FNB News - “APMC reforms would eliminate middlemen, help save”

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“APMC reforms would eliminate middlemen, help save”

Tuesday, 16 December, 2014, 08 : 00 AM [IST]

Mohan Kundariya, first-time Member of Parliament (MP) from Rajkot, is minister of state (MoS) for agriculture in the Narendra Modi government. In an email interaction with Abhitash Singh, he threw light on the government’s plans for the growth of agriculture in coming years, including the reforms undertaken for contemporising the APMC Act. Excerpts:

The government is introducing reforms with regard to the Agricultural Produce Market Committee (APMC) Act. But clarity is needed because a number of states are concerned. Comment.
The government formulated a Model Act on agri-marketing reforms in 2003 and Rules in 2007. Since then, the Centre has been pursuing the state governments to adopt the Model Act and Rules.

The former inter alia provides for alternative models through which farmers can access larger markets (viz setting up of markets in the private and cooperative sectors, contract farming, farmer-consumer market and direct marketing).

The licences for these alternative models under the Model Act are to be issued by the prescribed authorities of the state governments.

Further, some of the states have developed kisan mandis (farmers’ and consumers’ markets) managed and operated by the APMC.

These variously named markets provide a platform to the farmers for the sale of their fresh fruit and vegetables directly to the consumers without the involvement of the middlemen.

These include Andhra Pradesh’s Rythu Bazar; Haryana and Punjab’s Apni Mandi; Himachal Pradesh’s Kisan Mandi; Karnataka’s Raithara Santhe; Odisha’s Krushak Bazar, and Tamil Nadu’s Uzhavar Sandhai.

Brief us on how the APMC Act reforms would help farmers.
The reforms in the APMC Act would:

Eliminate the middlemen and facilitate farmers to sell their agricultural produce directly to bulk buyers, processors, exporters and bulk retailers at remunerative prices;
Facilitate the sale of products at the farm gate, and help farmers save transportation charges, which would have been higher if they were to take their products to the mandis, and
Sell the produce to the right buyers at pre-designated places as convenient or beneficial to the farmers.

Research has shown that pollution has halved the agricultural production of the country. Comment.
There is no scientific evidence to support the claim that pollution has halved agri production in India.

The foodgrain production in the country is increasing over the years.

Outcomes of studies on impact of pollution or climate change on foodgrain production

Systematic studies on climate change and its impact on the agricultural sector are relatively few and of recent origin.

So far, there is no definite and conclusive evidence of impact of climate change on agricultural productivity.

The Indian Council of Agricultural Research (ICAR) studies revealed that the change in the rainfall pattern may impact agricultural production in the future.

Accordingly, the ministry of agriculture (MoA) has intensified the implementation of various schemes and missions, with a view to enhance the agricultural productivity, sustaining foodgrain production in the wake of a changing climatic scenario.

What steps are being taken in this regard?
MoA has launched National Mission for Sustainable Agriculture (NMSA) in April 2014 to address issues regarding ‘Sustainable Agriculture’ in the context of risks associated with climate change.

NMSA has three components, namely rainfed area development (RAD); soil health management (SHM); and on-farm water management (OFWM); to address the issues of climate change in the agricultural and allied sectors, and to make Indian agriculture climate resilient for sustaining agricultural production.

In addition, MoA’s department of agriculture and cooperation (DAC) has formulated the National Policy for Management of Crop Residues (NPMCR), 2014 in consultation with the ministry of environment, forest and climate change (MoEF&CC) and circulated it to all the state governments for necessary action.

This policy envisaged the adoption of various technical measures, including diversified uses of crop residue, capacity-building and training, the formulation of suitable laws and legislations to curb crop residue burning for the prevention of air pollution and environmental degradation.

As a result of the various technological advances in the agricultural sector, despite natural calamities, the production of foodgrains has increased from 234.5 million tonne in 2008-09 to 257.13 million tonne in 2012-13. It has further increased to 264.8 million tonne in 2013-14 (as per the fourth advance estimates).

In what way is the government planning to control the rising prices of fruit and vegetables?
Fruit and vegetables constitute an important segment of the horticulture sector. With an output of 255 million tonne (i.e. 87 million tonne of fruit and 168 million tonne of vegetables), India is the second-largest producer of fruit and vegetables in the world.

These crops are grown mostly by small and marginal farmers to derive an income on a sustainable basis. Vegetables being short-duration crops, provide a quick source of income. Fruit and vegetables are also perishable commodities which witness price fluctuations, depending on the demand and supply situation.

The irony is that the producer does not get a fair share of the price paid by the consumer. Moreover, under glut situations, sometimes the farmer may not get even cost of production.

DAC has also taken note of the prevailing high rate of food inflation and has sought the cooperation of the states to take concerted measures to increase the supply of fresh produce in the market, so that the prices can be controlled.

One of the initiatives in this regard is the establishment of Kisan Mandis (farmers’ markets), where producers and farmer producer organisations (FPOs) can directly market their produce to wholesalers, organised retailers and ordinary consumers.

One such Kisan Mandi is being set up in Delhi by the Small Farmers’ Agribusiness Consortium (SFAC), which proposed linking FPOs directly to the platform, thereby creating an additional channel for the supply of fresh produce in the Delhi and National Capital Region (NCR) area.

Kisan Mandis can play an integral role in the price stabilisation initiative. They serve as an effective measure to tackle the current supply-side constraints, by directly sourcing fruit and vegetables from farmers and FPOs, thereby reducing the role of intermediaries.

SFAC also offered its expertise to the states in setting up of similar Kisan Mandis. It may also be noted that at the behest of the department, several state governments, including the government of the National Capital Territory (NCT) of Delhi, have taken up the following agricultural marketing reforms:

Direct marketing, and
The removal of APMCs’ jurisdiction over fruit and vegetables.
The other initiatives taken by the government to improve the availability and contain the prices of vegetables are as follows:
The minimum export price (MEP) of potatoes was $450 per million tonne with effect from June 26, 2014, and onions was $500 per million tonne with effect from July 2, 2014;
The states were advised to allow the free movement of fruit and vegetables by delisting them from the APMC Act;
An advisory was issued to state governments to take action against hoarding and black marketing, and effectively enforcing the Essential Commodities Act, 1955, and the Prevention of Black-marketing and Maintenance of Supplies of Essential Commodities Act, 1980; and
Stock limits were imposed in respect of onions and potatoes for a period of one year with effect from July 3, 2014, under the Essential Commodities Act.

At a recent event, many people voiced their concern about the declining gross domestic product (GDP) of agriculture at 13.9 per cent. What steps will be taken by the ministry to tackle this?
The GDP of the agricultural sector is not declining. However, as per the estimates released by the Central Statistics Office (CSO), the share of the agriculture and allied sectors in the country’s GDP has come down from 16.8 per cent in 2007-08 to 13.9 per cent in 2013-14 at 2004-05 prices.

The decrease in the share of agriculture and allied sectors in the GDP of the country in comparison to other sectors is on account of the structural changes due to a shift from a traditional agrarian economy to an industry- and service-dominated one.

This phenomenon is generally expected in the normal development of an economy. Prior to the rapid economic growth of most developed nations, agriculture accounted for a fairly high share of the economic output.

Agri GDP growing
The GDP of agriculture increased from Rs 6,55,080 crore in 2007-08 to Rs 8,00,548 crore in 2013-14 at 2004-05 prices.

Also in the 11th Five Year Plan, the GDP growth rate of 4.1 per cent was achieved, which was better than the target of four per cent fixed for the sector.

The GDP growth rate has shown great improvement compared to the Ninth and 10th Five Year Plans’ GDP growth rates of 2.5 per cent and 2.4 per cent, respectively.

In the first year of the 12th Five Year Plan (2012-13), the GDP growth rate of the agriculture sector has declined to 1.4 per cent, but recovered in 2013-14 to 4.7 per cent.

The estimated GDP growth for the first quarter of 2014-15 (April-June, 2014) was 3.8 per cent, and in the second quarter (July-September 2014), it was 3.2 per cent, giving an average GDP growth rate of 3.5 per cent in the first half of 2014-15..

This was lower than the growth rate of 4.5 per cent recorded in the first half of 2013-14. Depending on the monsoon performance on a year-to-year basis, the GDP growth shows ups and downs.