Agriculture Reform: Breaking the trader cartel

After Delhi, it is Maharashtra’s turn to attempt liberating fruits & vegetables from APMC shackles.

Written by Partha Sarathi Biswas | Vashi | Pune | Published: June 16, 2016 2:20:58 am
APMC Maharashtra, indian farmner, agricultural produce market committee, APMC Act, fair prices to farmers, APMC fruits and vegetables, fruits and vegetable de-listing, maharashtra news, latest news, india news The Vashi mandi, situated 35 km from the Mumbai main city. (Express Photo: Narendra Vaskar)

Spread over 70 hectares land off the Old Mumbai-Pune highway, it’s a place where more than Rs 10,000 crore worth of fruits, vegetables and other farm produce gets traded annually. But right now, it’s also the scene of a prabodhan, a mass awakening campaign by traders and commission agents that could gather pace in the days ahead.

The Agriculture Produce Market Committee (APMC) at Vashi, barely 35 km from the main Mumbai city, is one of Maharashtra’s 305 regulated mandis where produce is first traded before being taken for consumption elsewhere. While the smallest of these may have a yearly turnover of below Rs 25 lakh, the Vashi APMC is the largest and also a terminal market receiving daily over 2,000 trucks that ferry produce from both within and outside Maharashtra. Last year alone, this mandi saw arrivals of 8,93,444 tonnes of onions and potatoes, 5,64,056 tonnes of other vegetables and 6,63,831 tonnes of fruits.

Currently, though, a single factor is uniting the market players operating in regulated mandis across Maharashtra irrespective of size: The state government’s move to “delist” fruits and vegetables (F&V) from the purview of the APMC Act. This, if it happens as was done by the Delhi government in September 2014, would dispense with the requirement for all F&V to be brought to mandis and sold through licensed market agents charging commission fees. Such fees in the Vashi APMC amount to 6.5 per cent of the purchase price of onions and potatoes, 8 per cent for other vegetables and 10 per cent for fruits.

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“The notification delisting F&V will be issued in the next few days. The issue has been pending since long and we have decided to go ahead taking into account the interest of farmers,” said Chandrakant Patil, Maharashtra’s minister for cooperation.

This isn’t the first attempt at a significant agricultural marketing reform. In 2012, Radhakrishna Vikhe Patil, who was agriculture minister in the previous Congress-NCP regime, had announced the intent at delisting horticultural produce from the state APMC Act’s purview. A final decision, however, could not be taken following strong trader protests.

The possibility of the reform going through is seen to be higher under the present BJP-Shiv Sena dispensation. A major reason for it is that the APMCs — like sugar and various other rural-based cooperatives — are largely controlled by the NCP and Congress. The ruling alliance partners have little presence in APMC boards that are supposed to have elected directors representing all stakeholders, including farmers, traders and mandi labourers. The Vashi APMC is now under a state government-appointed administrator, with the earlier board of directors superseded for alleged malpractices.

“The total turnover of APMCs in Maharashtra is roughly Rs 50,000 crore. Delisting of F&V may bring this down by Rs 10,000 crore. But even this needn’t be the case, as we have seen in Delhi, where business at Azadpur mandi has not suffered after delisting. We are only giving farmers an option, which includes supplying directly to processors or supermarkets. There’s nothing stopping them from continuing to sell through APMCs,” pointed out Patil.

F&V contribute over Rs 3,000 crore to the Vashi APMC’s yearly turnover of Rs 10,000-12,000 crore.

APMCs were originally established with a view to prevent exploitation of farmers by intermediaries, who compelled them to dispose of their produce at the farmgate at very low prices. By mandating all farm produce to be brought to regulated market yards and sold through auctions, the APMC mechanism was meant to ensure fair prices to farmers. But in many cases, these bodies have themselves become dens for cartelisation by traders, who control prices and charge hefty commission fees on produce transactions.

An extreme case that surfaced recently was of Devidas Maruti Parbhane. This farmer from Vadgaon Rasai, a village in Pune district’s Shirur taluka, supplied one tonne of onions early this month at the local market yard under the Pune APMC’s jurisdiction. The price he got — a little more than Rs 1.5 per kg — was itself very low. But adding insult to injury was the various “cuts” imposed on top of this.

A scrutiny of Parbhane’s patti (trade slip) by The Indian Express revealed his total revenues from the sale of one tonne of onions at Rs 1,523.20. The total cuts even on this meager amount added up to Rs 1,522.20. That included commission fees of Rs 91.30, hamali or labour charges of Rs 59, bharai or filling-in-bags charges of Rs 18.55, tolai or loading charges of Rs 33.30, and transport charges of Rs 1,320 (as the kutcha patti issued in Shirur was billed for delivery at Pune). Parbhane, at the end of it, was left with a net earning of Re 1: “When after the auction, the trader handed me a Re 1 coin, I was flabbergasted. Maybe, he should not have taken the trouble to pay me even that!”

Traders, however, dismiss these as one-off incidents, while claiming that delisting of F&V would ultimately hurt even farmers. “The produce brought by farmers is not uniform, which is what processors want. The APMCs are tuned to handle variety. Here, we have 50-55 varieties of vegetables and 25-30 varieties of fruits arriving on a daily basis. Such variety will disappear once delisting happens. Moreover, instead of a centralised marketplace, you’ll have small and medium vehicles carrying farm produce and creating traffic mayhem in Mumbai,” warned Rajendra Shelke, a leading onion and potato commission agent at the Vashi APMC.

Besides, the APMC system guarantees that the farmer is paid for his produce, which wouldn’t be the case if he were to sell directly? “The proposed reform looks good on paper, but it will only spell doom for the farmer and end up completely destroying the agrarian economy,” he added.

Sanjay Pansare, who represents traders at the Vashi APMC’s fruit market, justified the high commission rates on grounds that the goods being handled here were perishable and prone to quality deterioration. Only around a quarter of the produce brought to the market is eventually of the best quality; the rest falls between medium and bad. The losses borne by traders on this count have to, therefore, be made up through higher commission fees. Since 2002, the Maharashtra government has been issuing marketing licenses to various entities for procuring directly from the farmgate. Besides, 34 private markets have been allowed to be set up. But despite this, an estimated 75 per cent of annual arrivals of F&V in the state still take place in APMCs. The proportions are lower at 46 per cent for cotton and 25-30 per cent in oilseeds and foodgrains.

Delisting F&V from the purview of the APMC Act

This isn’t the first attempt at a significant agricultural marketing reform. In 2012, Radhakrishna Vikhe Patil, who was agriculture minister in the previous Congress-NCP regime, had announced the intent at delisting horticultural produce from the state APMC Act’s purview. A final decision, however, could not be taken following strong trader protests APMC’s were originally established with a view to prevent exploitation of farmers by intermediaries, who compelled them to dispose of their produce at the farmgate at very low prices. By mandating all farm produce to be brought to regulated market yards and sold through auctions, the APMC mechanism was meant to ensure fair prices to farmers.

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