for a national common market in agri products

To break trader oligopoly and to help create a national common market, the central government proposes to identify 50 regulated wholesale markets (mandis) across 10 states. Their functioning is to be reformed with the involvement of state governments. 

According to a concept note floated on a national common market, the state governments would have to switch to modern practices such as a single trading licence for the entire region, single-point levy of market fee (mandi tax) and electronic  auction for price discovery in the identified mandis. Then, the market in question would become eligible for funding under the initiative. 

A sum of Rs 200 crore has been earmarked for the programme, to be spent over three years from 2015-16. Gradually, all the 585 mandis in the country would be covered. The Small Farmers Agri-Business Constortium will be the nodal agency to implement it. Each mandi will get Rs 30 lakh to implement the necessary hardware needed for electronic auctions.

Officials said a common national market for agricultural commodities would also help establish a transparent process of price discovery, uniform to the entire country. "This would minimise the scope of price manipulation and also bring down market levies," a senior official said. At present, mandi taxes range from 0.5 per cent in some states to as much as 10-15 per cent. 

For instance, in Punjab, foodgrain is taxed at 14 per cent but Madhya Pradesh levies a little less than five per cent.At present, most wholesale markets in different states are governed by the respective Agriculture Produce Marketing Committee (APMC) laws. 

The APMCs charge multiple fees, of substantial magnitude and often non-transparent - market fee on buyers, licensing fee from commission agents and fees from a whole range of functionaries. Commission agents also charge a fee on transactions between buyers and farmers.

The earlier central government had framed a model APMC Act but only a few states adopted these fully. Absence of a uniform national market has been several times blamed for the wide disparity between farm gate and retail prices, sometimes as much as 100 per cent.

The government's latest Economic Survey had called for using all constitutional means to achieve the objective of a common national market for farm commodities. The survey said an un-integrated and distortion-ridden agri market was one of the most striking problems in agricultural growth.

It also said that all states should drop fruit and vegetables from the APMC schedule of regulated commodities.