State Governments Have Powers to Enact Reforms, But Not Willingness

It is a common belief that the repeal of the three farm laws marked the end of agricultural market reforms. The reality is that the reforms are possible and desirable. State governments have all the powers to enact reforms, but very few have shown the willingness to go ahead. What is puzzling is that despite the noise about reforms, even BJP-ruled states and Union Territories have not found them necessary.

A fresh effort in this direction is the draft National Policy Framework on Agricultural Marketing on which the Union Government invited comments in November 2024. One hopes that the guidelines will be dispassionately considered by the state governments. The Centre also needs to deeply engage with states so that suitable amendments to laws are quickly legislated. More importantly, the states need to issue the rules under the amended Acts so that the reforms can be implemented and enforced.

The APMC Reform

The most contentious of the three farm laws was the Farmers’ Produce Trade and Commerce (Promotion and Facilitation) Act, 2020. It enabled farmers to sell their produce outside the physical boundaries of Agricultural Produce Market Committee (APMC) yards. It prohibited state governments from levying fees or taxes on agricultural produce sold outside the APMC’s physical boundary. The only requirement for purchasing produce from farmers was a PAN card. This Act was seen as destructive of APMCs. It was feared that the freedom from payment of any fee or taxes would result in agricultural trade shifting from APMCs to ‘trade areas’ outside. It was argued that this will result in withering away of APMC mandis. In Punjab and Haryana, it was projected by agitating farmers unions as a possible ploy to abandon procurement of wheat and paddy at the minimum support price.

The draft National Policy Framework, 2024, does not have any provision like the repealed law. So, the topmost item of opposition to Farmers’ Produce Trade and Commerce (Promotion and Facilitation) Act has been addressed by the Union Government.

Investment needed

For any meaningful progress in marketing of produce, APMCs should have modern infrastructure for cleaning, grading, sorting and packaging. It is also expected that both the Union and state governments will collaborate to set up cold storage facilities at collection points as well as in APMCs so that fresh produce can be stored, quality retained and losses minimised. Ideally, APMCs should also provide primary food processing and value addition infrastructure. It is a pity that even the largest APMC in India, Azadpur in Delhi, does not have such modern infrastructure. Out of `11.11 lakh crore capital expenditure in Union Budget of 2024-25, there is no provision for APMCs.

It will be appropriate if the Union government finds the required funds for Azadpur under the Prime Minister Dhan-Dhaanya Krishi Yojana (announced by the Finance Minister in her Budget speech on February 1, 2025) for creating modern facilities of global standards in the markets of national importance, beginning with Azadpur. The states should then be persuaded to match the facilities in their bigger APMCs.

Rules not notified

Agriculture marketing reforms have been on the national agenda since 2003, when a model “State Agricultural Produce Marketing (Development &Regulation) Act, 2003” was circulated to the states. Several states amended their APMC Acts in accordance with the model law. However, only a few have notified the rules. For example, Andhra Pradesh, Arunachal Pradesh, Assam, Gujarat, Haryana, Jharkhand, Karnataka, Manipur, Meghalaya, Nagaland, Tamil Nadu, Telangana, Tripura, and Uttar Pradesh have enacted a provision to include warehouses as deemed market yards, but only four states, Andhra Pradesh, Karnataka, Telangana and Uttar Pradesh, have notified the rules. A similar situation exists for other reforms.

E-NAM’s high potential

In 2015-16, the Ministry of Agriculture had taken up a proposal to develop a “Unified Market” for agriculture produce; the e-National Agriculture Market (e-NAM) was launched. This was to enable the development of a pan-Indian market to enable buyers from across the country to bid for agricultural produce in any APMC linked to e-NAM. The idea was to enable farmers to get the best price discovery in competitive, online bidding. The progress on this front has been below par. To make it a success, the Union government needs to enact a law for inter-state secondary trade (primary trade is governed by the respective APMC Acts).
 

Hard push needed

The Additional Secretary in the Ministry of Agriculture dealing with the National Policy Framework 2024 was transferred recently. It can be hoped that the Minister of Agriculture, Shivraj Singh Chouhan, who has a long experience as Madhya Pradesh Chief Minister, will provide the much-needed direction and push to the reform of marketing laws by the states. 

The author is Siraj Hussain, Former Union Agriculture Secretary .Views are personal.