Impact Assessment of Agri-Marketing Reforms in India

1. Impact Assessment of Agri-Marketing Reforms in India By: NATIONAL COUNCIL OF STATE AGRICULTURAL MARKETING BOARD & PREMIUM FARM FRESH PRODUCE LIMITED (THE LALIT GROUP), NEW DELHI Presented by: S.S Randhawa PratibhaBisht

2. Introduction • Government of India through Model Act introduced reforms in 2003. • Many States adopted fully while many have partially accepted. • The era of first phase reforms is going to be finished soon. • Actual ground level results of implementation not seen/visible. • Therefore, COSAMB took an initiative (first ever) to undertake pioneer study on impact assessment. • The study paves way for 2nd phase of reforms

3. Methodology • Study tend to explore the current status and suggest new reforms. • Respondents selected for primary survey are farmers, traders, APMC officials, Marketing Board Officials and Private Investors. • Based on their current knowledge/understanding results were obtained. • States Covered: Rajasthan, Gujarat, Maharashtra, Karnataka, Andhra Pradesh, Tamil Nadu, Punjab, Himanchal Pradesh (8 States). These were selected purposively. • Total No. of APMCs surveyed : 61

4. Sample Size *Private Investors mainly constituted of Private Market Players, Contract Farming Sponsors, Grading Sorting Provider, Cold Storage Facility Provider, Exporters and Processors.

5. Objectives • To make a comparative study of amendments in selected State APMC Acts in accordance with the identified provision of reforms. • To understand and evaluate the perception of users/stakeholders w.r.t the reforms, -their implementation and impact. • To identify the gaps in the respective state APMC Acts vis-a-vis the practices on ground w.r.t identified areas of reforms. • To evaluate the physical and financial impact of the reforms introduced on Agricultural Marketing Systems of respective state.

6. Results and Interpretations

7. Comparative Statement & Status of Reforms (Ref. Provisions under Acts/Rules with year of Implementation)

8. Distinct Observations • No amendment w.r.t provision for prohibition of commission agents, establishment of Separate Agriculture Marketing Standard (except in Karnataka) and Marketing Extension/Training Cell by any State • In Rajasthan Rules not been framed • As per Tamil Nadu Agricultural Produce Marketing (Regulation) Act, 1987 “The Act does not prohibit private markets, direct marketing and contract farming” • In Tamil Nadu there are no Commission Agents acting in Regulated Markets

9. Results onPerception of users/stakeholders w.r.t reforms

10. Awareness level of Reforms among Farmers

11. Preferred Mode of Selling by Farmers Most preferred place for selling produce by farmers is still the APMC Market as they say that most of the times no other option is available to them and also because they have been selling in these markets since years ago

12. Role of Commission Agent • In case of Punjab all farmers are dependent on commission agents for the supply of inputs especially seeds • Traders were found to be of the view that most of the agriculture business runs on credit basis which is provided by commission agents to both farmers and traders. • If the commission agents are prohibited, there is a question as to who will provide credit and who will risk lending of money without any co- lateral guarantee.

13. Perception of Farmers for Contract Farming • 100% farmers agree that they are being benefited by Contract Farming. • Nowhere the model agreement format was found to be followed. Sponsors customize this agreement as per their own criteria. • In no state they are aware of the Dispute Settlement Mechanism as laid down in Model Act • In Maharashtra Pepsico has introduced a new system of Hundakari.

14. Awareness Level of Reforms Among Traders In Tamil Nadu, Punjab, Himanchal Pradesh and Karnataka, no Trader was aware that Model Act lays provision for prohibition of Commission Agents

15. Perception Towards private Markets • 5 traders operating in Private Market were surveyed. Reasons quoted for their satisfaction in participating in Private Market are: • Hassle free and transparent transaction • Space availability for auctioning is sufficient as compared to the AMPC markets. • More hygiene • Security system is good. No theft of commodities. • Cooperative officials of the market • No extra taxes collected than the normal 1% market fee. • New alternative option other than existing. • Better market management • As farmers also willingly come to the market, traders are bound to shift trade in Private Market • All traders said that private market will remove the monopoly of existing APMCs and will create a healthy competitive environment

16. Perception of Traders on Establishment of Separate Agriculture Produce Marketing Standard Bureau

17. Perception of APMC Officials on Direct Marketing • Many APMC officials were of the view that direct marketing is more beneficial to traders than farmers. Reasons stated were: • unawareness of farmers towards market rates, • default by the direct marketing license holder in weight, • pressurizing farmers to sell on farm itself by stating different benefits like no transport cost, no labour cost, no time wastage, no commission deducted, etc. • Some officials said that direct marketing license holder will not be benefited as • he has to search for good quality produce, in which much time is wasted • sometimes farmers demand much more than expected. • there occurred usual cases where the farmers’ promises to give to a particular buyer, but when some other buyer approaches him will better price; the commodity is sold to the later.

18. Perception of APMC Officials on Contract Farming Few officials responded that contract farming gives only partial benefit to farmer as the sponsor does not take responsibility if crop fails, sometimes they do not even purchase the produce due to reasons like non adherence of the commodity to set standards or quality

19. Perception of APMC Officials on Provision of Promotion of PPP In Maharashtra, Gujarat and Himachal Pradesh, few officials opined that private investor will always seek for his profit margin and hence will not come forward through PPP mode or even if they start business in PPP they will always be thoughtful about their own profit margins and will not think about the community at large

20. Perception of Officials on Establishment of State Agricultural Produce Marketing Bureau

21. Perception of APMC Officials on Provision of Market Extension/Training Cell 100% of the respondents were in favour of Training cell for farmers, traders and APMC Officials as it will: • Transfer information about improved agri. Inputs to farmers • Transfer of information about prices of commodities in different APMC • Transfer of improved technical skill for growing crops to farmer

22. APMC Officials Perception on Provision of Private Wholesale Markets For Against In Tamil Nadu and Punjab, 4 APMCs officials were not in favor of private market as they feel that private player itself will start acting as a commission agent and will think of his own profit. (Misnomer) Fear of shift of trade They opine that the facilities they provide will be costly to farmers. • Officials agreed that there is monopoly of APMCs, due to which there is a political influence which curb development • Private markets will create competition with existing APMCs which will ultimately benefit the stakeholders

23. APMC Officials on Prohibition of Commission Agents • All Officials in Andhra Pradesh, Tamil Nadu, Himachal Pradesh and Karnataka strongly feel that if CAs are removed then farmers will get better price • According to them the commission agents charge interest on credit given to the farmers.

24. Perception towards Single Unified License and Single Point levy of market Fee • All APMC officials were of the view that a SUL will help traders in operating in entire state but APMCs will lose control over them. • All said that single point levy of market fee will benefit all stakeholders in the value chain by reduction in prices, especially the processors who purchase commodities from different markets.

25. Perception of APMC Officials towards E-Marketing • Officials were of the view that for E-Market concept to be feasible, there should be proper supportive infrastructure like efficient cool chain throughout country. Cold chain provision should be at cheap rate so that it is affordable by stakeholders.

26. Perception of APMC Officials on Professional Management in Markets • Few officials in Maharashtra and Andhra Pradesh opine that it is only the experience that counts and only such a person can take better decision than a technically sound professional who is inexperienced.

27. Private Investors perception about Direct Marketing and Contract Farming

28. Perception of Private Investors towards Market Extension/Training Cell and Prohibition of Commission Agent

29. Perception of Private Investors towards Establishment of Private Wholesale Markets Perception of Private Investors towards Single Point Registration of Functionaries and Single Point levy of Market Fee

30. Gaps in the respective state APMC Acts vis-à-vis the practices on ground

31. Contract Farming • As per the Model Act, given agreement format should be made, but in reality, this is not followed. • The Contract Farming sponsors are not registering themselves with the concerned authorities • Hence, there is no control and record of Contract farming • Parties do not renew agreements after their duration period is over • Local dispute authority for contract farming is at District level (in case of Maharashtra), but according to model agreements the authority should be at local level, close to farmer.

32. Direct Marketing • Many companies do not renew their license; also, they do not prepare their annual reports for submission to the respective APMCs. • This makes it difficult for the APMC to monitor direct purchasing operations in the notified area • In many cases, the direct marketing license holder actually procures the produce through a broker or middlemen, due to which the commodity prices escalates in case of direct purchasing also (E.g. Maharashtra, Tamil Nadu)

33. Private Wholesale Markets • There are several provisions in the Act/Rules which discourage Private Investment in Markets. These need to be amended in respective states which have made provision for the same. • e.g. Distance Limit, Investment Limit, Limits to purchase of land, etc.

34. Physical and Financial Impact of Reforms

35. Direct Marketing

36. Farmers/Consumer Market

37. Impact of Public Private Partnership (PPP)

38. Contract Farming • Farmers responded that they were being benefitted by this provision except in Punjab where Contract Farming is now on decline. Huge losses were incurred by the sponsors in past. • In other states it was reported that due to contract farming, the production of commodities have increased. Yield has been increasing due to improved quality of agriculture inputs supplied by contract farming sponsors. • In Maharashtra & Punjab PepsiCo Ltd. and ITC have been the major contract farming players while in Andhra Pradesh it is Global Greens. • In Gujarat Agro Cell Ltd. and Godrej Agro Vet Ltd are the major ones.

39. Thank You!