Gokul Patnaik
The raging controversy regarding the new farm laws and the country-wide protest of farmers have once again brought to focus the crucial role played by agricultural markets in economic development. States like Punjab, Haryana and Maharashtra have well developed marketing systems which have contributed to their prosperity. Other states have lagged and continued with the traditional systems. Reforms have taken a back seat.
Agriculture market reform in India has historically been a vexatious issue. The Royal Commission on Agriculture in 1928 noted the need to regulate agricultural markets. The Madras Commercial Crops Act 1933 (which was then applicable to areas of present day Odisha) laid down certain restrictions. The Constitution of India (1950) prescribed that “Agriculture”, “markets and fairs” and “trade and commerce within the state” are all State subjects (Entry 14, 26, 28, List II, Seventh Schedule). Agricultural markets have therefore been the responsibility of the states. In fact, Odisha was one of the first states to notify Orissa Agricultural Produce Markets Act 1956. Its main objective was to assure the agricultural producer “of his legitimate share of the price paid by the consumers” and to regulate unfair trade practices. Similar laws were enacted in other states. But regrettably, the stated objectives of the legislations remain unfulfilled. Sporadic attempts have been made to introduce the much-needed reforms in the agriculture sector. The Central government circulated a new Act in 2003. Model APMC Rules were also framed in 2007 and states were asked to adopt them. Reportedly 11 states adopted them fully and seven states partially. But there has been no significant improvement at ground level and in most cases, it remains business as usual.
Odisha has 66 Regulated Market Committees (RMCs) with 180 sub-yards. A number of markets remain under the control of local bodies. The state has 76 municipal markets and approximately 2000 gram panchayat markets (out of which about 250 are managed by RMCs). The Government of Odisha also tried some piecemeal reforms. In an attempt at disintermediation, it set up 43 Krushak Bazaars where farmers can sell their produce directly to buyers. It has also set up 14 Special Commodity Markets. Yet, the markets have poor infrastructure and most of the transactions take place outside the market yards. Bulk of the market fee is collected from check-gates.
The International Finance Corporation (IFC) sponsored a project in 2016 to study and frame a new law for agricultural marketing in Odisha. Our company, Global AgriSystem, was appointed as the consultant. We conducted extensive survey of the existing markets in the state, held in-depth discussions with the State Marketing Board and other stakeholders and proposed a new law.
This was discussed and approved at a high-level meeting of the state government in the presence of the concerned minister and secretary. The proposed act was designed to pave the way for new age marketing concepts such as e-markets, commodity exchanges, facilitation of buying by bulk buyers (retail chains, processors, exporters, warehousing, and trading companies). It was proposed that the entire state shall be considered as one market and check-gates will be abolished. Producers will be allowed to sell anywhere in the state. It was suggested to have a single point registration for all traders and wholesale buyers and issue unified registration number (URN), which will permit them to buy anywhere in the state. Market fee would be abolished and only service charges will be levied on users who use market facilities. The Act was designed to attract private investment in a big way to augment government resources in setting up of agricultural infrastructure and reduce post-harvest losses. Private markets would be licensed by the state government provided they had or agreed to build the necessary infrastructure like warehouses or electronic trading platform.
If the state government had adopted these proposals in 2016, Odisha would have been the first state in the country to adopt a progressive modern agricultural marketing act and it would have saved the farmers from suffering the pain points of the new Central farm laws. In view of the persistent doubts about the constitutional validity of the Central laws on agriculture, which is a State subject, many states including Punjab, Rajasthan and Chhattisgarh have passed new laws on the subject in their state Assemblies. Odisha should consider what is in its best interest. Concluded…
The writer is a retired IAS officer and former Chairman, Agricultural & Processed Food Products Export Development Authority (APEDA).