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Maharashtra dismantles monopoly of APMCs

Farmers can now bypass wholesale markets and sell directly to buyers.

Written by Parthasarathi Biswas | Pune |
Updated: November 1, 2018 12:59:56 am
Maharashtra dismantles monopoly of APMCs Maharashtra farmers can strike deals with buyers right at the farmgate, and the point of first sale does not have to be an APMC mandi. (Express Archive)

Maharashtra has become the second state after Bihar to allow trade in all farm commodities, including livestock, outside the regulated Agriculture Produce Market Committee (APMC) wholesale markets or mandis.

An ordinance by the Devendra Fadnavis-led government on October 25 has amended the Maharashtra Agriculture Produce Marketing (Development and Regulation) Act, 1963. This Act had made it mandatory for farmers to sell all their crops after harvest in mandis within a geographically delineated market area under the particular APMC’s jurisdiction. But the amendment now curtails the supervisory powers of APMCs only within its own “principal market yard, sub-market yard and market sub-yard”. The APMC shall henceforth “not regulate marketing of agricultural produce and livestock in its delineated market area,” the amendment has stated.

What this practically does is to allow traders or processors to deal directly with farmers. Neither they nor farmers will have to go to mandis to buy and sell produce. The buyers can strike deals with farmers right at the farmgate and the point of first sale does not have to be an APMC-regulated mandi.

Bihar, in 2006, scrapped its APMC Act altogether. The Fadnavis administration has not done the same, but the ordinance amending its Act makes APMCs powerless beyond their market yards. The APMCs can continue to levy a cess/market fee on the produce brought and traded in their mandis. But these levies – ranging from 0.8 per cent to 1 per cent of the value of purchase – cannot be charged on trades outside the mandi.

The Maharashtra government had earlier, in August 2016, “de-listed” fruits and vegetables from the APMC purview. It expanded the universe of buyers for horticultural produce beyond traders or commission agents licenced to operate in the area under a particular APMC. But now, that freedom for trading of farm produce has been extended to all crops and livestock.

The latest reform is expected to do two things.

The first is that it will enable solvent extraction and oil expeller units, dal millers, ginners, animal feed makers, and other big processors and traders to deal directly with farmers. Since no APMC cess/market fee will be levied on their purchases, they could be incentivised to make such direct purchases or even pass on some of the savings to farmers. Farmers, too, would be spared the burden of transporting their produce to the mandi, apart from incurring expenses towards loading, unloading and weighing.

Secondly, the APMC mandis will be forced to invest in infrastructure and improve their quality of services to attract farmers and buyers. “The farmer till now had no choice but to bring his produce to the mandi or sell it at throwaway prices to a village-level aggregator. What the ordinance does is to introduce competition. The farmer, at the end of the day, may still choose to sell at the mandi, if he gets a better price there than from selling at the farm gate,” a senior government official pointed out.

At present, about 80 per cent sale of pomegranate and grapes in Maharashtra take place at the farmgate itself. In other crops, farmgate level trade is virtually absent, partly because the APMCs demand payment of market fees from buyers even when the trade doesn’t take place on mandi premises.

Maharashtra has 305 APMC mandis, with their annual turnover estimated at over Rs 50,000 crore, of which fruits and vegetables alone account for Rs 10,000 crore. The mandis are supposed to provide infrastructure, such as market yards (where the produce gets auctioned), weighing machines, godowns, parking and washroom facilities, etc. The APMCs are also expected to ensure payments to farmers on the same day their produce is auctioned and regulate the commission fees charged by the mandi intermediaries who facilitate trades.

“If now trades shift outside the mandis, who will ensure that farmers are paid on time and their produce is properly weighed? If a farmer is cheated, who will he approach? Will the buyers even give him a bill?,” asked Lalitbhai Shah, the chairman of the APMC at Latur, a major hub for tur (pigeon-pea), chana (chickpea) and soyabean that reports cess collections of Rs 10-15 crore annually.

However, Nitin Kalantri, the CEO of Kalantry Foods, a leading Latur-based pulses processor, feels the Maharashtra government’s amendment will not lead to any marginalisation of mandis. “Marketplaces have inherent advantages from many buyers and sellers coming together at a single point. What will happen now is competition, which will force the APMC mandis to get their act together and provide better infrastructure and facilities in their yards,” he said.

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