Day 31 – Q 5.Institutional and procedural reforms alone won’t address the problems of agricultural marketing in India. Do you agree? Substantiate.

5. Institutional and procedural reforms alone won’t address the problems of agricultural marketing in India. Do you agree? Substantiate.

केवल संस्थागत और प्रक्रियात्मक सुधार भारत में कृषि विपणन की समस्याओं को दूर नहीं कर सकते। क्या आप सहमत हैं? पुष्टी करें।

Introduction:

Farmers in India are largely unrelieved of their incessant problems. The most pressing problems facing the Indian farmer are the persistently low market prices. From onions to potatoes and pulses to oilseeds, prices of most crops are much below expectations and normal trends. Farmers are hardly empowered to decide price of their product.  

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Problems of agricultural marketing in India:

• Low share of farmer: The Dalwai Committee on Doubling Farmers’ Income has pointed out that the share of farmers in consumer’s price is very low; it generally varies from 15 to 40 per cent.
• Lack of ware housing and storage: Cold storage units exist in less than one-tenth of the markets. Post-harvest losses of various commodities ranged from 6 to 18 per cent.
• Lack of transportation facilities: Almost 40 per cent of all fruits and vegetables are lost annually in India between the grower and the consumer mainly due to lack of storage facilities, a weak transportation system and bad roads.
• Lack of Uniformity in grading and standardisation: Open auction platforms exist only in two-thirds of the regulated markets. Grading facilities in less than one-third; electronic weigh-bridges are available only in a few markets.
• Lack of Market information.
• Inadequate research on marketing.

Problems of APMC Act:

• Market Segmentation: The monopoly of APMCs in agriculture market reduces buyer competition in comparison to integrated markets, as it limits the geographical range of the mandis, number of buyers and sector specialization of buyers.
• High Degree of Intermediation and Cartelization: Missing credit markets so farmers borrow from intermediaries, conditional to sale of harvest. Cartelization by traders prevents price discovery mechanisms from functioning in mandis.
• High License fees and Taxes: High commission levied on both farmers and buyers create artificial inflation. Final price to consumer high but benefit does not reach the farmer.

Institutional and procedural reforms:

• Model APMC act: Despite of being the state subject central government has brought model APMC act to empower farmer to sell his product outside APMC. 
• E-NAM: It is virtual market but it has a physical market (mandi) at the back end. E-NAM creates a unified market through online trading platform both, at State and National level and promotes uniformity. 
• Minimum support price: Govt assured farmers MSP almost 150% of input cost and announced 5% to 7% increase in the MSP for winter season recently.
• Price stabilization fund: The scheme provides for maintaining a strategic buffer of commodities for subsequent calibrated release to moderate price volatility and discourages hoarding and unscrupulous speculation.

Along with Operation Green, Agriculture market infrastructure fund, Agriculture Marketing and farmer friendly index are major steps towards institutional and procedural reforms in agricultural market.

However considering the urgency of agricultural market reforms, there is need to apply innovative measures along with institutional and procedural reforms.   

Need of new thinking:

• Agriculture marketing can moved to union list or concurrent list to push reforms as only handful of states like Bihar, Maharashtra broke the monopoly of APMC markets.
• Farmer-Consumer Market: There is need to squeeze intermediary share if not eliminate. Farmer- consumer markets specially reserved for farmers may prove solution for both inflation of food prices and remunerative price. 
• Ware house based sale.
• Reduction input cost of farming could also solve the issue of agricultural pricing.  
• Innovative ways to reduce dependence on fluctuations in agriculture pricing, there is a need for the farmers contributing in solar energy generation, participation in wind energy, installing solar panels in his farms, etc and also to become an Urjadaata from Annadata.

Conclusion

Climate change and weakening of WTO led system of Agriculture trade created new challenges for agriculture marketing in light of which agricultural marketing services have to be strengthened. There is need to bring information decimation and increased awareness among farmers for maximum benefits.