APMC markets have to reinvent themselves

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APMC markets have to reinvent themselves

G Chandrashekha | Updated on June 24, 2020 Published on June 24, 2020

The promulgation of the Farming Produce Trade and Commerce (Promotion and Facilitation) Ordinance 2020 is intended to promote barrier-free trade in agricultural produce across the country and implement the idea of one-nation one-market. Growers’ marketing freedom will stand enhanced.

In other words, private markets too will operate in addition to the traditional APMC marketing yards (mandis). It is expected that there will be healthy competition between APMC and private markets that will potentially benefit growers. However, it may not be as simple as it sounds.

No regulatory oversight

Warehouses, silos, factory premises and cold storages can all become private markets. No regulatory oversight for these markets has been envisaged as yet. Importantly, there will be no cess or fee levied on farmers by private markets.

Given that agricultural commodity trade has always been a high-volume, low-margin business, buyers would tend to move away from APMC markets (where cess or fee is levied) to private markets. Over a period, this migration is sure to hurt APMC markets. It will also cause loss of jobs and incomes for commission agents, traders and their staff traditionally associated with mandis.

The fee or cess collected by APMC on transactions is utilised for monitoring and administration of the market. If trade migrates to private markets, APMCs will face fund crunch.

Unequal competition

It will be an unequal competition between APMC and private markets from the perspective of charging a fee or cess in which the former can lose out. One way for APMCs to stay in business is to abolish the transaction fee or cess. The State government must compensate APMC markets to the extent of revenue loss. In other words, State governments have a huge responsibility to ensure that APMCs are able to compete with private markets.

To compete with private markets, APMC markets will have to reinvent themselves. The produce market committees have to be depoliticised and the stranglehold of enlisted commission agents will have to be substantially loosened.

APMC strengths

Marketing yards have their strengths, including a long track-record of doing business and possibly endowed with storage and other facilities as well as vacant land. Loss of business would mean the facilities would idle and support staff may be rendered jobless. This should be prevented. The vacant land can be used for building infrastructure facilities for primary grading and sorting of agri produce.

How growers will approach the new ecosystem where they have marketing freedom remains to be seen. APMC markets are regulated markets, but the private markets will not be. This can potentially create an apprehension in the minds of growers, who in any case are vulnerable.

Untested dynamics

The business model of private markets remains to be seen, especially if their operations and facilities are superior to APMCs. How expeditiously and effectively disputes are resolved will also be keenly watched.

Overall, the onus of upgrading APMC markets into a competitive agri-trading hub lies with the State governments.

The writer is a policy commentator and agribusiness specialist. Views are personal

Published on June 24, 2020

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