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Friday, 08 July 2016 04:22
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No free markets for farms, no matter what PM says

The Maharashtra government saying it is about to issue an ordinance to end the Vashi mandi’s monopoly over sales of fruits and vegetables (F&V) in the state—the country’s second-largest market deals with 6,000 tonnes of F&V every day—is good news as it gives lakhs of farmers the option to sell in other markets instead of in only the heavily cartelised mandi where buyers call the shots, and where heavy market charges also need to be paid. But there is an important caveat here. The move has been made twice before, of which once was by the Devendra Fadnavis government that had to withdraw the ordinance after it was cleared by the state’s cabinet. But, even if the move gets gazetted—it is only then that a law becomes final—this is unlikely to make too much of a difference unless other conditions are met. Once the move is finalised, it will allow large buyers, like say a Wal-Mart, to contract directly from the farmgate, to even enter into long-term contracts with farmers for such supply. But for farmers who don’t have such contracts, there is no option but to sell at Vashi since there are few other mandis he can sell in. A good example of this is Delhi’s Azadpur which lost its monopoly over F&V in September 2014—there was, however, no discernible change in sales since the Delhi government did not allot land for alternate mandis; so if Maharashtra wants to make an impact on its farmers lives, it will have to allot land for alternate mandis in the Mumbai area.

Theoretically, as the prime minister has said, the National Agriculture Market (NAM)—an electronic trading portal connecting various existing Agriculture Produce Marketing Committee (APMC) mandis—is the solution for non-F&V products since it provides a unified national market for farm produce. In reality, as Pravesh Sharma who was spearheading NAM when he was in the IAS points out, the state governments are simply not interested in freeing up markets for farmers as there is lots of revenue to be collected from the mandi taxes—these go up to around 15% in states like Punjab and Haryana—and the powerful mandi cartels probably have political connections as well. Since fruits and vegetables are outside the purview of NAM, the creation of the alternative mandis is critical. But even for other agriculture commodities, Sharma points out, the states ensured the NAM portal would have to be located only in existing mandis and that the mandi charges would continue to be paid. While states like Punjab and Maharashtra were not even willing to allow traders from outside the state to bid online, Madhya Pradesh allowed NAM in only one of its 546 mandis, and Haryana said it would experiment with just safflower which is a minor rabi oilseed. In such a situation, since farmers don’t get the price benefits of a free market, it is not surprising they prefer to focus on wheat and rice since there is at least an assured buyer in the form of FCI and various state buying agencies, apart from an assured prize—freeing up agriculture markets is a critical part of the prime minister’s farm strategy but, for now, this remains badly stuck.


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