IGIDR-IFPRI, Incentives to States for Adopting the Model Market Act Sukhpal Singh, IIM

28-07-2014

S U K H P A L S I N G H

C M A , I I M A

MAKING THE AMENDED

APMC ACTS WORK

apmc/ss/cma/iima/july2014delhi

WHERE IS REGULATION OF AGRI

MARKETS?

• India: 35% of wholesale markets and 25% of all agri

markets

• Karnataka: 30% and 40%; Tamilnadu: 90% and 30%;

AP (old): 100%

• Jharkhand:14% and 25%: MP: 100% and 33%; UP:

50% and 15%

• UK:70% and 90%; Haryana: 35% and 60%; Punjab:

35% and 90%

• Gujarat: 98% and 85%. Maharashtra:33% and 22%

• WB: 14% and 20% and Orissa: 10% and 20%

28-07-2014 2apmc/ss/cma/iima/july2014delhi

THE MYTH AND THE REALITY ABOUT

AMENDED APMC ACTS

• Is the farmer not free to sell anywhere s/he wishes?

• If not, how are food supermarkets procuring? and how is contract farming going on across India? And how are farmers’ markets being held?

• Direct purchase from farmers allowed in: Maharashtra (130), MP (8), Chattisgarh, Karnataka (258) Andhra Pradesh(171), Gujarat (21), Haryana (37), Himachal Pradesh (12), Odisha (46), Punjab (26), Rajasthan (77), Delhi, and Tamilnadu (179).

States/ UTs with no APMC Act: Bihar (repealed w.e.f.01.09.2006),Kerala, and Manipur

MoFPI says 16 states have amended the APMC Act fullyor partially, and have agreed to delist F&V from theAPMC Act! Some have aleady done it


MAJOR F& V STATES IN INDIA

• AP, Karnataka, Kerala, TN, Bihar, Orissa, WB,Jharkhand, Chattisgarh, MP, Gujarat, Maharashtra, HP, UK, UP, Arunachal, Manipur, Meghalaya, Sikkim, Tripura

• Where are F&V growing fast: AP, Bihar, J’khand, Guj, Haryana, HP, J&K, MP, C’garh, Maha, Orissa, UP, UK, WB, and the NE states


THE MYTH AND THE REALITY ABOUT

AMENDED APMC ACTS

• Is contract farming not permitted anywhere in

India?

State that permit CF: Punjab, Haryana, HimachalPradesh, UK, Rajasthan, Maharashtra,Gujarat, Chhattisgarh, Madhya Pradesh,Jharkhand, Andhra Pradesh, Orissa, WB,Karnataka, Kerala


MAKING AGRI MARKETS WORK

� Scrutiny of contracts, public contract terms, and competition in procurement (monopsony)

� Incentivise smallholder inclusion (unlike MoFPI and Pb. Govt. Schemes)

� Link credit to CF, though not mandatory or exclusive (lower interest rates for CF?)

� Exempt F&V crops from APMC rules only for CF and Direct purchase

� Promote Producer Companies to organise/encourage market oriented and business like co-operatives (New Generation Co-operatives) which can deal with CF agencies

� Learn from the Thai Experience



� Role of the state- How Much regulation? Bihar v/s Gujarat in APMC Act!

� Role of the state:

� Promotion of producers’ organizations for marketing of farm produce as PPP

� Provide more of marketing extension to growers

� Market orientation in terms of improved marketing practices at the farmer level.

� Incentivise/promote Group contracts to reduce information asymmetry between firm and growers, transaction cost of dealing with small growers and for better bargaining power to growers

� Legal protection to growers like in Japan/USA



� Reform APMC markets- free licensing for better competition, e-payment of market fee, ensure open auction system, better facilities, PC representation in APMC mgt., denotification of CAs/Arthiyas like in MP, (APMC markets serve as competitors to contract and direct purchaseand can help improve the terms offered by CF/DP to growers as contract/contact prices are benchmarked to APMC prices

� Make warehouse receipts applicable to less perishable produce like potato/onions



IGIDR-IFPRI, Incentives to States for Adopting the Model Market Act Sukhpal Singh, IIM

Education

apmc prices

apmc rules

agri markets karnataka

farmers markets

regulation of agri markets

agri markets work role

wholesale markets

small growers