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Food and Agricultural Marketing Sector

National Competition Policy and Economic Growth of India. Food and Agricultural Marketing Sector. Dr. Anusree Paul Symbiosis School of Economics Pune. PAC Meeting - ComPEG CIRC, 7 th February 2013. Structure of Presentation. Background Aim of the Study Agricultural Marketing Chain

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Food and Agricultural Marketing Sector

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  1. National Competition Policy and Economic Growth of India Food and Agricultural Marketing Sector Dr. Anusree Paul Symbiosis School of Economics Pune PAC Meeting - ComPEG CIRC, 7th February 2013

  2. Structure of Presentation • Background • Aim of the Study • Agricultural Marketing Chain • Institutional Framework • Legal and Regulatory Framework • Policy Framework • Competition Distortions in the Marketing Chain • Constraints Identified • Survey Objective • Sampling Note • Pilot Survey • Challenges and Issues to Ponder

  3. Background • Agriculture is one of the major driving forces of economic growth • Market-mediated linkages of agricultural sector • In India, the agricultural sector is the most diverse sector and supports majority of its population for livelihood.

  4. Aim of the StudyTo promote effective implementation of National Competition Policy by advocating for legislative changes identified in the select sector Scope of the Study: • Review of existing Laws/ Acts. • Identification of the competition distortion issues • Suggest new reforms to make the agricultural marketing sector competitive.

  5. Agricultural Marketing Chain Source: Author’s Compilation

  6. Institutional Framework • Institutions regulate market conduct, structure, performance (efficiency): • Regulation of primary agricultural produce markets • Legal and regulatory provisions relating to storage, transportation, packaging, processing, buying/selling, quality specifications, e.g. DMI, SAMBs, APMCs etc

  7. Institutional Framework 2. Institutions provide and maintaining marketing infrastructure (physical and institutional): SAMBs, APMCs etc. 3. Institutions involved in administered prices, e.g. NAFED, FCI, CACP etc. 4. Institutions influence foreign trade: APEDA

  8. Legal and Regulatory Framework • Laws and Orders: • Agricultural Produce Marketing (Grading & Marking) Act, 1937.Amended in 1986. • The Essential Commodities Act, 1955 • National Cooperative Development Act,1962 • Food Corporation of India Act, 1964 • Prevention of Black Marketing & Maintenance of Supply of Essential Commodities Act, 1980 • The Bureau of Indian Standards Act, 1986 • Agricultural Produce Marketing Committee (APMC) Model Act 2003 • Forward Contracts (Regulation) Amendment Act, 2006 • Act, 1952. • The (Warehousing Development and Regulation) Act, 2007

  9. Policy Framework • National Agricultural Policy • Price Support Policy • Credit Policy • Trade Policy

  10. Competition Distortions in the Marketing Chain • Agricultural marketing: poorly organised, over regulated-leading to low price to producers, high marketing cost and large physical losses. • Marketing monopoly – due to restrictive provisions of the APMC act • Model APMC has failed to establish a competitive structure in the system • Overtime the balance of power in transactions has moved back in favour of middlemen and the trading class. • Traders, commission agents, and other functionaries organised themselves into associations, created entry deterrence for new players and hindered the competitive functioning of markets

  11. Constraints Identified • Undue emphasis on fee collection • Under-performance of regulated markets: • Grading • Market Intelligence • Method of sales • Payments of sales proceed

  12. Survey Objective • To conduct an institutional and stakeholder analysis by • studying the pattern supply chain of the product/sector • understanding the political and social interest of the stakeholders towards reform • identifying the institutional (political, economic and social) constraints that is hindering the institutional efficiency • understanding the cost structure of the supply chain ( this cost related information will help us to do the economic analysis)

  13. Sampling Note • Selected States • Representative Product* • Selection Criterion • Sampling Technique • Stakeholders* • Sample Size • Questionnaire

  14. Pilot Survey • Bethua market in Nadia district, West Bengal • Established in 2010 • No APMC • Cold storage and arats/sheds are present but yet not have started functioning. • No License required for buying/selling • No separate sorting grading facility though labourers are available and traders pay these labourers

  15. Rs.8-10/Kg Retailers/Wholesalers in the vicinity of the Regulated markets Consumers in the vicinity of the Regulated markets Aratdars lend money to the farmers Aratdars/Auction Agents PRODUCE No clarity on how the first auction-price was determining FARMERS Rs.5/Kg TRADERS Consumers in other states/cities Traders have clear information about the price of similar product in Arats/wholesale market in other states Rs.20-25/Kg Aratdars in other states / cities/ wholesale markets RETAILERS

  16. Challenges and Issues to Ponder • Stakeholders are reluctant to share information • Time of visit to the market yard • Total time span of the survey and the study

  17. Thank You

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