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Review of APMC Act and Reform Initiatives (28 th -30 th August,2012) Lallan Rai Ex-Asstt AMA/Consultant, Directorate of Marketing and Inspection N.H.IV,

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Presentation on theme: "Review of APMC Act and Reform Initiatives (28 th -30 th August,2012) Lallan Rai Ex-Asstt AMA/Consultant, Directorate of Marketing and Inspection N.H.IV,"— Presentation transcript:

1 Review of APMC Act and Reform Initiatives (28 th -30 th August,2012) Lallan Rai Ex-Asstt AMA/Consultant, Directorate of Marketing and Inspection N.H.IV, Faridabad-121001 1COSAMB Meeting

2 Outline of Presentation Agriculture Scenario Agriculture Scenario Agricultural Marketing Scenario Agricultural Marketing Scenario Review of APMC Act Review of APMC Act Present APMC Act-Issues and Concerns Present APMC Act-Issues and Concerns Need for Market Reforms Need for Market Reforms Model APMC Act, 2003 Model APMC Act, 2003 Progress of Market Reforms Progress of Market Reforms Initiatives by States Initiatives by States Need for Future Action Need for Future Action 2COSAMB Meeting

3 Agriculture Scenario Strength Varied agro-climatic conditions – wide range of Agricultural/Horticultural productsVaried agro-climatic conditions – wide range of Agricultural/Horticultural products Leadership across several products-volumeLeadership across several products-volume Large Domestic MarketLarge Domestic Market Provides large raw material base to industryProvides large raw material base to industry Abundant labour supply at competitive costAbundant labour supply at competitive cost Strong Research and Development Set upStrong Research and Development Set upWeakness Small land holdings with Small Individual Marketable SurplusSmall land holdings with Small Individual Marketable Surplus Weak Credit flow and inadequate risk coverageWeak Credit flow and inadequate risk coverage Low level of value addition at the farm gateLow level of value addition at the farm gate Lack of Market informationLack of Market information Absence of Common trade languageAbsence of Common trade language 3 COSAMB Meeting

4 Production Trends 4COSAMB Meeting

5 Agricultural Marketing Scenario Strength Large Consumer BaseLarge Consumer Base Wide network of markets across the State through APMCsWide network of markets across the State through APMCs Rise in household income- enhanced demand for high value foods and FMCG productsRise in household income- enhanced demand for high value foods and FMCG productsWeakness High Post-harvest wastages and Transportation costHigh Post-harvest wastages and Transportation cost Multiple intermediaries-Low price realization by farmersMultiple intermediaries-Low price realization by farmers Lack of adequate Scientific Storage facilities near to FarmLack of adequate Scientific Storage facilities near to Farm Fragmented Supply Chains and High marketing CostFragmented Supply Chains and High marketing Cost Opportunities Globalization provides better farming and value addition opportunityGlobalization provides better farming and value addition opportunity Government investment policy conducive for private investmentGovernment investment policy conducive for private investment Specialized Schemes leading to capital formation and enhancing productivity and farm incomeSpecialized Schemes leading to capital formation and enhancing productivity and farm income 5COSAMB Meeting

6 High Post-harvest Losses COSAMB Meeting6 Source: ICAR Study, 2010

7 COSAMB Meeting7 Source: Price Policy for Rabi crops, the Marketing season- 2012-13

8 How to Safeguard Small Producers? Present Agricultural Marketing -Three main Components (GMM): Present Agricultural Marketing -Three main Components (GMM): Statutory charges (6 to 12 per cent); Statutory charges (6 to 12 per cent); Net margins of intermediates (6-20 per cent); and Net margins of intermediates (6-20 per cent); and Real cost of performing marketing functions (68 to 88 per cent). Real cost of performing marketing functions (68 to 88 per cent). COSAMB Meeting8 Reduction in real cost of marketing require increasing scale of operations and technological change in the marketing system. Reduction in real cost of marketing require increasing scale of operations and technological change in the marketing system. Small farmers with low marketed surplus cannot do it. The organized sector is coming up in a big way and their role is important. Small farmers with low marketed surplus cannot do it. The organized sector is coming up in a big way and their role is important. Need for an institutional revolution to enable the producer organizations with professional management to emerge in the scene. Need for an institutional revolution to enable the producer organizations with professional management to emerge in the scene. Can we think of farmers corporations /Producers Companies to emerge in production as well as processing and marketing of agricultural commodities? Can we think of farmers corporations /Producers Companies to emerge in production as well as processing and marketing of agricultural commodities? Implications of this form of institutional set up in agricultural marketing need critical examination and serious debate. Implications of this form of institutional set up in agricultural marketing need critical examination and serious debate. (Source: Prof.S.S. Acharya Paper)

9 Review of APMC Act Initial Regulatory Framework: Initial Regulatory Framework: Agriculture Marketing- a State subject- regulated through respective State APMC Act Agriculture Marketing- a State subject- regulated through respective State APMC Act 27States and 1 UT have APMC Act 27States and 1 UT have APMC Act Major Objectives of APMC Act: Major Objectives of APMC Act: Development of Market Infrastructure Development of Market Infrastructure Open Auction for price discovery Open Auction for price discovery Fair Value for farmers produce Fair Value for farmers produce Standardized Charges Standardized Charges Prompt payment to farmer Prompt payment to farmer Dispute Settlement Dispute Settlement 9COSAMB Meeting

10 Progress of Regulation of Markets 10 COSAMB Meeting

11 Density of Regulated markets COSAMB Meeting11

12 Status of Cold Storages (31.12.2009) COSAMB Meeting12 Numbers of Cold Storages Capacity in 000 tonnes

13 Establishment of Market Committee Responsibility of enforcement of provisions of the Act rests with Market Committee Responsibility of enforcement of provisions of the Act rests with Market Committee Except Tamil Nadu(One Committee for all markets in the District) all State Acts provide for constitution of separate Market Committee Except Tamil Nadu(One Committee for all markets in the District) all State Acts provide for constitution of separate Market Committee In Maharashtra separate Market Committee for Greater Mumbai In Maharashtra separate Market Committee for Greater Mumbai The number and constituents of the membership of the Market Committee differ with other Committees of State The number and constituents of the membership of the Market Committee differ with other Committees of State TN Act permits Co-operative Marketing Societies to establish a market after observing certain formalities TN Act permits Co-operative Marketing Societies to establish a market after observing certain formalities It is, therefore, necessary to have a Taluk level Market Committee with uniform pattern in all the States/UTs It is, therefore, necessary to have a Taluk level Market Committee with uniform pattern in all the States/UTs COSAMB Meeting13

14 Election of Members of Committee In most of the States provision of direct election of non-official members In most of the States provision of direct election of non-official members In Himachal Pradesh, the members are appointed by the Board out of the Panel maintained (given by the concerned District Commissioners) In Himachal Pradesh, the members are appointed by the Board out of the Panel maintained (given by the concerned District Commissioners) There should be indirect election of members from amongst the Panchayat members (already elected through direct election) to save wasteful expenditure There should be indirect election of members from amongst the Panchayat members (already elected through direct election) to save wasteful expenditure COSAMB Meeting14

15 Composition of APMCs (%) Name of the State/UT Producers/ Agriculturist Licensees / Cooperative CooperativesLocal Authority State Govt.MLA/ MPFinancial Institution SWC/ FCI/ CWC Uttar Pradesh 52.2814.284.77 9.52--14.28 West Bengal50.0016.705.55 11.105.55 - Assam46.0520.006.66 - Gujarat47.7023.5511.765.8811.76--- Rajasthan46.6813.33 26.66---- Orissa47.0523.555.8811.76 --- Delhi42.8814.287.14 14.28Lic. W/man 7.14 Metro- Coun. 7.14 - Goa46.7020.006.6613.32 --- Madhya Pradesh Upto 7.00 15.005.00- -- Tripura50.008.50 16.50 --- Maharashtra55.5516.705.5511.10 --- Tamil Nadu60.0020.00-- --- Punjab52.9435.305.88- --- Andhra Pradesh 66.6516.705.55 --- Karnataka52.965.8811.765.88 SC/T 11.76 Taluk Dev/ Board 5.88 - Haryana SC/ST/BC represented 58.3425.008.33- --- Meghalaya38.4823.0715.387.677.69--- Arunachal Pradesh 22.22 11.11-National Samity 44.45 --- Nagaland54.55 One SC/ST 18.189.90-18.18--- 15COSAMB Meeting

16 Numerical strength of Market Committees No. of persons as stipulated in market legislation States/Union Territories 8-20Madhya Pradesh 14-21Uttar Pradesh 15-18West Bengal 9 or 16Punjab (Without representation of cooperatives) 10 or 17Punjab (With representation of cooperative) 11 or 19Haryana (Without representation of cooperatives) 12 or 20Haryana (with cooperative representative) 9-16Himachal Pradesh 9Arunachal Pradesh 11Nagaland 12Tripura 13Meghalaya 14Delhi 15Tamil Nadu, Assam, Rajasthan, Goa. 17Gujarat, Orissa, Karnataka 18 Maharashtra 16 COSAMB Meeting

17 Commodity Coverage Commodities included in the Schedule or declared as such by the Government Notification Commodities included in the Schedule or declared as such by the Government Notification In Andhra Pradesh, Tamil Nadu, U.P., Maharashtra, Gujarat, In Andhra Pradesh, Tamil Nadu, U.P., Maharashtra, Gujarat, Rajasthan, Odisha, Punjab and Chandigarh regulation is specified in the Schedule Rajasthan, Odisha, Punjab and Chandigarh regulation is specified in the Schedule Except Andhra Pradesh and Tamil Nadu all the Acts provides for inclusion as well as deletion of any agricultural produce from the list of notified commodities Except Andhra Pradesh and Tamil Nadu all the Acts provides for inclusion as well as deletion of any agricultural produce from the list of notified commodities Manner of Notification as well as commodity coverage also vary from State to State Manner of Notification as well as commodity coverage also vary from State to State No provision exists for livestock inPunjab, Chandigarh, No provision exists for livestock inPunjab, Chandigarh, HP, MP and Tamil Nadu HP, MP and Tamil Nadu COSAMB Meeting17

18 Realization of Market Fee By APMCs Sl. No. Rate of market fee Names of States/UtsRemarks 1Below 1%Gujarat, Pondicherry, Goa, Tripura, Parts of Maharashtra & Kerala Maharashtra – Rs.0.75 –100 Only Malabar hills districts under MCCM Act, 1933 in Kerala. 21 % to below 2% Andhra Pradesh, Assam, Delhi, Himachal Pradesh, Karnataka, Madhya Pradesh, Uttar Pradesh, Orissa, Tamil Nadu, Meghalaya, Nagaland, Rajasthan and parts of Maharashtra. FCI & State Coop. Exempted in Assam. Meghalaya & Nagaland Collection of fee not yet introduced. In Orissa 3% for animal husbandry products. 32 %Punjab, Haryana, West Bengal, Arunachal Pradesh Punjab 1% for Timber. 18COSAMB Meeting

19 Contribution of income of APMCs to SAMB Sl. No. Percentage contribution to the Board Name (s) of States/U.T. 1Upto 5%Karnataka & Orissa 2Upto 10%Andhra Pradesh, Uttar Pradesh, Rajasthan and Maharashtra 3Upto 20%West Bengal, Tripura, Delhi 4Upto 30%Assam and Meghalaya 5Upto 50%Madhya Pradesh and Arunachal Pradesh 7Upto 10-40%Punjab – Slab system depending upon income of APMC. 8Upto 20-30%Haryana – Slab system depending upon income of APMC. 19COSAMB Meeting

20 Settlement of disputes in various States Sl. No. Channel for settlement of disputesStates/UT 1SecretaryArbitratorDispute sub-committeeGujarat, Delhi, Andhra Pradesh, Bihar, Uttar Pradesh, Orissa, Tripura, Punjab and Chandigarh. 2SecretaryArbitratorWest Bengal 3SecretaryArbitratorBoard constituted for settlement of disputes Maharashtra 4ArbitratorUmpireDispute Sub-CommitteeRajasthan 5SecretaryArbitratorEmpire dispute Sub- Committee Himachal Pradesh COSAMB Meeting 20

21 Present APMC Act -Issues Issues and Concerns: Issues and Concerns: Traders can not buy outside Market Yard-add to cost Traders can not buy outside Market Yard-add to cost Market Density Low – Long travel Market Density Low – Long travel Infrastructural facilities inadequate in markets Infrastructural facilities inadequate in markets Rural Periodic Markets not properly developed Rural Periodic Markets not properly developed Bureaucratic management- lost original purpose Bureaucratic management- lost original purpose Congestion in market yards Congestion in market yards Several Malpractices continue Several Malpractices continue Barrier to entry-Strong associations, License linked to shops Barrier to entry-Strong associations, License linked to shops Market fee not used for development in some cases Market fee not used for development in some cases APMCs emerged as monopoly APMCs emerged as monopoly 21COSAMB Meeting

22 Need for reform in Agricultural Marketing Necessary to : Empower producers with market information to undertake market-driven production. Provide Multiple Choice and competitive Marketing Channels to farmers. Attract Large Scale investments needed for building Post-Harvest infrastructure. 22

23 Model Act, 2003- Salient Features Model Act, 2003- Salient Features Establishment of Market in Private and Cooperative sector Establishment of Market in Private and Cooperative sector Promotion of Direct Marketing and Contract Farming Promotion of Direct Marketing and Contract Farming Establishment of Farmer/Consumer Markets Establishment of Farmer/Consumer Markets Single point licensing & Single Point levy of market fee/cess Single point licensing & Single Point levy of market fee/cess Setting up of Special Commodity Markets/ Promotion of e-trading Setting up of Special Commodity Markets/ Promotion of e-trading Professional management of APMCs Professional management of APMCs 23COSAMB Meeting

24 Progress of Market Reforms 24COSAMB Meeting

25 Provisions of Model Act Adopted (con..) Area of ReformsStates adopted the suggested area of market reforms Setting up of Special Markets and Special Commodity Market Andhra Pradesh, Gujarat, Maharashtra, Karnataka, Nagaland, Sikkim, Tamil Nadu Tripura, Jharkhand and Uttarakhand To promote and encourage e-trading, Gujarat, H.P., Karnataka, Nagaland, Sikkim, Mizoram, Goa, Maharashtra (under Rule 5 license granted to Commodity Exchanges registered under FMC), Uttarakhand and Rajasthan Registration of Contract Farming Andhra Pradesh, Arunachal Pradesh, Assam, Goa, Himachal Pradesh, Karnataka, Haryana, Maharashtra, Madhya Pradesh, Mizoram, Nagaland, Odisha, Rajasthan, Chhattisgarh, Sikkim, Tripura and Jharkhand and Uttarakhand contract farming agreement recorded with the prescribed officer. Andhra Pradesh, Arunachal Pradesh, Assam, Chhattisgarh, Gujarat, Goa, Karnataka, Haryana, Madhya Pradesh, Mizoram, Maharashtra, Nagaland, Orissa, Rajasthan, Sikkim, Tripura and Jharkhand and Uttarakhand No title, rights, ownership or possession shall be transferred or alienated or vest in the contract farming sponsor or his successor or his agent as a consequence arising out of contract farming agreement. Arunachal Pradesh, Assam, Goa, Haryana, Maharashtra, Mizoram, Nagaland, Odisha, Rajasthan, Sikkim, Tripura, Jharkhand, Andhra Pradesh, Karnataka and Uttarakhand 25 COSAMB Meeting

26 Provisions of Model Act Adopted Area of ReformsStates adopted the suggested area of market reforms Dispute settlement mechanism Andhra Pradesh, Arunachal Pradesh, Assam, Chhattisgarh, Gujarat, Goa, Karnataka, Haryana, Madhya Pradesh, Mizoram, Maharashtra, Nagaland, Ordisha, Rajasthan, Sikkim, Tripura and Jharkhand; Himachal Pradesh and Uttarakhand Exemption of Market Fee on the sales to the contract farming sponsors taking place outside the market yard under the contract farming agreement Arunachal Pradesh, Goa, Karnataka (Reduced by 30%), Maharashtra, Mizoram, Nagaland, Orissa, Rajasthan, Sikkim, Tripura, Punjab (exempted under the Rules), Chandigarh (exempted under the Rules) and Uttarakhand Single point levy of market fee Chhattisgarh, Gujarat, Goa, Himachal Pradesh, Madhya Pradesh, Mizoram, Karnataka, Nagaland, Sikkim, UT of Chandigarh, Punjab, Jharkhand, Rajasthan and Uttarakhand Establishment of private market yard and direct purchase from farmers Andhra Pradesh, Arunachal Pradesh, Assam, Gujarat, Goa, Himachal Pradesh, Karnataka, Madhya Pradesh ( only direct purchase), Maharashtra, Mizoram, Nagaland, Orissa (excluding for paddy / rice), Rajasthan, Sikkim, Tripura, Punjab (not for direct purchase), Chandigarh (not for direct purchase), Jharkhand and Uttarakhand Establishment of consumer / farmer market Arunachal Pradesh, Assam, Gujarat, Goa, Himachal Pradesh, Karnataka, Madhya Pradesh (under bye-laws), Mizoram. Maharashtra, Nagaland, Rajasthan, Sikkim, Tripura, Punjab (only enabling provision), UT of Chandigarh (only enabling provision), Jharkhand and Uttarkhand COSAMB Meeting26

27 Initiatives Taken by States Common License for Direct procurement from farmers has been provided by Maharashtra (23), MP (8), Rajasthan (1) and Karnataka(249) Common License for Direct procurement from farmers has been provided by Maharashtra (23), MP (8), Rajasthan (1) and Karnataka(249) License for Direct marketing has been provided by Andhra Pradesh(171), Gujarat(21), Haryana(37), Himachal Pradesh(12) Karnataka(9), Maharashtra(107), Odisha(46), Punjab(26), Rajasthan (76) and Tamil Nadu(179). License for Direct marketing has been provided by Andhra Pradesh(171), Gujarat(21), Haryana(37), Himachal Pradesh(12) Karnataka(9), Maharashtra(107), Odisha(46), Punjab(26), Rajasthan (76) and Tamil Nadu(179). License for Private Markets – Andhra Pradesh(2), Rajasthan(2), Gujarat(13), Tamil Nadu(6) and Karnataka(3) License for Private Markets – Andhra Pradesh(2), Rajasthan(2), Gujarat(13), Tamil Nadu(6) and Karnataka(3) License for Spot Exchange has been granted by Gujarat, Maharashtra, Karnataka, Orissa, Rajasthan and Madhya Pradesh License for Spot Exchange has been granted by Gujarat, Maharashtra, Karnataka, Orissa, Rajasthan and Madhya Pradesh M.P.,Uttarakhand and West Bengal have waived market fee on sale of fruit & vegetables. M.P.,Uttarakhand and West Bengal have waived market fee on sale of fruit & vegetables. Government of Haryana introduced E-license to commission agents Smart Card based electronic records for farmers and Digital Mandi system. Government of Haryana introduced E-license to commission agents Smart Card based electronic records for farmers and Digital Mandi system. 27 COSAMB Meeting

28 Need for Future Action State Governments to expedite amendment of Act/Rules on the lines of Model Act/Rules State Governments to expedite amendment of Act/Rules on the lines of Model Act/Rules COSAMB may pursue member States to complete the Reform process COSAMB may pursue member States to complete the Reform process Initiatives for Private Markets/infrastructure development in Reformed States Initiatives for Private Markets/infrastructure development in Reformed States Long term Policy stability to attract investment Long term Policy stability to attract investment Organize farmers into Groups/Co-operatives Organize farmers into Groups/Co-operatives /Producer Companies /Producer Companies Promote barrier free National Market Promote barrier free National Market 28COSAMB Meeting

29 Thank You 29COSAMB Meeting


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