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‘One Nation, One Market’

Market integration will remain a pipedream without structural changes in agricultural markets.

In early June, the cabinet had approved two agricultural ordinances—namely, the Farmers’ Produce Trade and Commerce (Promotion and Facilitation) Ordinance, 2020 and the Farmers’ (Empowerment and Protection) Agreement on Price Assurance and Farm Services Ordinance, 2020—potentially to enable barrier-free inter- and intra-state trade in agricultural produces outside the physical premises of the (deemed) markets notified under the agricultural produce marketing legislations and to empower the farmers to engage with the buyers of their choice. Both these ordinances should be welcome steps with their perceived scope of ensuring seamless flow of farm produce across the country without regulatory restrictions and excessive intermediation, intuitively vital for raising price realisation by the farmers on the one hand, and enabling the supply of food to the consumer at competitive prices on the other, among several things. While the actual effects of these ordinances can only be comprehended during/after this year’s kharif harvest in September, there is already much scepticism about the usefulness of these ordinances on various grounds.

According to existing empirical evidences, a maximum of two-fifths of the agricultural marketable surplus in India passes through the regulated marketing yards/mandi. The remaining three-fifths or more finds its way outside the regulated premises and is no less fraught with the marketing bottlenecks that make price realisation by the farmers, especially the smallholders, at least as challenging as on the mandi premises. For instance, the minimum support price (MSP) frequently ends up being the ceiling price, instead of the benchmark/floor price, so much so that private traders/aggregators refrain purchasing from the farmers while the government procurement is on. However, the MSP procurement window being narrow, farmers eventually end up selling to the private buyers at much lower prices. Or, take the example of the surreptitious method of bidding for the “best price” between the commission agents and buyers on the Agricultural Produce Market Committee (APMC) yards, by “touching hands under a handkerchief,” whereby the price of the same commodity changes with every buyer. Not to forget, here is also the case of the market charges and commission rates charged to the farmers/sellers on these premises, which conveniently overshoot the officially mandated rates, thereby making the marketing costs prohibitive for them.

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Updated On : 3rd Aug, 2020

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