ISSN (Print) - 0012-9976 | ISSN (Online) - 2349-8846

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Reforming Agricultural Markets in India

A Tale of Two Model Acts

Reforming Agricultural Markets in India

The union Ministry of Agriculture and Farmers’ Welfare had prescribed a model Agricultural Produce Marketing Committee Act in 2003. The state-level adoption of the act has been tardy and varied in terms of both the magnitude and content of agricultural market reforms. Yet, the ministry under the current central government has come up with another model act, the Agricultural Produce and Livestock Marketing (Promotion and Facilitation) Act, 2017, supposedly an improvement over the 2003 act. Among other things, the provision that has grabbed much attention is the removal of contract farming from the APMC domain to a separate model act of Agricultural Produce and Livestock Contract Farming and Services (Promotion and Facilitation). Analysing these draft acts, the paper finds that both the model acts suffer from serious conceptual lacunae that have implications for their application and governance, and, consequently, for inclusive and sustainable agricultural development.

The reform of agricultural markets is a long overdue policy issue in India. Like many other issues related to agriculture which is a state subject, this one too is caught in the battle between the union government and the state governments which have their own positions and compulsions on carrying out these market reforms. The first attempt at the reforms in agricultural markets was made by the union government with the design of a model Agricultural Produce Marketing Committee (APMC) Act in 2003 which made new market channels, such as direct purchase, private wholesale markets, and contract farming (CF), legal for farmers and buyers alike. The other related agricultural market reforms at the union government level have been the Warehouse Receipts Act, 2006 and the integrated food law (Food Safety and Standards Act, 2006) besides the amendment to the Companies Act, 2003 under which farmer producer companies were allowed to be set up (Singh 2016).

In the light of the changing global and local markets, agricultural market reforms in India are the pressing need of the hour. The emergence of new (organised) stakeholders in food and fibre markets such as domestic and foreign players in the wholesale cash ‘n’ carry segments, food retail supermarkets, online retailers/aggregators, processors, exporters, and farmer producer companies has led to new demands for quality and consistent supply on the existing market structures (APMCs) that have not been organised and managed, keeping these new players in mind. These wholesale markets have not changed adequately to meet new (modern retail and consumption) demand in India (unlike Europe where wholesalers supply to supermarkets as third-generation markets). This is so, as less than optimum policy attention has been paid to the wholesale agricultural produce markets, especially the fresh produce (wet) wholesale markets, both by the state as well as the APMCs themselves.

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Updated On : 2nd Jan, 2019

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