Revamping agri-marketing is must
3 Jan 2014 11:18 PM GMT
In the 2014 run-up to the Lok Sabha Election, the ruling UPA coalition headed by Prime Minister Manmohan Singh is left clueless as to how to get back to the slender majority it managed in 2009 to capture popular vote of the people, more so the aam aadmi. After the travesty of its own but unpatented slogan by a new political party in the name of aam aadmi in the Delhi Assembly elections, the century-old party Congress is desperately looking for strategies to erase the sullenness and sulking of the poor people across the nation, for whom the rise in food inflation to 20 per cent in 2013 is a rankling sore that put paid to all their hope of having even half a square meal a day. The UPA government no doubt enacted a raft of welfare legislations such as guaranteed employment and food security and in some cases old age pensions to destitute but they paled into insignificance in the face of an inexorable rise in prices of basic commodities of mass consumption.
No wonder the scion of the Nehru dynasty and the vice president of the Congress party, Rahul Gandhi, has reportedly directed party chief ministers to exempt fruits and vegetables that had been the principal villain of the piece to the unrelenting spurt in food inflation in recent months from the ambit and remit of the Agricultural Produce Marketing Committee (APMC) Act. It needs to be noted that the APMC provisions had wreaked havoc on the free movement of agricultural goods through the transparent tack of trade by restricting farm produce trade within the boundaries of the state-regulated mandis. Barring farmers, anyone requires a licence to trade in agricultural commodities.
But, it is altogether another sordid saga that traders down the decades had cartelised their operations, fixing prices of the farm produce through manipulative procurement techniques that passes the wit of innocent farmers who are not deft enough to see through the murky methods of the mandis. It may be noted that wholesale trading is in the hands of market functionaries like wholesale traders and commission agents.
A recent query in Parliament on this showed that as in 2011-2012, the latest available, number of licenced wholesale traders across the country were 6, 66,938 while the number of wholesale commission agents were 27,758. Though there is no licencing system for retail traders of vegetables and fruits, retail traders procure their produce only from wholesale traders after giving them all the costs in the procurement chain! When it gets into the hands of the ordinary consumers which are the end of the value chain, the value of the produce gets magnified with the original growers not even sharing a quarter slice of the price!
A decade ago, the Centre tried to reform this structure by a model APMC Act circulated in 2013 though it panned out nothing substantive or substantial because basically agricultural marketing is a state subject under the Constitution. The reason is not far too seek as the vested interests manifest in traders who are averse to any move that threaten their stranglehold and the state agricultural marketing boards who could ill-afford to upset the apple cart of entrenched mandis that invariably add to their revenue kitty. All the sanctimonious suggestions from the various central ministers right from the prime minister over the years did not melt any State seriously to cut the mandis hold on fruits and vegetables, though a few did come forward to implement the reform proposals to the APMC on the lines of the model Act. But these few and far between remain a work in progress in perpetuity.
It is an open secret that most of the traders at mandis have their own warehouses partly for hoarding purposes to maximise gains at the miseries of the hapless consumers, lay and lower-middle class alike. While oligopolistic understanding enables the traders to fix prices at will, mandi tax and cognate taxes in the name of development compound the final cost to the gullible consumers. It is also interesting to note that the fledgling Competition Commission of India (CCI) which is mandated to deal with massive corporate frauds or cartel type of behaviour among firms to take the users for a ride, took suo-moto cognisance of increase in prices of onion in 2011, though such flare-up in onion prices did take place just before the winter in 2013 across the nation!
In a written reply to a query in the Lok Sabha by Murli Manohar Joshi and others on 17 December, the Minister of Agriculture and Food Processing Tariq Anwar said that based on ‘investigation report’, the CCI closed the matter on 10 April 2012 under sec 26(6) of the Competition Commission Act 2002, as the ‘findings in the report do not mention hoarding as a reason for increase in the price of onion’. It requires no rocket science to note that the latest spurt in onion prices the country witnessed in the festival season till early December 2013 was widely attributed to hoarding of onion by the marketing cooperatives in the principal onion producing States with Maharashtra in particular.
Though some states such as Tamil Nadu did try to institute farmers’ markets to cut the intermediary and enable them to sell their produce direct to the consumers, the reach of the farmers is limited to these state-sponsored fares. Since most of these fares are set up away from the city or in the periphery of the villages, the consumers in general do not make a trek to these markets with gusto.
In fine, what is needed is a clear understanding of the underlying causes that contribute to the system in which either the grower or the final consumer is happy but the middle rung consisting of traders in cahoots with political parties batten themselves on the toil of the farmer and the travails of the latter.
It is time an earnest bid is made to ensure that the farmers of fruits and vegetables get the benefit of marketing through mission-mode extension services as the only recipe for success over the long haul.
IPA
No wonder the scion of the Nehru dynasty and the vice president of the Congress party, Rahul Gandhi, has reportedly directed party chief ministers to exempt fruits and vegetables that had been the principal villain of the piece to the unrelenting spurt in food inflation in recent months from the ambit and remit of the Agricultural Produce Marketing Committee (APMC) Act. It needs to be noted that the APMC provisions had wreaked havoc on the free movement of agricultural goods through the transparent tack of trade by restricting farm produce trade within the boundaries of the state-regulated mandis. Barring farmers, anyone requires a licence to trade in agricultural commodities.
But, it is altogether another sordid saga that traders down the decades had cartelised their operations, fixing prices of the farm produce through manipulative procurement techniques that passes the wit of innocent farmers who are not deft enough to see through the murky methods of the mandis. It may be noted that wholesale trading is in the hands of market functionaries like wholesale traders and commission agents.
A recent query in Parliament on this showed that as in 2011-2012, the latest available, number of licenced wholesale traders across the country were 6, 66,938 while the number of wholesale commission agents were 27,758. Though there is no licencing system for retail traders of vegetables and fruits, retail traders procure their produce only from wholesale traders after giving them all the costs in the procurement chain! When it gets into the hands of the ordinary consumers which are the end of the value chain, the value of the produce gets magnified with the original growers not even sharing a quarter slice of the price!
A decade ago, the Centre tried to reform this structure by a model APMC Act circulated in 2013 though it panned out nothing substantive or substantial because basically agricultural marketing is a state subject under the Constitution. The reason is not far too seek as the vested interests manifest in traders who are averse to any move that threaten their stranglehold and the state agricultural marketing boards who could ill-afford to upset the apple cart of entrenched mandis that invariably add to their revenue kitty. All the sanctimonious suggestions from the various central ministers right from the prime minister over the years did not melt any State seriously to cut the mandis hold on fruits and vegetables, though a few did come forward to implement the reform proposals to the APMC on the lines of the model Act. But these few and far between remain a work in progress in perpetuity.
It is an open secret that most of the traders at mandis have their own warehouses partly for hoarding purposes to maximise gains at the miseries of the hapless consumers, lay and lower-middle class alike. While oligopolistic understanding enables the traders to fix prices at will, mandi tax and cognate taxes in the name of development compound the final cost to the gullible consumers. It is also interesting to note that the fledgling Competition Commission of India (CCI) which is mandated to deal with massive corporate frauds or cartel type of behaviour among firms to take the users for a ride, took suo-moto cognisance of increase in prices of onion in 2011, though such flare-up in onion prices did take place just before the winter in 2013 across the nation!
In a written reply to a query in the Lok Sabha by Murli Manohar Joshi and others on 17 December, the Minister of Agriculture and Food Processing Tariq Anwar said that based on ‘investigation report’, the CCI closed the matter on 10 April 2012 under sec 26(6) of the Competition Commission Act 2002, as the ‘findings in the report do not mention hoarding as a reason for increase in the price of onion’. It requires no rocket science to note that the latest spurt in onion prices the country witnessed in the festival season till early December 2013 was widely attributed to hoarding of onion by the marketing cooperatives in the principal onion producing States with Maharashtra in particular.
Though some states such as Tamil Nadu did try to institute farmers’ markets to cut the intermediary and enable them to sell their produce direct to the consumers, the reach of the farmers is limited to these state-sponsored fares. Since most of these fares are set up away from the city or in the periphery of the villages, the consumers in general do not make a trek to these markets with gusto.
In fine, what is needed is a clear understanding of the underlying causes that contribute to the system in which either the grower or the final consumer is happy but the middle rung consisting of traders in cahoots with political parties batten themselves on the toil of the farmer and the travails of the latter.
It is time an earnest bid is made to ensure that the farmers of fruits and vegetables get the benefit of marketing through mission-mode extension services as the only recipe for success over the long haul.
IPA
Next Story
