Farm marketing

Encourage big retail chains for a positive impact

The Maharashtra government's decision to delist fruits and vegetables from the Agriculture Produce Marketing Committee (APMC) Act is a welcome reform that should have been carried out much earlier. If meticulously executed - and this is a big if - it can benefit both farmers and consumers and can, more importantly, bring down the prices of such perishable goods, which have been the major contributor to the recent rise in food inflation. Misgivings on this count arise from the fact that similar plans made at least twice in the past had made no headway in the wake of intense pressure from traders, commission agents and the politically influential APMC committees. This time, too, similar pressure is being built by stalling trading activities in several key markets, including Maharashtra's largest mandi at Vashi in Mumbai. The latest in the series of such coercive tactics is the surrendering of trading licences by onion dealers in Lasalgaon and adjoining mandis in the Nashik area.

However, Maharashtra is not alone to have failed in reforming agri-marketing by freeing perishables from the stranglehold of APMCs. At least a dozen other states, including the national capital territory of Delhi, have exempted horticultural produce from being compulsorily traded through APMC markets but without much success. The country's largest agricultural mandi at Azadpur in Delhi, where fruits and vegetables were delisted in September 2014, has not seen any perceptible dip in the daily trading volumes, which remain as high as around 15,000 tonnes - more than twice the amount traded in Vashi. This is despite the existence of two other agricultural markets at Keshopur and Shahdara in the capital region. Even the setting up of a Kisan Mandi by the Small Farmers' Agri-business Consortium at Alipur, close to Delhi's border with Haryana, for direct sale of produce by farmers, did not make much difference to the usual business at Azadpur.

The exemption of perishable farm output from the ambit of APMC laws can potentially serve several useful objectives. For one, it can trim marketing overheads by eliminating middlemen. This helps evade commission agents' charges, mandi taxes and other state levies which could add up to anywhere between six and 14 per cent in different states. Besides, delisting can help farmers get in touch with bulk consumers, food processors, big and small retailers and other end-users of fruits and vegetables to produce demand-driven products through contract farming. This aside, it can also encourage private investment in setting up modern agricultural mandis to offer competition to regulated APMC markets, where trading is manipulated by cartels.

However, these advantages can accrue only if there is political will to withstand pressure from the trading circles and put in place a legal framework that could facilitate the emergence of alternative farm marketing avenues. Given the difficulties in acquiring land, state governments' assistance in land acquisition would be vital to woo private investment. Besides, the state governments would also have to create the necessary logistics infrastructure. The most critical need for improving agri-marketing is to encourage large retail chains with backward linkages with farmers. This will automatically end the monopoly of APMCs and ensure price stability in perishables, which require specialised handling, temperature-controlled storage and outlets for transportation and sales.