Surinder Sud: Where's the market?

FARM VIEW

Apart from the huge shortage in markets for farm produce, restrictive regulations in these markets are hurting farmers.

Incredible as it may seem, there is just one proper agricultural market for an area as sprawling as 435 sq km, on an average. Even in an agriculturally progressive state like Punjab, each market is expected to cater to farmers living in a 114 sq km area. And in a state like Meghalaya, the average catchment for each market is a whopping 11,215 sq km.

The National Commission on Agriculture, which gave its report in the initial green revolution phase in 1976, had recommended that the facility of a market should be available to farmers within a radius of 5 km. According to this yardstick, there should be at least one market in an area of 80 sq km. Thus, the density of mandis needs to increase nearly five-and-half times.

The deficiency of physical marketing infrastructure apart, a sizeable chunk of the existing regulated markets lack even the basic facilities needed for trading in agricultural produce. Going by the official reckoning, cold storage units, vital for the marketing of perishable produce like vegetables, fruits and flowers, exist only in 9 per cent of the markets.

Grading facilities, essential for proper valuation of the produce, are available in less than one-third of the markets. And to top it all, elementary amenities and services like roads, boundary walls, electric lights, loading and unloading facilities and weighing equipment are wanting in about 20 per cent of the mandis.

Indeed, the very concept of regulated markets has lost its relevance. Though conceived with the good intention of safeguarding farmers from the exploits of intermediaries, these markets themselves have become the source of their exploitation. Farmers are denied the much-needed freedom to sell their produce directly to those willing to pay the highest price.

The licensing of traders and commission agents in the regulated markets has virtually given them a monopoly over purchases from growers. They even tend to organise themselves into associations to completely rule out any possibility of competitive marketing.

Besides, the entire farm marketing system is beset with an archaic legal regime, excessive fees and levies and restrictive curbs and controls on trade, pushing farm trade out of sync with contemporary marketing realities.

Over the years, the centre and states have enacted a number of legislations which have provisions to impede movement, storage, marketing, export and import of agroproducts. The worst of them is the umbrella central statute, the Essential Commodities Act, 1955, which despite being diluted through subsequent amendments, is still being used to restrain agricultural marketing to the detriment of the farmers.

Indeed, what is most surprising is that both central and state authorities know what needs to be done to revamp farm marketing but are still not inclined to do it. The pace of amendment of the Agriculture Produce Marketing Acts by the states on the lines of the model Act circulated by the centre is woefully slow.

In fact, what is needed is to go beyond the model law. For this, a roadmap has already been sketched by the inter-ministerial task force on agricultural marketing reforms. The recommendations of this task force also find mention in the report of the sub-committee of the National Development Council (NDC) which was presented and considered at the NDC meeting held in Delhi last month under the chairmanship of Prime Minister Manmohan Singh.

Interestingly, these reports have minced no words in pointing out that agriculture needs well functioning markets to drive growth, employment and economic prosperity in rural areas. They have called for the promotion of direct marketing, contract farming and setting up of markets in private and cooperative sectors. Besides, they recommended large investment, both public and private, for development of post-harvest and cold chain infrastructure nearer to the farmers' fields.

These committees have laid stress on the removal of all restrictions on production, supply, storage and movement of agricultural commodities and their trade and commerce that have been imposed under the Essential Commodities Act.

Besides, they have favoured allowing futures trading in all agricultural commodities to improve price risk management and facilitate price discovery. This would need further amendment of the Forward Contracts (regulation) Act, 1952.

Going further, these panels have called for putting in place enabling policies to encourage the procurement of agricultural commodities directly from farmers' fields and to establish effective linkage between farm production and the retail chain and food processing industries.