Panel seeks freedom for farmers to sell produce outside APMC

Panel on the integration of commodity spot and derivatives futures also proposes to exempt levy on such sale

Farmers should allowed to sell their farm produce outside of the Agriculture Produce Market Committees (APMCs) to help them fetch the best prevailing price for their produce. Whenever the facilities of APMCs are not used, that is, if sale is done outside the APMC premises, such as sale on a regulated electronic platform, or regulated private markets, fee or levy on such sale outside APMCs or mandis should be waived. These were recommendations of the panel on integration of commodity spot and derivatives market chaired by Niti Ayog member, Ramesh Chand.

The panel was set up by a year ago by the finance ministry. The matter assumes significance as the agriculture market has a 16 per cent share in country’s GDP and employs half the total workforce. The flexibility to sell farm produce outside APMCs gives an option for buyers of commodities, especially big processors to deal directly with farmers, which is a win-win situation for both.

Regulated electronic platforms such as electronic spot markets and spot exchanges may be deemed as market so as to enable direct selling by producers/farmers through multiple modes or on spot exchanges without having to pay any fees to APMCs. The Committee wants the union agriculture ministry and various state governments to facilitate these changes.

The panel has highlighted the need to implement model APMC act by all states. It notes, “A new Model Agricultural Produce and Livestock Marketing (Promotion and Facilitating) Act (APLM), 2017 has been introduced in consultation with states. The change in existing APMC Act on the lines suggested in Model APLM Act, 2017 is critical to improve the efficiency in agricultural markets and to integrate farm level production with end-uses.”

All the measures suggested are aimed at integrating the spot and futures commodity markets and the report covers agri and non-agri commodities. Submitted over two months ago, the report was under deliberation of the Department of Economic Affairs and is now in public domain. It says, “To help small farmers get better bargaining power, there is a need to promote farmer producers organisations and cooperatives.” They can do collective bargaining in spot markets and can mobilize bigger lot sizes to hedge and deliver on derivatives platform.

The report also proposed that when government imposes stock limits, it should exempt stocks held by farmers’ collectives, such as Farmer Producer Organisations (FPOs) in a warehouse and stocks held in the WDRA-registered warehouses.

The committee also addressed other issues and called for the incentivisation of private entrepreneurship to improve facilities for farmers like scientific storage, quality consciousness about crops, expansion of low-cost, technology based assaying facilities and also to enable the producers / farmers to seamlessly transact in both spot and derivatives market.

In the non-agriculture segment, such as metals, Union Ministry of Steel could be entrusted the task of overseeing the markets for all ferrous and non-ferrous base metals.

What the committee Recommends

• No levy on the sale of produce by farmers outside the Agriculture Produce Market Committee (APMC)  
• Rationalise cost of trading in derivatives markets
• Implement Model APMC (Promotion and Facilitating) Act, 2017 in all states
• Exempt farmer producer organisations and registered warehouses from stock limits
• Register all warehouses with an unified authority