Author: Mayank Bhatt, 5 year of B.A.,LL.B, from ILS Law College Pune.
Jai Jawaan Jai Kisaan, this is a phrase we all grew up listening to, but due to the current political scenario, the government has placed Jawans on one side and Kisans on one side.
In September 2020 the government passed three agriculture bills in the parliament namely Farmers’ Produce Trade and Commerce (Promotion and Facilitation) Act, 2020, Farmers (Empowerment and Protection) Agreement on Price Assurance and Farm Services Act, 2020 and the Essential Commodities (Amendment) Act, 2020. In this article I will be talking about the Agricultural Markets managed under the APMC acts, their impact and the changes proposed to the existing system, having the Farmers’ Produce Trade and Commerce (Promotion and Facilitation) Bill, 2020 in the background.
Introduction
Agricultural markets in every state are established by the state governments under the APMC (Agricultural Produce Marketing Committee) acts of the state. According to this act, states are divided into small markets that are managed by market committees appointed by the government. Farmers reach these markets with their goods and are paid by the agents who sell their goods and, in turn, take a commission for selling their goods.
No person can freely conduct trade in the area appointed by the government as market areas. APMC’s consists of representatives of farmers, warehousing entities, traders, registrar of cooperative societies etc. And the market boards consists of chairmen of all the APMC’s. The main aim of the Agricultural Markets is to ensure transparency in pricing and transactions, some day payments to the farmers, promote public private partnership in the management of agricultural markets, helping to increase value addition in agricultural produce, etc.
There are shops, godowns, auction halls, soil testing labs, weigh bridges and many more facilities available within the area for the ease of trade. There are about 2477 principal regulated markets (the APMCs) and 4843 sub-market yards regulated by the respective APMCs in India.
Under the constitution of India, inter-state agriculture market and trade comes under the state list and intra-state agricultural trade falls under the ambit of the Central government, and that is why agricultural markets are managed by the state governments, but there still remains some states who have not enacted the APMC act in their states.
Problems with the current system
The APMC system was adopted in the country to stop the exploitation of the farmers, to help them get faster payments from creditors. Currently, in order to operate in an APMC mandi, a person needs to obtain a license to operate as an agent/trader. One of the conditions in order to obtain a license is that a person should have a shop in the premise, which are limited in number and those which are available are very expensive, so that makes it very expensive for anyone to start a business inside a mandi. Not only agent/middleman/trader have to obtain a license, even the weigh-men and paddlers have to obtain a license. So in order to get a license, these people have to give bribes, and in the end, the investment, which includes all the bribes, is recovered from the farmers by giving them a low cost for their produce.
In many states regular elections for committee are not held, and there is no uniformity in the running of these market areas. These market areas are usually run by a few traders that often forms cartels in the area and control these markets and thereby causing monopolization of the market and hence the final sufferer remains the farmer who is not able to get the right price for his goods.
Sometimes slips of transactions are not provided to the farmers by the traders in order to avoid tax, and later the farmers face difficulty while proving their income. The commission agents or the traders do not give timely payments to the farmers, their only work is to take the goods from the farmers to the final consumers, and for this simple process a lot of commissions is taken by these middlemen.
One of the major problem with middlemen is that there is a very huge difference between the wholesale and retail prices. All the hard work that is done by the farmer, in the end these middlemen in the mandis are the ones who get to have a huge commission. In the APMC market the vegetables cannot be sold below a certain price, these vegetables have a pre-decision Minimum price by the government, but there is no such assurance of minimum support given by the government on fruits, so the middlemen have ample scope to exploit the farmers. Under the APMC act, it is stated that first-hand sale of commodities such as edible oilseed, fruits and vegetables, etc, can only be conducted under the APMC.
In 2003, the Union Agricultural Ministry introduced a new model of the APMC act. In this new model the ministry allowed contract farming and gave farmers to sell their produce outside the APMC, they also increased the accountability of APMC, and tried to provide many other facilities like cold storage, pre-cooling facilities, pack houses etc, to the farmers. But what went wrong was that agriculture inside a state is a state subject, and the centre cannot interfere with state subjects, so only 17 out of the 35 states amended or partially amended their APMC act to enforce these changes, but the rest stayed with the old model.
Reforms Proposed in the 2020 bill
The government through the Farmers’ Produce Trade and Commerce (Promotion and Facilitation) Bill, 2020 proposed some changes for the benefit of the farmers, like allowing the farmers to sell their produce both outside and inside the APMC. The government by the bill proposes to give the farmers more liberty on the mode of selling their produce and also by encouraging online sale of goods.
There are many fears in the minds of the farmers, that the government will eventually remove the APMC market where they had a surety of a minimum support price. The small farmers fear that due to the presence of big farmers in the market, they will have no negotiating power and will have to pay the price that the big corporations decide, that might lead to more exploitation of the farmers. As soon as the government allows people to trade outside the mandis, as they are proposing by giving incentives like no mandi tax, that the farmers are currently paying, all the middlemen and commission agents will move their shops from the mandis to the free market and by having very less government intervention, they will decide the prices and that will eventually lead to the collapse of the APMC market and further exploitation of the farmers.
The bill also proposes to give the creditors more time to pay money to the farmers, and there is not much dispute resolution procedure provided in the bill. The bill further seeks to regulate farmer producer organizations (FPOs) which are independent organizations.
Conclusion
India is a very large country having different geographical distributions, and hence the agriculture and methods of agriculture keep on changing in each state. The APMC act was brought to enforce the rights of the farmers by providing a fair price for their crops. The government should focus on better management of these APMC’s as they are playing an important role in the agricultural market, what the government needs to do is to stop the cartels in the market and allow the farmers to decide the right price for their crops and help them make a better decision by providing them information on the inflation of price and other market factors.
The government should also ensure that the farmers have a choice to go or not to go to the APMC, as contrary to the current law where certain goods have to be sold in the APMC market by the help of licensed middlemen, for that the government will have to make certain management changes in the APMC. The government should form a regulatory board to protect the interest of small farmers, the government should look for long-term solutions to prevent price inflation and farmer suicides. The government should focus on shortening the supply chain so that the price of the goods do not change substantially by the time it reaches the consumer. The way in which APMC’s function in the current period, it can only be said that the only intention of the government is to profit the corporations and further help then exploit the already suffering farmers.
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