Post-COVID, farmers will be in distress, revamp APMC laws

Amidst a nationwide lockdown announced on March 24, 2020 to contain the spread of the coronavirus disease, even as an overwhelming share of the economic activity has come to a grinding halt, agriculture too has suffered a major jolt. The crisis has come at a time when Rabi crop (October 2019 – March 2020) mostly winter staple wheat, is ready for harvest.

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While on one hand-harvesting operation have suffered due to shortage of labour (courtesy, sudden stoppage of all modes of transport and workers getting stuck where they were), on the other, farmers are unable to move harvested crop to the market.

According to an estimate, already they have suffered the loss of about Rs 15,000 crore (due to crashing prices of horticulture crops such as fruits, vegetables etc, besides wastage due to lack of buying). In view of the extension of the lockdown for this is expected to increase to over Rs 50,000 crore.

The government has exempted agricultural activities from the purview now. It has also made elaborate arrangements for procurement of wheat under the MSP (minimum support price scheme) programme and asked states to start procuring 25% of pulses and oilseeds under its price support scheme. Besides, under the market intervention scheme (MIS), it has issued orders to compensate horticulture farmers for a dip in wholesale prices.

But has it thought through a major impediment that farmers face even in normal times? This has to do with a highly restrictive legislation – the APMC (Agriculture Produce Market Committee) Act. The Act empowers state governments to specify market areas where farmers bring their produce for sale. These are operated and regulated by market committees. There are a total of about 5,000 such markets (mandis).

The stated objective of the APMCs is to promote organised marketing of farm commodities to ensure fair play, achieve an efficient system of buying and selling of commodities, protect farmers from intermediaries and traders and to ensure better prices and timely payment for the produce. Far from achieving these objectives, farmers are being exploited by a network of licensed traders and middlemen who have a complete stranglehold over these platforms.

While on one hand, they don’t get to sell their entire produce at the MSP on the other, no alternative platforms are available where they can sell. Even government agencies such as the Nafed (National Agricultural Cooperative Marketing Federation of India Limited) etc, don’t come forward to buy when the market price dips below the MSP. Actually, the problem is much deeper.

This has to do with a cozy nexus between politicians and grain traders (in many cases, the former also happen to be deeply entrenched in this business) that has existed and flourished for decades. A grain trader has a fundamental interest in ensuring that he minimises his payout to farmer for the grains he buys from him/her. He can succeed in this game plan if farmer is left high and dry by state agencies. So, he collaborates with the politicians in the ruling establishment to ensure that state agencies remain weak and de-motivated.

This nexus also comes in the way of making amendment in the APMC Act to open alternative channels of selling such as private yards/markets, direct purchase centres, consumer-to-farmer markets for direct sale, contract farming, special commodity markets and promotion of public-private partnership in management and development of agricultural markets.

Giving more options to farmers for selling are included in Centre’s Model Agricultural Produce and Livestock Marketing – (Promotion and Facilitation) Act, 2017. But states have refused to budge. The revenue they get from levy of market fee on transactions at the mandis is also a major deterrent.

Direct purchase

Meanwhile, during a video conference with chief ministers on April 11, 2020, Prime Minister Narendra Modi asked the states to suspend certain provisions of their respective APMC laws for three months to make way for purchase of farmer’s produce directly from their doorsteps by large farmers’ produce organisations, large buyers, cooperatives and individual traders.

But, so far only two states - Tamil Nadu and Karnataka - have given their consent to amend their respective APMC laws. Even if all states agree to go ahead and act promptly to issue necessary ordinance, one wonders whether the alternative channels will be able to galvanise their machinery at such short notice to complement mammoth procurement efforts of state agencies.

But the bigger question is: what happens after the relaxation period (say, three months) is over? Will things be back to square one? Do the states have the gumption to let this amendment stay on the statute permanently? Should they not think in terms of dismantling the APMC Act or at the least, amending it on the lines of the Centre’s Model Agricultural Produce and Livestock Marketing – (Promotion & Facilitation) Act, 2017?

Much will depend on the ability of the state administrations to break the nexus between politicians and grain traders. To get a sense of whether or not they can do it, look at the following: In August 2018, the then Devendra Fadnavis government had approved amendment to the Maharashtra Agricultural Produce Marketing (Development & Regulation) Act, 1963 in line with Centre’s model Act.

As per the amendment, the entire state was declared a single market instead of the earlier rule of notifying “market areas” where sale/purchase of farm commodities could take place. This would have allowed a trader to obtain a single license for purchase of farm produce from any mandi within Maharashtra. Further, it allowed trade in all farm commodities, including livestock, outside the regulated APMC wholesale markets or mandis.

While this was done by promulgating an ordinance, it could not be enacted into law (in fact, the state government was forced to withdraw the bill on November 28, 2018 from the Legislative Council, a day after it was passed). In this backdrop, to expect that APMC reforms will see light of the day looks like daydreaming.

(The writer is a New Delhi-based policy analyst)