Union Ministry of finance announced that government will work with States for Creation of Unified National Agriculture Market, but it is not very much clear what framework Union government want to implement. How exactly they want to go away from the APMCs? Working with States, to have a unified Market can be a dream considering 29 states, thousands of markets and then different political parties and difference of opinions.

Working on Economic Survey recommendations, Union government have made it clear that they want to move away from the inefficiencies, heavy transaction cost and some unnecessary taxes of APMCs (Agricultural Produce Market Committees) involved in first sale the farm produce.

“The first sale in many commodities can be conducted only under the aegis of APMC through the commission agents licensed by the APMC. The typical amenities available in or around the APMC are: auction halls, weigh bridges, godowns, shops for retailers, farmer’s amenity center etc. Various taxes, fees/charges and cess levied on the trades conducted in the Mandis are also notified under the Act.

Currently, APMCs charge multiple fees, of substantial magnitude, that are non-transparent. They charge a market fee of buyers, and they charge a licensing fee from the commissioning agents and licensing fees from a whole range of functionaries. In addition, commissioning agents charge commission fees on transactions between buyers and farmers.These statutory levies/mandi tax, VAT etc. varying from state to state are the major source of market distortion. Such high level of taxes at the first level of trading has significant cascading effects on the price.”

From the Budget write up, modus operandi of the National Agriculture Market is not clear nor there are guidelines on How it will operate and how it will ultimately benefit the farmer economics. This is real question mark that remains unanswered. From the layman or a farmers perspective, what can be the possible solution to APMCs situation and ultimately benefit the farmers economics and end consumers to get the final product at cheaper price. In current format we farmers are completely dependent on the APMCs and can not go away from it. Large farmer base has no infrastructure to sell and keep on waiting for consumers to approach and make a deal or realize cash

Empowering the farmers producers organization can be one way where we all can move away from APMCs, farmer groups can distribute the supply chain responsibilities or can outsource respective part which is not feasible to achieve and other organizations has expertise in it.

In current situation we farmers make sale in APMCs where we transfer the responsibility to APMC agent & give him 10% of the sales price and additional taxes and levies on the farm produce. Here for a farmer perspective all responsibilities are over and within a week we can realize the monies from Broker and the cycle continues. When we consider the farmer producer organization, we can avoid the cost that is going in first transaction @ APMC and economics can be improved by more than 10% minus the transaction cost involved in farmer producer organization. This benefit can reflect on price of the commodity coming on the consumer's table. If we take the example of tomato, it is the raw tomato or tomato ketchups prepared by farmer producer companies. Here exampled tomato is the commodity which can be converted to end produce by a small farmer produce organization or even by a large individual farmer, but same is not applicable when a farmer is cultivating the commodity like cotton or sugarcane.

If managed properly, farmer producer organizations are the best solutions to go away from the APMCs cost and inefficiencies. I believe this is the area where government should work in tandem with farmer producer organizations. They should be enabled to run the organizations which can be meant for vegetable fruit tomato or for cash crop like cotton. in mid 1970-80's we have seen success stories in the western Maharashtra over the cooperatives, but over the period of time it became the political hotbeds which resulted in sick units, ultimately making hole in taxpayers pocket

Government should bring Agriculture based supply chains and farm produce processing education under the national skills development program (NSDC) and devote considerable budget towards it. How this can be done, it can be easily worked out. NABARD* also can play an significant role in such establishment and it already working with many farmer produce organizations.

On another note there are many mid career level employees from the software industry are looking towards the taking entrepreneurial assignments and they may fill the gap in the business development required for the farmer producer companies. Many of those software professionals are 1st generation away from the farms and as they understands the agriculture can provide ICT improvisement to the sector by removing the wastes.

This structure can best justify the National Skills development Corporations initiative to build the India through the skills development where employment and country largest sector is taken care, promoting the mid career level through this initiative would enable the longevity of the initiative by utilizing the taxpayers money.

*NABARD: “National Bank for Agriculture and Rural Development” is an apex development bank in India

Subhash M Lode ( +91 9666 55 6197)

“Farmer’s Own Social Network, Marketplace and Information Hub.”

Author is Founder of Agriculture Ecosystem based start-up Agrowbook.com and expressed views are coming out of his domain experience in agriculture and software industry
Last update on March 17, 1:35 am by Subhash.
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