Major Agricultural Marketing Reforms – The Way Forward

Implementation of reforms is crucial in making any plan effective and delivering the intent in all its aspects. Many outlooks published by agencies like United Nations and the United States Department of Agriculture had termed the main focus areas of Indian agrarian economy with two major issues, where raising required returns for farmers and reducing costs for buyers are addressed.  

What is required for a better growth is market integration. Fragmented markets are the result of notified area of agriculture produce marketing committees. They do have an undesirable impact on the competitiveness of agricultural marketing system. Commodity exchange for future trading of commodities created a single, nationwide market for various agricultural commodities through an online trading platform.

Their objectives were different but they provided a template of how a unified market for the country as a whole could be created. Market integration through practices like e-NAM had done a lot to integrate them, but the way forward is difficult. States like Karnataka had done a lot to integrate all the agriculture produce marketing committee (APMC) of the state to integrate and function in a unified way.

A single licence valid for entire trade to revitalise agricultural marketing had given a lot to learn for the rest of India. In the words of Prabhu Lal Saini, agriculture minister of Rajasthan, “Integration and electronic facilitation of agricultural markets is an aspect that we have learnt from a state like Karnataka”. Integrating all the APMC’s of the nation may not be a distant dream, keeping an eye over their nature of huge underlying potential in agri-marketing.

Market Access to farmers

A single seamless market for agriculture commodities in the nationwide market may not be a single solution for entire agri-marketing issues. It will still play a major role for better results. Buyers accepting common commodities at unified prices throughout the entire nation can never be termed as a bad idea. The National commission on farmers had observed that the density of APMC is poor and it would be helpful if the market is within five kilometres from the farmer’s residence or farm field. This policy can be used to connect farmers’ to the market field.

Contract Farming

It had been given much prominence in the model APMC act, and very much remained a focus area of the model APLM draft 2017. It had been in practised for quite some time in India. Seed production by seed companies and sugarcane production under catchment area of a sugar producing unit are few classic examples of contract farming in India. Contract farming as done by Pepsico in Punjab for tomatoes or Mc-Cain for potatoes in Gujarat is a perfect example of it. This can help to get farmers’ new technology at affordable scale. Contract farming may present a potentially good example.

Direct Marketing

It has been a good concept, which has got a space in APMC act and a full coverage in Model APLM draft 2017. There are basically two ways for it, either to sell directly to consumers (as done in northern and few southern Indian states in country markets). Otherwise, a constructive market where agriculture producers can directly go and sell. In both the ways, it is all about removing the market intermediaries (possibly a real reason to find Rs40/ Kg tomatoes in Rs120/Kg).

Farmer Producer Organisation

The percentage of market surplus is high in most of the crops. Absolute figures can be small due to the predominance of small and marginal holdings. This affects scale economies which are an important factor in the marketing of agricultural produce. Only uneconomical sizes may raise transportation and other related costs. Cooperatives may increase chances as small holdings may not give a chance to bargain where Yogendra Alagh’s committee of the year 2002 had proposed a possible complete solution to it.