Punjab Pulse Bureau
This Committee was set up on 2 March 2010 to persuade various States/UTs to implement the reforms in agriculture marketing through adoption of Model APMC Act and Model APMC Rules, suggest further reforms necessary to provide a barrier free national market for the benefit of farmers and consumers and also suggest measures to effectively disseminate
market information and to promote grading, standardisation, packaging, and quality certification of agricultural produce.
“DUE TO RESTRICTIVE PROVISIONS OF THE ESSENTIAL COMMODITIES ACT…. PRIVATE INVESTMENT IN LARGE SCALE STORAGE AND MARKETING INFRASTRUCTURE INCLUDING IN THE AREAS OF CONTRACT FARMING, DIRECT MARKETING HAVE NOT BEEN VERY ENCOURAGING”
- Due to the restrictive provisions of the Essential Commodities Act and various Control Orders issued thereunder, private investment in large scale storage and marketing infrastructure including in the areas of contract farming, direct marketing have not been very encouraging. Under the present system, the marketable surplus of one area moves out to consumption centres through a network of middlemen and traders and institutional agencies. Thus, there exists national level physical, though, there is no national level regulation for the same and the existing regulation does not provide for a barrier free market in the country. There are many significant Inter-State barriers to trade, viz. (a) Taxation Related Barriers (variation in rates, applicability of VAT, levy of market fee at multiple point, etc.); (b) Physical Barriers (Essential Commodities Act, Check Posts, APMC Regulations, etc.); and (c) Statutory Barriers relating to licensing and registration of traders, commission agents. Therefore, there is a need to develop a national level single market for agricultural commodities by removing all the existing barriers of licensing, movement and storage.
- In order to regulate and control the supply and distribution of food grains from surplus to deficit areas, the Government of India implements Essential Commodities Act to control and regulate production, manufacturing and distribution of essential commodities in the country in the event of short supply. The Act itself does not lay the Rules and Regulations but allows the States to issue Control Orders in the event of malpractices like hoarding and black marketing i.e., “Licensing of Dealers/Retailers for trade in food grains”; “Restrictions on movement of food grains”; and “Regulation of Storage limits”. Since 1993, the Central Government has decided to treat the entire country as a single food zone, but the States are still imposing such orders and restrict movements now and then.
- State Governments often issue Control Orders promulgated under the Essential Commodities Act, 1955 adversely affecting trading in agricultural commodities such as food grains, edible oils, pulses and sugar. These Control Orders broadly relate to licensing of dealers, regulation of stock limits, restrictions on movement of goods and compulsory purchase under the system of levy. Due to the restrictive provisions of the Essential Commodities Act and various Control Orders issued thereunder, private investment in large scale storage and marketing infrastructure including in the areas of contract farming, direct marketing have not been very encouraging.
- Agricultural Produce Marketing Regulation Act and Essential Commodities Act need to be amended to ensure barrier free storage and movement of agricultural commodities across the States as storage and movement are very important marketing functions for maintaining regular supply and distribution of food products in the country from the point of production to the consumption centres. This will help to contain uneven price fluctuations and ensure optimum management of the supply chain.
- The regulation of markets, however, achieved limited success in providing an efficient agricultural marketing system in the country because, over the years, these development-oriented institutions (e.g. the State Agriculture Marketing Boards, APMCs etc.) turned out to be more of revenue generating institutions than facilitating efficient marketing practices to benefit the farmers and other market participants. Apart from the market regulation programme, the Essential Commodities Act and plethora of Orders promulgated under this Act by the Centre and States prevented development of free and competitive marketing system in the country
- Apart from the market regulation programme, the Essential Commodities Act, 1955 (EC Act) and plethora of Control Orders promulgated under this Act by the Centre and States prevented development of free and competitive marketing system in the country. Due to the restrictive provisions of the EC Act and various Control Orders issued thereunder, private investment in large scale storage and marketing has virtually become non-existent. These Control Orders also give rise to inordinate delay in haulage of agricultural produce at the border check points creating artificial barriers on the movement and storage of agricultural commodities and to that extent the formation of common market.
- The regulatory framework needs to undergo a change by providing free hand to private sector to own, operate and manage markets/alternate marketing system with backward and forward linkages. The Government may at best formulate rules of the game for the market players rather than controlling the system. The role of the Government should be that of facilitator only.
- The present Act restricts the farmers from selling their produce to processor/manufacturer/bulk processor outside the market yard as the produce will have to channel through regulated market according to provisions of the APMC Act. In the changed scenario, the producer should be free to enter into direct sale without the involvement of other middlemen outside the market yard in the market area under the relevant provision of the concerned Act. This will facilitate direct marketing between the producers and processing factories with monetary gains to the producer-seller through improving competitiveness and to the consumers by way of reasonable prices.
- Under the present APMC Act, only State Governments are permitted to set up markets. Monopolistic practices and modalities of the State-controlled markets have prevented private investment in the sector. The licensing of traders in the regulated markets has led to the monopoly of the licensed traders acting as a major entry barrier for new entrepreneurs. The traders, commission agents and other functionaries organise themselves into associations, which generally do not allow easy entry of new persons, stifling the very spirit of competitive functioning.
(Inputs for a report generated by Observer Research Foundation)