Resurrect farm reforms

A committee set up by the Ministry of Agriculture (MoA) in June 2024 has proposed a national policy framework for the marketing of agricultural produce, along with measures to ensure remunerative prices for farmers. The measures include

1. Allowing direct farm-gate purchases of agricultural commodities by bulk buyers

2. Declaring warehouses, silos and cold storages as “deemed market yards” (DMYs)

3. Establishing and operating multiple e-trading platforms, including e-NAMs (electronic national agriculture market) in the private sector.

Agricultural marketing is currently governed by the respective state laws under the APMC (Agricultural Produce Market Committee) Act. These laws vary widely across states, hindering the free movement of agri-produce between states and, in many cases, even within states. Farmers can sell their crops only at the designated APMC Mandis. At the mandi, a cartel of licensed traders and arthiyas (local name for commission agents) dominate the market.

This system allows traders and arthiyas to exploit farmers to the hilt through low prices, arbitrary rejections, under-weighing, and delayed payment. Additionally, the APMC mandis can handle only a fraction of the quantity of produce the farmers bring to sell. So, many farmers
are forced to sell in private local markets--where sales are legally barred--often at throwaway prices.

Clearly, the extant marketing arrangements severely hamper farmers’ ability to sell their agri-produce, fetch a remunerative price and increase their incomes. While some states have made enabling provisions in their APMC laws to set up private wholesale markets, progress has been slow. Many states have either not framed rules or have imposed rules that are not conducive to attracting private players. A few states like Maharashtra, Uttar Pradesh, and Gujarat have provided for farm-gate purchases, but these transactions are restricted to specific commodities and timeframes.

The idea of buying and selling agri-produce on e-trading platforms is not new. The Centre launched e-NAM in April 2016, but its impact has been limited. Of over 7,000 regulated wholesale APMC mandis, only 20 per cent are on the e-NAM platform. Moreover, just 12.5 per cent of India’s 140 million farmers are registered on the e-NAM portal, and business transactions on the portal account for only 12% of the total value of agri-trade (excluding dairy and meat products).

For the e-platform to work effectively, farmers must be able to sell their produce on the platform regardless of location, traders should have a single trading licence valid across the state, and there should be a ‘single-window’ system for levying fees. States must make necessary amendments in their laws to provide for all this. But most states have shown little interest.

Recognising that states were unlikely to reform APMC laws on their own, the Centre used its constitutional powers to create an alternative framework.

In September 2020, it enacted the Farmers’ Produce Trade and Commerce (Promotion and Facilitation) Act, 2020, to regulate interstate and intrastate trade, providing for freedom of choice to the farmer or trader to conduct trade and commerce while allowing traders to purchase specified farm commodities directly from farmers anywhere in the country, even outside the State APMCs. It enacted two other laws to give legal protection to farmers while engaging with buyers.

The laws had all the ingredients of what the MoA committee is seeking to achieve under the national policy framework for marketing of farm items. These enabled direct purchases of agri-produce from the farmers, gave them multiple choices to sell to whomever they intended, and would have given a boost to trading on the e-platform. But, bowing to year-long protests by a handful of farmers from Punjab and Haryana, Prime Minister Narendra Modi announced their repeal on November 19, 2021.

Now, the Committee has revived those very ideas under a new incarnation. But the big difference is that this time, the Centre wants the states to come on board. This is clear when the committee itself says, “To align with the proposed national policy, the states and union territories would have to notify state policy on agri-marketing as the subject falls in the domain of states.” But the states are unlikely to yield ground!

This brings us back to square one. The farmers can get a fair deal by resurrecting the three central laws.

(The writer is a policy analyst)