Agricultural Marketing Reforms: Amendments in State APMC Acts/ Rules

1. Agricultural Marketing Reforms:Amendments in State APMC Acts/ Rules Agricultural Marketing Division for State Agriculture/ Agrl. Mktg. Ministers Conference 23.04.2008

2. Agri-Markets in India as on 31.03.2007 • 6261Wholesale Markets in India (majority are regulated markets) • 20870Rural Primary Markets (about 15% are regulated markets) Total – 27131 • 2459Principal Regulated Markets • 5006Regulated Market Sub-yards Total – 7465 (Only 286 regulated markets in 1950)

3. Contribution of Regulated Markets • Basic objective has been- - to ensure reasonable gain to the farmers by creating environment in markets for fair play of supply and demand forces, - to regulate market practices and attain transparency in transactions • Aimed at providing proper method of sale, correct weighment, prompt payment and various marketing related services • Democratic set up to control and manage markets • Advent of regulated markets has helped in mitigating the market handicaps of producers/ sellers at the wholesale assembling level • Achieved only limited success and Rural Periodic Markets in general, and the tribal markets in particular, remained out of its developmental ambit.

4. Agricultural Marketing – Constraints • Predominantly marginal or small farmers – Hence small marketable surpluses & limited bargaining power • Poor availability of markets & monopolistic tendencies of APMCs • Inadequate infrastructure in wholesale markets/ rural primary markets • Lack of fairprice discovery mechanism • Multiple and exploitativeintermediaries – low returns • Fragmented supply chain, poor cold chain & high post-harvest losses • Lack of cleaning, grading, packaging & quality certification facilities • Limited access to market information and marketing opportunities available

5. Initiative of Market Reforms • Amendments in APMC Acts suggested by Expert Committee on Market Reforms constituted by the Ministry of Agriculture (Report in June, 2001) • Expert Committee recommendations discussed in the National Conference of State Agriculture Marketing Ministers on 27.09.2002 • Standing Committee of State Agricultural Marketing Ministers constituted under the Chairmanship of Union MOS (A) met & resolved to implement reforms on 29.01.2003 • Committee headed by Additional Secretary (AM), GOI including State Representatives set up to draft a Model Law for Agri-Marketing • Model APMR Act finalized on 09.09.2003 by the Committee and circulated to States by Central Government • Model Rules based on the Model Act circulated to States by the Ministry in November, 2007 • NDC has resolved on 29th May, 2007 for completion of amendments in APMC Acts and notification of Rules there under by March, 2008.

6. Amendments Proposed in Model APMC Act • Allow establishment of Private or Cooperative markets/ Farmer-consumer markets/ Direct marketing • Safeguard the interest of the farmers through provisions for Contract Farming • Single point levy & payment of market fee/ Single point registration of functionaries • Prohibition of Commission Agentsfor agriculturists and no deduction to be made towards commission • PPP in management & extension activities/ Promotion of e-trading/ Electronic Spot Exchanges • Encouraging professional management in APMCs • Promotion of Grading & Standardization.

7. Proposed Legal Framework of Contract Farming • Contract Farming Sponsor to register himself with a prescribed officer • The Contract Farming Sponsor to get the contract farming agreement recorded with a prescribed officer • No title, rights, ownership or possession shall be transferred or alienated or vest in the contract farming sponsor or his successor or his agent as a consequence arising out of the contract farming agreement • Fast Dispute Settlement Mechanism at local level • Specification of Model Agreement for Contract Farming to ensure inclusion of terms & conditions safeguarding interest of both farmers & buyers.

8. Status of APMC Act Amendments

9. Private Market / Direct Marketing Establishment of private market yard and direct purchase from farmers States which have adopted the suggested provision: • A.P., Arunachal Pradesh, Assam, Goa, Gujarat, H.P., Karnataka, M.P.{not for private market - direct sale can be permitted under the bye-laws – Sect 36(2)}, Maharashtra, Nagaland, Orissa (excluding for paddy/ rice), Punjab/ UT of Chandigarh (not for direct purchase), Rajasthan, Sikkim, Tripura, T.N. & NCT of Delhi States which amended the Act but not adopted this provision: • Chhattisgarh

10. Consumer/ Farmer Market Establishment of consumer/ Farmer market States which have adopted the suggested provision: • Arunachal Pradesh, Assam, Goa, Gujarat, H.P., Karnataka, Maharashtra, M.P.(can be permitted under the bye-laws), Nagaland, Punjab /UT of Chandigarh (only enabling provision) Rajasthan, Sikkim & Tripura States which amended the Act but not adopted this provision: • A.P. ((being set up under Exemption Clauses), Chhattisgarh, Orissa, T.N. (being set up under Executive Orders)

11. Contract Farming The Contract Farming Sponsor shall get the contract farming agreement recorded with the prescribed officer States which have adopted the suggested provision: • A.P., Arunachal Pradesh, Assam, Chhattisgarh, Goa, Gujarat, Haryana, Karnataka, M.P., Maharashtra, Nagaland, Orissa, Rajasthan, Sikkim & Tripura States which amended the Act but not adopted this provision: • H.P., Punjab/ UT of Chandigarh, T.N.

12. Contract Farming No title, rights, ownership or possession shall be transferred or alienated or vest in the contract farming sponsor or his successor or his agent as a consequence arising out of the contract farming agreement States which have adopted the suggested provision: • Arunachal Pradesh, Assam, Goa, Haryana, Karnataka, Maharashtra, Nagaland, Orissa, Rajasthan, Sikkim & Tripura States which amended the Act but not adopted this provision: A.P., Chhattisgarh, Gujarat, H.P., M.P., Punjab/UT of Chandigarh, T.N.

13. Contract Farming Dispute Settlement Mechanism States which have adopted the suggested provision: • A.P., Arunachal Pradesh, Assam, Chhattisgarh, Goa, Gujarat, Haryana, Karnataka, M.P., Maharashtra, Nagaland, Orissa, Rajasthan, Sikkim & Tripura States which amended the Act but not adopted this provision: • H.P., Punjab/UT of Chandigarh, T.N.

14. Contract Farming Specification of Model Agreement for Contract Farming States which have adopted the suggested provision: • Chhattisgarh, Goa (as may be prescribed), Gujarat, Haryana, Karnataka (as may be prescribed), M.P., Maharashtra (Rules), Nagaland, Rajasthan, Sikkim & Tripura States which amended the Act but not adopted this provision: • A.P., Arunachal Pradesh, Assam, H.P., Orissa, Punjab/UT of Chandigarh, T.N.

15. Prohibition of Commission Agents No commission agent shall act on behalf of agriculturist seller and no deduction to be made towards commission States which have adopted the suggested provision: • Chhattisgarh, Nagaland, Sikkim States which amended the Act but not adopted this provision: • A.P., Arunachal Pradesh, Assam, Goa, Gujarat,H.P., Karnataka, M.P., Maharashtra, Orissa, Punjab/UT of Chandigarh, Rajasthan, T.N. & Tripura

16. Registration of Market Functionaries Registration (not licensing) of market functionaries and single registration for trade/ transaction in more than one market States which have adopted the suggested provision: • Assam, Chhattisgarh, Goa, H.P., Maharashtra, Nagaland, Sikkim States which amended the Act but not adopted this provision: A.P., Arunachal Pradesh, Gujarat, Karnataka, M.P., Orissa, Punjab/ UT of Chandigarh, Rajasthan, T.N., Tripura

17. Single point levy of Market Fee Market fee shall not be levied for the second time in any market area of the State by market committee Market fee not to be levied more than once in commercial transactions between traders or sale to consumers States which have adopted the suggested provision: • Chhattisgarh, Goa, H.P., M.P., Nagaland, Punjab/ UT of Chandigarh, Sikkim States which amended the Act but not adopted this provision: • A.P., Arunachal Pradesh, Assam, Gujarat, Karnataka, Maharashtra, Orissa, Rajasthan, T.N., Tripura

18. Market Extn. Cell/ State Standards Bureau Setting up of separate Market Extension Cell in the Board Establishment of State Agricultural Produce Marketing Standard Bureau States which have adopted the suggested provision: • Nagaland, Sikkim States which amended the Act but not adopted this provision: • A.P., Arunachal Pradesh, Assam, Chhattisgarh, Goa, Gujarat,H.P., Karnataka, M.P., Maharashtra, Orissa, Punjab/UT of Chandigarh, Rajasthan, T.N. & Tripura

19. Special Concerns • In some States, no provision for registration of contract farming sponsors, recording of contract farming agreement, dispute settlement mechanism, indemnity against the alienation of producer’s land on failure of contract and a model agreement format for contract farming • In some States, no specific provisions for setting up of private markets/ direct marketing, setting up of consumers/ producers’ markets and fastredressal of disputes with regard to the same • In some States, no provision forsingle point levy of market fee in the State • In some States, Licensing provided instead of registration for market functionaries; No provision forsingle point registration for trade and transaction in more than one market area • In some States, no provision to promote and encouragePPP in management of markets/extension activitiesand e-trading • Rules not notifiedin many States for amended provisions (Notified only in AP, HP, Karnataka, Maharashtra, Rajasthan, Orissa so far).

20. Other Special Concerns • In some States, registration of contract farming sponsors or processors vested with the Secretary of the APMC – should be out of APMC’s purview (better at State level) • In some States, contract farming dispute settlement authority is State Level/ Divisional Officer – should have been kept at below District level for easy access to farmers • In some States, Private Markets have been restricted within a specified distance from the existing regulated markets under the Rules.

21. Programmatic Initiatives based on Reforms • Reform-linked central assistance to encourage public/ private investment for development of marketing infrastructure, common facilities for aggregation & value addition of produce and grading/ packaging/ quality certification facilities • Scheme to set up modern terminal markets under NHM for perishable agricultural produce with suitable backward & forward linkages • Development of post-harvest/ cold chain infrastructure, CA storage facilities, refrigerated transportation by road/ rail, perishable cargo centres at air & sea ports under NHM • Action Plan for development of Food Processing Industries including setting up of Mega Food Parks • World Bank assisted MACP (5-6 States) and ADB Study for Agri-business Development Project (2 States)

22. Present Scenario in Value Chain of Perishables Cost build up for one Kg. basket Of Fruits 11.6 2.5 1.7 4.1 3.3 FARMER TRADER WHOLESALER RETAILER CONSUMER PRICE Retail Markups 350 220 160 100 FRUITS &VEGETABLES MILK FISH FARM GATE PRICES

23. Modern Terminal Market Infrastructure: Packhouse, Quality Testing Facility, Palletisation Services: Transport (incl. cool chain), Settlement of Payments, Banking, Market information Banking Institution Electronic Auction Processor Exporter Wholesaler/ Trader/ Retail chain operator Storage: Cold Storage, Temperature controlled warehouse, Ripening Chamber Direct Selling Collection Centre Infrastructure: Washing, grading, sorting, weighment, transport to TM Services: Collection & Aggregation of produce, Settlement of payment, advisory on inputs, prices, quality, multi-modal transport Producers/ Farmers and their Associations

24. Action Required for setting up TMCs • State Government to appoint a Nodal Officer (Secretary level) in concerned Department & make him a member of SHM • SLEC of SHM to coordinate all aspects • State to arrange feasibility study & decide bid parameters for each identified location • Model bid documents & OMDA suggested by Central Govt. in Operational Guidelines Document • SHM to appoint reputed FI to assist Nodal Officer in two-stage bidding process, evaluation, short-listing of PE & entering into agreements • Cost of feasibility study & engaging FI can be met from Mission Management Funds of SHM • Equity support of up to 49% to be provided from NHM for TMC – State Govt. can contribute to this equity (including land value/ rentals)

25. Thank you (For any further information please contact me atuks.chauhan@gmail.com; For details please visit www.agmarknet.nic.in)