Agriculture Marketing Reforms: Why APLM Act May Become Future

“Agrarian economy in India fails to prove its strength when it comes to marketing”, it was a famous statement for the corporates opting out of agriculture or not choosing agriculture for investment purposes, says one of the members from farmers’ producer organisation.

APMC Act 2003

Answer to this question sets with The Model Agriculture Produce Marketing Committee (APMC) Act of the government, which has proven itself as a major player of market reforms in agriculture. Act is based on the recommendations of an inter-ministerial task force. This act had proposed various provisions in the existing laws with an eye to encourage competition, by inducing cooperative and private sector to form wholesale markets.

As per the economic survey of 2014-15, APMC had provisions for-Direct sale of farm produce; establishment of special markets for specific agricultural commodities (for instance perishable items); new market establishment by farmers for their agriculture produce; registration of market functionaries instead of licensing; single levy on market fee; establishment of producers’ or consumers’ market for the facilitation of direct sale and purchase of agriculture produces etc.

A former chairman of committee for agricultural cost and prices said that ‘response to the implementation of the model APMC act was not very enthusiastic’. A few states had adapted the recommendations of 2003 act, while other states only amended the existing rules. In certain cases, the changes were applied only to selected commodities. It can be termed as some reluctance had been observed in liberalising agriculture marketing.

The data by ministry of agriculture and farmers welfare can make the adaption of salient features of the act of 2003 by various states, and will also suggest that problem is not in rules but in implementation and willingness.

Model State APLM Act 2017

The fragmentary approach to reform agricultural marketing was not delivering intended results (previous figure shows the participation status). States felt that a wide-ranging act that could facilities regulation and development of agricultural marketing across the country was required for system overhaul. Development such as electronic national agricultural market (e-NAM) required uniformity of regulations across states. Possibly this is how, ministry of agriculture and farmers welfare came up with Model State (Union Territory) Agricultural Produce and Livestock Marketing (APLM) (facilitation and promotion) act of 2017.

Why the latest draft can prove to be better than previous one – This act has provision where entire state would be treated as a single market, which will certainly remove hurdle of area limitations by APMC. The APLM has provision of both state committee and agricultural marketing board as fully democtratised making it work unbiased. It will enhance farmers produce by providing conditions for creation of private wholesale markets along with farmers-consumer market yards.

It will reduce price spread by enabling direct contact between farmers and consumers or other end-user categories. APLM will also give freedom to the farmer to sell his property to any person or agency at his place of choice, making him get a better return. Once the warehouses and other storage facilities will be declared as markets or sub-market yards, it will enable linkage between the farmer and buyer. This draft has provisions of promoting e-trading to link markets across different geographies that will make trade more transparent.

APLM also has the provision of single-point levy of markets fees and single trading licensing across state. It will also create conducive conditions such as inter-state trading license, standardisation and grading issues (for quality parameters) and quality certification for promoting nationwide single agriculture market. APLM act has also carried various provisions of earlier model APMC act for special commodity market yard, market rationalisation and commission charges etc. The willingness of implementation will matter once again.