Centre to states: Reform, only then you get money to improve farmers’ markets

The Cabinet Committee on Economic Affairs (CCEA) approved Rs 190 crore for setting up of new markets, strengthening and modernising the existing markets and upgrading Agmark laboratories.

What the states have to do to even qualify for the scheme is to, at least, amend the Agriculture Produce Marketing Committee (APMC) Act. The amendment allows mandis to be set up by the private sector, direct marketing and contract farming.

‘‘This is the first time, such a scheme has been linked to the performance of the states,’’ said P K Agarwal, joint secretary, Ministry of Agriculture.

By linking the scheme to reforms, the government is trying to offer incentives to states reluctant to amend the Act for the fear of losing revenue from state-owned mandis. States like Karnataka, Madhya Pradesh and Andhra Pradesh have already made the amendments. The Centre had circulated a model Act last year, urging the states to amend their respective Acts. At least eight states are on their way to amend the Act. The usual suspects like Bihar, Jharkhand and Orissa are way behind.

With mandis being entirely owned by the government, a need has been felt to allow private players to enter the agri-marketing sector. This would enable farm produce to be integrated with markets. In other words, an exporter or mill-owner can go to the farmer directly to buy produce without buying from government mandis.

Since private companies have more money to invest, there would be better infrastructure like grading facilities, packaging and storing, fetching a better price for the farmers. The Government hopes this will provide increased access to small and marginal farmers to agricultural marketing infrastructure. Once this basic but revolutionary amendment is brought about, the scheme cleared today can follow: It will allow a credit-linked ‘‘back ended’’ subsidy at 25 per cent of the capital cost of the project for commodity specific infrastructure for marketing of agricultural commodities.

For the North-eastern states, hilly and tribal areas and SC and ST entrepreneurs, the rate of subsidy will be 33.33 per cent.

Assistance will be available to individuals, group of farmers or growers or consumers, partnership or proprietary firms, NGOs, self-help groups, companies, corporations, cooperatives, cooperative marketing federations, local bodies, agricultural produce market committees and marketing boards in the country.

The Cabinet has also approved a proposal for construction and renovation of rural godowns with a total outlay of Rs 445 crore, of which the Central outlay would be Rs 115 crore.

This was an on-going scheme that had been fairly successful with nearly 1.1 crore tonnes of storage capacity added all over the country. This is changing the way goods are marketed by farmers as it allows them freedom to wait for the prices to increase to sell their produce instead of ‘‘distress’’ sales. Also, farmers can take credit from banks and later use the receipt to trade. The Government expects an additional 32-lakh tonne capacity will be added in the next phase. The scheme will be implemented through National Bank for Agriculture and Rural Development (NABARD), National Cooperative Development Corporation (NCDC) and by the Directorate of Marketing and Inspection.