CII today organized a Seminar on Reforms in the APMC (Agricultural Produce Market Committee) Act, and its impact in the Southern States. This is an effort of the Agri Business Sub-Committee, CII-Southern Area.
Speaking at the occasion, Mr. Shankarlal Master, Chairman-International Society for Agricultural Marketing stated Agricultural sector remains in immediate need of reforms by the respective State governments to help drive the economy to a greater growth rate that is expected by the policy makers, however a detailed agenda for reforms in this crucial sector is yet to emerge. For this reason, the requirement for Farming to be made a main subject and not a state topic, hence alienating it from politics, stated Mr. Master. Agreement farming ought to be encouraged as it will help bring innovation and contemporary practices into the agriculture sector - believed Mr. Expert.
The APMC Act in each state of India needs all farming items to be offered only in government - controlled markets. These markets enforce significant taxes on purchasers, in addition to commissions and charges taken by intermediaries, but normally supply little service in areas such as cost discovery, grading or assessment. A crucial impact of this regulation is the inability of private sector processors and merchants to incorporate their business straight with farmers or other sellers, removing middlemen while doing so. Farmers also are unable to lawfully enter into contracts with buyers. This leaves no incentives for farmers to upgrade, and inhibits personal and foreign investments in the food procedure sector.
Likewise addressing the audience was Mr. Sivakumar, Chairman Agri Company Sub-Committee, CII-Southern Region and President - Agri, ITC Ltd. Said that Agri service in India is at a shift point. Having actually sailed through the scarcity economy to an economy with surplus in grains, it is important that Federal governments at the Centre and State recognize the need for inclusive development to take agriculture forward in India. Setting the context for the day's discussion, Mr. Sivakumar highlighted that in spite of employing about 57% of the population of the nation, farming on contributes 27% to the GDP of India. This distortion makes agriculture not a rewarding employment generator and for this reason, keeping with the global view, India requires to take opportunities in agri-exports sector. Contract farming and direct marketing to retail chains and processing units are the need of the hour he stated. Regulations to keep pace with these needs are required, which need alternative marketing mechanisms. Hence, reforms in the APMC Act are recommended in different fields, he included.
Making a presentation on "Lining up State Policies with emerging new marketing designs", Prof. S Raghunath from the Indian Institute of Management-Bangalore, stressed the need for an effective and efficient circulation system for agri-produce and arrangement for supply-demand openness. Since the primary objective of the APMC Act was to avoid exploitation of farmers by different intermediaries, reforms were required in the Act, with altering face of farming and the farming supply chain, suggested Prof Raghunath. India is the largest manufacturer of veggie worldwide, with an overall share of 15% of international fruit and vegetables. 8% of world's fruits are produced in India, ranking it 2nd in the world market. In spite of this, there is a high cumulative waste of 40% in India, notified Prof. Raghunath. Inadequate infrastructure and lack of arranged supply chain were the primary cause for such a variation, he said. Therefore, reforms in this sector requirement to catch up with the speed of advancement in the economy and dis-intermediation and involvement of organized players in the sector will eliminate the lacunae, believed Prof. Raghunath.
Centre asks states to modify APMC Act
In a relocate to enable farmers to directly offer their fruit and vegetables to market, contract farming and setting up of competitive markets in personal and cooperative sector, the Centre has actually asked the state federal government to change the Agricultural Produce Marketing Act.
Under the present Act, the processing market can not purchase directly from farmers. The farmer is likewise limited from entering into direct contract with any maker since the fruit and vegetables is required to be canalised through managed markets. These limitations are acting as a disincentive to farmers, trade and industries.
The federal government has just recently approved a central sector plan titled "Development/strengthening of agricultural marketing infrastructure, grading and standardisation."
Under the scheme, credit linked investment subsidy shall be supplied on the capital cost of basic or commodity particular facilities for marketing of agricultural products and for enhancing and modernisation of existing farming markets, wholesale, rural periodic or in tribal areas.
The plan is linked to reforms in state law handling farming markets (APMC Act). Help under the new plan will be provided in those states that change the APMC Act.
The Centre has asked the state governments to inform regarding whether required changes to the APMC Act have been performed, in order to inform the reforming states for applicability of the scheme.
Along with the Centre, the industry is likewise thinking about the change to the APMC Function as it limits the development of trade in farming commodities.
"The policy routine referring to internal trade is especially limiting. The agricultural sector continues to be hamstrung by a plethora of controls, which were presented during the period of shortages," said the PHDCCI.
Meanwhile, a decentralised system of acquiring wheat and rice would make the general finding a clothing manufacturer public Distribution System more cost efficient, the federal government has stated.