Agricultural Marketing Reforms: Amendments in State APMC Acts/ Rules

Agricultural Marketing Division for

State Agriculture/ Agrl. Mktg. Ministers Conference 23.04.2008

Agri-Markets in India as on 31.03.2007

6261 Wholesale Markets in India (majority are regulated markets) 20870 Rural Primary Markets (about 15% are regulated markets) Total 27131 2459 Principal Regulated Markets 5006 Regulated Market Sub-yards Total 7465 (Only 286 regulated markets in 1950)

Contribution of Regulated Markets

Basic objective has been- to ensure reasonable gain to the farmers by creating environment in markets for fair play of supply and demand forces, - to regulate market practices and attain transparency in transactions Aimed at providing proper method of sale, correct weighment, prompt payment and various marketing related services Democratic set up to control and manage markets Advent of regulated markets has helped in mitigating the market handicaps of producers/ sellers at the wholesale assembling level Achieved only limited success and Rural Periodic Markets in general, and the tribal markets in particular, remained out of its developmental ambit.

Agricultural Marketing Constraints

Predominantly marginal or small farmers Hence small marketable surpluses & limited bargaining power Poor availability of markets & monopolistic tendencies of APMCs Inadequate infrastructure in wholesale markets/ rural primary markets Lack of fair price discovery mechanism Multiple and exploitative intermediaries low returns Fragmented supply chain, poor cold chain & high post-harvest losses Lack of cleaning, grading, packaging & quality certification facilities Limited access to market information and marketing opportunities available

Initiative of Market Reforms

Amendments in APMC Acts suggested by Expert Committee on Market Reforms constituted by the Ministry of Agriculture (Report in June, 2001) Expert Committee recommendations discussed in the National Conference of State Agriculture Marketing Ministers on 27.09.2002 Standing Committee of State Agricultural Marketing Ministers constituted under the Chairmanship of Union MOS (A) met & resolved to implement reforms on 29.01.2003

Committee headed by Additional Secretary (AM), GOI including State Representatives set up to draft a Model Law for Agri-Marketing
Model APMR Act finalized on 09.09.2003 by the Committee and circulated to States by Central Government Model Rules based on the Model Act circulated to States by the Ministry in November, 2007 NDC has resolved on 29th May, 2007 for completion of amendments in APMC Acts and notification of Rules there under by March, 2008.

Amendments Proposed in Model APMC Act

Allow establishment of Private or Cooperative markets/ Farmerconsumer markets/ Direct marketing Safeguard the interest of the farmers through provisions for Contract Farming Single point levy & payment of market fee/ Single point registration of functionaries

Prohibition of Commission Agents for agriculturists and no deduction to be made towards commission
PPP in management & extension activities/ Promotion of e-trading/ Electronic Spot Exchanges Encouraging professional management in APMCs Promotion of Grading & Standardization.

Proposed Legal Framework of Contract Farming

Contract Farming Sponsor to register himself with a prescribed officer

The Contract Farming Sponsor to get the contract farming agreement recorded with a prescribed officer
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 the contract farming agreement Fast Dispute Settlement Mechanism at local level Specification of Model Agreement for Contract Farming to ensure inclusion of terms & conditions safeguarding interest of both farmers & buyers.

Status of APMC Act Amendments

States/ UTs having Amended Acts
1. 2. 3. 4. 5. 6. 7. 8. 9. 10. 11. 12. 13. 14. 15. 1. Andhra Pradesh (26.10.05) Arunachal Pradesh (09.05.06) Assam (19.01.07) Chhattisgarh (10.02.06) Goa (06.08.07) Gujarat (01.05.07) Himachal Pradesh (26.05.05) Karnataka (16.08.07) Madhya Pradesh (15.06.03) Maharashtra (11.07.06) Nagaland (08.09.05) Orissa (17.05.06) Rajasthan (18.11.05) Sikkim (20.04.05) & Tripura (11.05.07) Tamil Nadu

States/ UTs with no APMC Act

(1) Bihar (repealed w.e.f. 01.09.2006), (2) Kerala, (3) Manipur and UTs of (4) Andaman & Nicobar Islands, (5) Dadra & Nagar Haveli, (6) Daman & Diu & (7) Lakshadweep

Partially Amended
(1) Punjab/ (2) UT of Chandigarh (Only private markets & contract farming) (3) Haryana (Only Contract Farming) & (4) NCT of Delhi (Only Direct Marketing)

Amendment Bills under finalization

(1) Jharkhand, (2) Uttarakhand, (3) U.P., (4) West Bengal, (5) NCT of Delhi & (6) Puducherry

Reportedly no Amendment Needed

Remaining States
(1) Haryana, (2) J&K, (3) Meghalaya & (4) Mizoram

Private Market / Direct Marketing

Establishment of private market yard and direct purchase from farmers
States which have adopted the suggested provision:

A.P., Arunachal Pradesh, Assam, Goa, Gujarat, H.P., Karnataka, M.P.{not for private market - direct sale can be permitted under the bye-laws Sect 36(2)}, Maharashtra, Nagaland, Orissa (excluding for paddy/ rice), Punjab/ UT of Chandigarh (not for direct purchase), Rajasthan, Sikkim, Tripura, T.N. & NCT of Delhi
States which amended the Act but not adopted this provision:

Chhattisgarh

Consumer/ Farmer Market

Establishment of consumer/ Farmer market
States which have adopted the suggested provision:

Arunachal Pradesh, Assam, Goa, Gujarat, H.P., Karnataka, Maharashtra, M.P.(can be permitted under the bye-laws), Nagaland, Punjab /UT of Chandigarh (only enabling provision) Rajasthan, Sikkim & Tripura
States which amended the Act but not adopted this provision:

A.P. ((being set up under Exemption Clauses), Chhattisgarh, Orissa, T.N. (being set up under Executive Orders)

Contract Farming
The Contract Farming Sponsor shall get the contract farming agreement recorded with the prescribed officer

States which have adopted the suggested provision:

A.P., Arunachal Pradesh, Assam, Chhattisgarh, Goa, Gujarat, Haryana, Karnataka, M.P., Maharashtra, Nagaland, Orissa, Rajasthan, Sikkim & Tripura
States which amended the Act but not adopted this provision:

H.P., Punjab/ UT of Chandigarh, T.N.

Contract Farming
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 the contract farming agreement
States which have adopted the suggested provision:

Arunachal Pradesh, Assam, Goa, Haryana, Karnataka, Maharashtra, Nagaland, Orissa, Rajasthan, Sikkim & Tripura
States which amended the Act but not adopted this provision: A.P.,

Chhattisgarh, Gujarat, H.P., M.P., Punjab/UT of Chandigarh, T.N.

Contract Farming
Dispute Settlement Mechanism
States which have adopted the suggested provision:

A.P., Arunachal Pradesh, Assam, Chhattisgarh, Goa, Gujarat, Haryana, Karnataka, M.P., Maharashtra, Nagaland, Orissa, Rajasthan, Sikkim & Tripura
States which amended the Act but not adopted this provision:

H.P., Punjab/UT of Chandigarh, T.N.

Contract Farming
Specification of Model Agreement for Contract Farming
States which have adopted the suggested provision:

Chhattisgarh, Goa (as may be prescribed), Gujarat, Haryana, Karnataka (as may be prescribed), M.P., Maharashtra (Rules), Nagaland, Rajasthan, Sikkim & Tripura
States which amended the Act but not adopted this provision:

A.P., Arunachal Pradesh, Assam, H.P., Orissa, Punjab/UT of Chandigarh, T.N.

Prohibition of Commission Agents

No commission agent shall act on behalf of agriculturist seller and no deduction to be made towards commission
States which have adopted the suggested provision:

Chhattisgarh, Nagaland, Sikkim

States which amended the Act but not adopted this provision:

A.P., Arunachal Pradesh, Assam, Goa, Gujarat, H.P., Karnataka, M.P., Maharashtra, Orissa, Punjab/UT of Chandigarh, Rajasthan, T.N. & Tripura

Registration of Market Functionaries

Registration (not licensing) of market functionaries and single registration for trade/ transaction in more than one market
States which have adopted the suggested provision:

Assam, Chhattisgarh, Goa, H.P., Maharashtra, Nagaland, Sikkim

States which amended the Act but not adopted this provision: A.P.,

Arunachal Pradesh, Gujarat, Karnataka, M.P., Orissa, Punjab/ UT of Chandigarh, Rajasthan, T.N., Tripura

Single point levy of Market Fee

Market fee shall not be levied for the second time in any market area of the State by market committee Market fee not to be levied more than once in commercial transactions between traders or sale to consumers
States which have adopted the suggested provision:

Chhattisgarh, Goa, H.P., M.P., Nagaland, Punjab/ UT of Chandigarh, Sikkim

States which amended the Act but not adopted this provision:

A.P., Arunachal Pradesh, Assam, Gujarat, Karnataka, Maharashtra, Orissa, Rajasthan, T.N., Tripura

Market Extn. Cell/ State Standards Bureau

Setting up of separate Market Extension Cell in the Board Establishment of State Agricultural Produce Marketing Standard Bureau
States which have adopted the suggested provision:

Nagaland, Sikkim
States which amended the Act but not adopted this provision:

A.P., Arunachal Pradesh, Assam, Chhattisgarh, Goa, Gujarat, H.P., Karnataka, M.P., Maharashtra, Orissa, Punjab/UT of Chandigarh, Rajasthan, T.N. & Tripura

Special Concerns
In some States, no provision for registration of contract farming sponsors, recording of contract farming agreement, dispute settlement mechanism, indemnity against the alienation of producers land on failure of contract and a model agreement format for contract farming

In some States, no specific provisions for setting up of private markets/ direct marketing, setting up of consumers/ producers markets and fast redressal of disputes with regard to the same
In some States, no provision for single point levy of market fee in the State In some States, Licensing provided instead of registration for market functionaries; No provision for single point registration for trade and transaction in more than one market area

In some States, no provision to promote and encourage PPP in management of markets/ extension activities and e-trading
Rules not notified in many States for amended provisions (Notified only in AP, HP, Karnataka, Maharashtra, Rajasthan, Orissa so far).

Other Special Concerns

In some States, registration of contract farming sponsors or processors vested with the Secretary of the APMC should be out of APMCs purview (better at State level) In some States, contract farming dispute settlement authority is State Level/ Divisional Officer should have been kept at below District level for easy access to farmers In some States, Private Markets have been restricted within a specified distance from the existing regulated markets under the Rules.

Programmatic Initiatives based on Reforms

Reform-linked central assistance to encourage public/ private investment for development of marketing infrastructure, common facilities for aggregation & value addition of produce and grading/ packaging/ quality certification facilities Scheme to set up modern terminal markets under NHM for perishable agricultural produce with suitable backward & forward linkages Development of post-harvest/ cold chain infrastructure, CA storage facilities, refrigerated transportation by road/ rail, perishable cargo centres at air & sea ports under NHM Action Plan for development of Food Processing Industries including setting up of Mega Food Parks World Bank assisted MACP (5-6 States) and ADB Study for Agri-business Development Project (2 States)

Present Scenario in Value Chain of Perishables

Cost build up for one Kg. basket Of Fruits

1.7 4.1 3.3

FARMER TRADER WHOLESALER

2.5

11.6

RETAILER

CONSUMER PRICE

Retail Markups
160 220

350

100

FARM GATE PRICES

MILK

FISH

FRUITS &VEGETABLES

Modern Terminal Market

Banking Institution

Infrastructure:
Packhouse, Quality Testing Facility, Palletisation

Electronic Auction

Processor

Exporter

Wholesaler / Trader/ Retail chain operator

Storage: Cold Storage, Temperature controlled warehouse, Ripening Chamber

Services:

Transport (incl. cool chain), Settlement of Payments, Banking, Market information

Direct Selling

Infrastructure:

Collection Centre

Washing, grading, transport to TM

sorting,

weighment,

Services:

Collection & Aggregation of produce, Settlement of payment, advisory on inputs, prices, quality, multi-modal transport

Producers/ Farmers and their Associations

Action Required for setting up TMCs

State Government to appoint a Nodal Officer (Secretary level) in concerned Department & make him a member of SHM SLEC of SHM to coordinate all aspects State to arrange feasibility study & decide bid parameters for each identified location Model bid documents & OMDA suggested by Central Govt. in Operational Guidelines Document SHM to appoint reputed FI to assist Nodal Officer in two-stage bidding process, evaluation, short-listing of PE & entering into agreements Cost of feasibility study & engaging FI can be met from Mission Management Funds of SHM Equity support of up to 49% to be provided from NHM for TMC State Govt. can contribute to this equity (including land value/ rentals)

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