Reforms in Agricultural Marketing- adoption and implications

1. Reforms in Agricultural Marketing- adoption and implications Dr. B.K.Paty Deputy Director NIAM

2. 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

3. Reforms in Agricultural Marketing Sector • Necessary to : • Enable producers to undertake market-driven production planning. • Facilitate integrationof farm production with domestic and Global markets. • Attract massive investmentsneeded for building Post-Harvest infrastructure.

4. 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.

5. 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.

6. 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.

7. Status of APMC Act Amendments

8. 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. and Jharkhand. • States which amended the Act but not adopted this provision: • Chhattisgarh

9. 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 and Jharkhand 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)

10. 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., H.P., Maharashtra, Nagaland, Orissa, Rajasthan, Sikkim, Tripura and Jharkhand States which amended the Act but not adopted this provision: • Punjab/ UT of Chandigarh, T.N.

11. 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: • Andhra Pradesh, Arunachal Pradesh, Assam, Goa, Haryana, Karnataka, Maharashtra, Nagaland, Orissa, Rajasthan, Sikkim, Tripura and Jharkhand* States which amended the Act but not adopted this provision: A.P., Chhattisgarh, Gujarat, H.P., M.P., T.N., Punjab and Chandigarh *( Nomenclature as Market oriented Farming)

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

13. 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 and Jharkhand States which amended the Act but not adopted this provision: • A.P., Arunachal Pradesh, Assam, H.P., Orissa, T.N., Punjab and Chandigarh

14. 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: • Madhya Pradesh, Chhattisgarh, Nagaland and 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, Rajasthan, T.N., Tripura, Punjab, Chandigarh and Jharkhand

15. 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 and Jharkhand 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

16. 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, Gujarat, Goa, H.P., M.P., Nagaland, Punjab/ UT of Chandigarh, Sikkim and Jharkhand States which amended the Act but not adopted this provision: • A.P., Arunachal Pradesh, Assam,Karnataka, Maharashtra, Orissa, Rajasthan, T.N. and Tripura

17. 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 and Karnataka States which amended the Act but not adopted this provision: • A.P., Arunachal Pradesh, Assam, Chhattisgarh, Goa, Gujarat,H.P., M.P., Maharashtra, Orissa, Punjab/UT of Chandigarh, Rajasthan, T.N., Tripura and Jharkhand

18. Special Concerns – A.P. • No provision to promote and encourage PPP in management of markets & e-trading • No provisions regarding indemnity against the alienation of producer’s land on failure of contract farming • No provision specifying a model agreement format for contract farming • No provision for single point levy of market fee in the State • Licensing provided instead of registration for market functionaries; No provision for single point registration for trade and transaction in more than one market area • No provision for prohibiting commission agents in APMCs • No clear-cut provision for setting up of producer / consumer markets (being facilitated through exemption clause) and dispute settlement mechanism for private markets/ direct marketing • No provision for setting up of a separate market extension/ training cell and the agricultural produce marketing standards bureau

19. Special Concerns – Arunachal Pradesh • No provision to promote and encourage PPP in management of markets&extension activitiesand e-trading • No provision specifying a model agreement format for contract farming • No provision for single point levy of market fee in the State • Licensing provided instead of registration for market functionaries; No provision for single point registration for trade and transaction in more than one market area • Provision for prohibiting commission agents by a resolution of APMCs • No provision for setting up of a separate market extension/ training cell and the agricultural produce marketing standards bureau • Rules not notified for amended provisions.

20. Special Concerns – Assam • No provision to promote and encourage PPP in management of markets&extension activitiesand e-trading • Registration of contract farming sponsor with the DC – would have been better at State level; recording agreement also with DC - would have been better at lower level/ APMC • Dispute settlement on contract farming at Director level; no clear provision for appeal - dispute settlement below District level and appeal at District/ Divisional level was desirable • No provision specifying a model agreement format for contract farming • No provision for single point levy of market fee in the State • Licensing provided instead of registration for market functionaries; No provision for single point for registration for trade and transaction in more than one market area • No provision for prohibiting commission agents in APMCs • No provision for setting up of a separate market extension/ training cell and the agricultural produce marketing standards bureau • Rules not notified for amended provisions.

21. Special Concerns – Chhattisgarh • No provision to promote and encourage PPP in management of markets&extension activitiesand e-trading • No provision for registration of Contract Farming Sponsors and indemnity against the alienation of producer’s land on failure of contract farming • Licensing provided instead of registration for market functionaries • No specific provisions for setting up of private markets/ direct marketing, setting up of consumers/ producers’ markets and redressal of disputes with regard to the same • No provision for setting up of a separate market extension/ training cell and the agricultural produce marketing standards bureau • Rules not notified for amended provisions.

22. Special Concerns – Goa • No provision to promote and encourage e-trading • No provision for prohibiting commission agents in APMCs • No provision for setting up of a separate market extension/ training cell and the agricultural produce marketing standards bureau.

23. Special Concerns – Gujarat • No provision to promote and encourage PPP in management of markets&extension activities • No provisions for registration of contract farming sponsors and indemnity against the alienation of producer’s land on failure of contract farming • No provision for single point registration of market functionaries for trade and transaction in more than one market area • No provision for single point levy of market fee in the State • No provision for prohibiting commission agents in APMCs • Provision for setting up private market restricted for trading in only fruits & vegetables • No provision for setting up of a separate market extension/ training cell and the agricultural produce marketing standards bureau • Rules not notified for amended provisions. Special Feature: Provision for setting up of e-markets

24. Special Concerns – H.P. • Registration of contract farming sponsors or processors vested with the Secretary of the APMC – would have been better at State level • No provision for recording of the contract farming agreement, safeguarding the rights of the farmers over land in the case of the failure of the contract, dispute redressal under contract farming etc. • No provision specifying a model agreement for contract farming • No provision for prohibiting commission agents in APMCs • No provision for setting up of a separate market extension/ training cell and the agricultural produce marketing standards bureau • Rules not notified so far for amended provisions.

25. Special Concerns – Karnataka • No provision for single point registration of market functionaries for trade and transaction in more than one market area • No provision for prohibiting commission agents in APMCs • No provision for setting up of a separate market extension/ training cell • Rules not notified for amended provisions. Special Features: • Constitution of a revolving fund for implementing a floor price scheme and procurement of produce at MSP (also a provision for State MSP) • Market fee reduced by 30% for private markets, spot exchange, direct purchase and purchase under contract farming • No market fee for 5 years on purchases made by new processing industries • Price determination mechanism for private markets and direct marketing • Establishment of Spot Exchange to facilitate online trading & clearing system.

26. Special Concerns – M.P. • No provision to promote and encourage PPP in management of markets&extension activitiesand e-trading • No provisions for registration of contract farming sponsors and indemnity against the alienation of producer’s land on failure of contract • No clear-cut provision has been made under the Act for private markets, direct marketing, setting up of producer / consumer markets and disputes settlement (made permissible through bye-laws) • No provision for setting up of a separate market extension/ training cell and the agricultural produce marketing standards bureau.

27. Special Concerns – Maharashtra • No provision to promote and encourage PPP in management of markets&extension activitiesand e-trading • Provided for licensing of market functionaries instead of registration • No provision for single point levy of market fee in the State • No provision for prohibiting commission agents in APMCs • No provision for setting up of a separate market extension/ training cell and the agricultural produce marketing standards bureau • Private markets restricted within a specified distance from the existing regulated markets under the Rules

28. Special Concerns – Orissa • No provision to promote and encourage PPP in management of markets & extension activities and e-trading • Registration of contract farming sponsors or processors vested with the Secretary of the APMC - would have been better at State level • Dispute settlement authority is Director – would have been at below District level for easy access to farmers • No provision specifying a model agreement for contract farming • Provided for licensing of market functionaries instead of registration & no provision for single point registration of market functionaries for trade and transaction in more than one market area • No provision for single point levy of market fee in the State • No provision for prohibiting commission agents in APMCs • No provision for direct marketing, setting up of producer / consumer markets and dispute settlement mechanism for private/ producers’ market & direct marketing • No provision for setting up of a separate market extension/ training cell and the agricultural produce marketing standards bureau.

29. Special Concerns – Punjab/Chandigarh • No provision to promote and encourage PPP in management of markets & extension activities and e-trading (Provision to promote and encourage e-trading was introduced under the Ordinance which has lapsed) • No clear-cut provisions for registration of contract farming sponsors, recording of contract farming agreement, dispute settlement mechanism and indemnity against the alienation of producer’s land on failure of contract etc. • No provision specifying a model agreement format for contract farming • Provided for licensing of market functionaries instead of registration • No provision for single point registration of market functionaries for trade and transaction in more than one market area (It was provided in the Ordinance which has lapsed) • No provision for prohibiting commission agents in APMCs • Provision for direct marketing was made under the Ordinance which has lapsed • Under the provision for private market yards, Govt. can fix distance limits • No provision for setting up of a separate market extension/ training cell and the agricultural produce marketing standards bureau.

30. Special Concerns – Rajasthan • No provision to promote and encourage PPP in management of markets & extension activities and e-trading • Registration of contract farming sponsors or processors vested with the Secretary of the APMC - would have been better at State level • No clear-cut provision for single point levy of market fee in the State • No provision for single point registration of market functionaries for trade and transaction in more than one market area • No provision for prohibiting commission agents in APMCs • No provision for dispute settlement in the cases of private markets etc. • No provision for setting up of a separate market extension/ training cell and the agricultural produce marketing standards bureau • Rules not notified so far for amended provisions.

31. Special Concerns – T.N. • No provision to promote and encourage PPP in management of markets & extension activities and e-trading • No provisions for registration of contract farming sponsors, recording of contract farming agreement, dispute settlement mechanism and indemnity against the alienation of producer’s land on failure of contract etc. • No provision specifying a model agreement format for contract farming • No clear-cut provision for single point levy of market fee in the State • No provision for single point registration of market functionaries for trade and transaction in more than one market area • No provision for prohibiting commission agents in APMCs • No provision for private markets, direct marketing, setting up of producer / consumer markets (being set up under Executive Orders) and dispute settlement thereon • No provision for setting up of a separate market extension/ training cell and the agricultural produce marketing standards bureau.

32. Special Concerns – Tripura • No provision to promote and encourage PPP in management of markets & extension activities and e-trading • No provision for single point levy of market fee in the State • No provision for single point registration of market functionaries for trade and transaction in more than one market area • No clear-cut provision for prohibiting commission agents in APMCs • No provision for setting up of a separate market extension/ training cell and the agricultural produce marketing standards bureau • Rules not notified so far for amended provisions.

33. Thank you