Govt turns new reforms leaf

While the present system of government mandis and the minimum support price for grains will continue, farmers will now have an alternative market. They can even get together in groups to set up their own markets.

This radical reform comes in the form of the Agriculture Produce Marketing Act prepared by the Centre for the states to implement. Andhra Pradesh, Maharashtra and Madhya Pradesh are already off the block, others have promised to get their Assemblies to pass it.

Cheering from the sidelines is the Asian Development Bank. Beginning next month, it8217;s carrying out a 750,000-project to identify areas of private sector participation in agribusiness. 8216;8216;India is changing and this Act is going to provide the impetus that we need for our project. Hopefully, it will be in place by the time we start work in November,8217;8217; says Patricia Crombie, one of the ADB team members. The incentives couldn8217;t be greater. Not only for marginal farmers who so far have been at the mercy of the middlemen but also for India Inc.

As per the new Act, companies like ITC and Mahindra and Mahindra will be able to set up markets offering competitive prices to government mandis. A few years ago, ITC set up E-Chaupal and Mahindra began Subh Labh but these served as market information kiosks for farmers. They were unable to buy any produce as the law did not allow them. 8216;8216;This is the most important reform that we need in the sector to initiate other changes,8217;8217; said ITC chairman Y.C. Deveshwar who would like to use his 6,000 e-chaupals as trading points.

Experts say the present marketing system may work for the rice-wheat system but fails with high value crops. The Act is expected to unleash a bouquet of reforms8212;quality control, food processing, commodity markets, exports, futures trading and the most revolutionary, contract farming.

The key areas are:

8226; Under contract farming, the buyer makes a deal with a farmer before the crop is sown that he will buy it at a particular price. The farmer has to promise a certain quality and quantity of the produce. In turn, the buyer offers technical support like seeds, fertilisers and pest control. So far, it never worked in India as there was no institutional support. Some companies like Pepsi did it for their Tropicana juices but on a limited scale. With this Act, the Government will provide a mechanism for a legal arbitrators who will required to solve all disputes in 30 days.

8226; The new Act will ensure that the mandi fee is paid at one time rather than different places.

8226; More pressure on markets to be service-driven, to have facilities for storing produce, grading facilities, linkages with processing industries.

8216;8216;Everybody was asking the question why our farmers are not as prosperous as those in the west. With this the farmers here will get a level playing field. Globalisation will become a reality,8217;8217; said P.K. Agarwal, Member Secretary of the task force that framed the Act. 8216;8216;Market forces will serve as the strongest checks and balances.8217;8217;