One of the laws permits farmers to sell their produce freely – anywhere to anyone. The other moves contract farming outside APMC jurisdiction. To be able to understand the implications can you explain the centrality of APMCs in the agri-produce market, and hence whether a move of this nature is viable, sustainable and will benefit farmers or not?
So, let me tell you that at least in terms of terminology or wording – farmers were always free to sell wherever he or she wanted. Farmers have been selling to local traders and not even making use of the APMCs in the district or the headquarters. It was the buyer who was concerned restricted).
The buyers had to take permission to buy whether directly or through contract farming or outside the mandi. So, it was buyer freedom which was restricting the farmer freedom in that sense.
Since 2003, the Union Government has asked states to make three more channels available beside the APMC – one of them is direct purchase from farmers inside the mandi, now it’s outside as part of the new trading area. Second is contract farming. Third is private wholesale markets – that in order to give competition to APMCs to perform efficiently and effectively we should also have more mandis of that kind where farmers and traders meet to buy and sell. So, three new channels were made available by law which were not legal earlier through the APMC route, and then eNAM came within the APMC system – that we also needed to discover prices, more widely in a given mandi even if farmers are local, prices should be at least state-wide or multi state-wide or national. So, that has been going on.
The role of APMC depends on how you look at it. One role of the APMC is that there are people who are able to directly access it. Some people say 6% farmers get benefit of MSP. Some say just 10%, it is not very high anyway. The other part about it is, even if you don’t get MSP, when you sell at an APMC mandi where MSP procurement takes place it helps other farmers get a little better price. So, when the government intervenes up to 20-30% of produce in a particular crop produce market, it helps other farmers also get it. So that is one role of the APMC.
The second is – APMCs were giving price signals because they were the largest places where the produce was being handled, bought and sold. So, you will be surprised that even food supermarkets, buy directly from farmers—whether Reliance Fresh or Birlas, even they discover their direct farmer purchase prices based on the APMC price. Even today, many contracting companies still contract their price to the APMC mandi price. So, the APMC mandi price is so important in this country because there is no other place where so much material was being handled whether for the government or for private trade. Even if directly 30% was coming through the APMC system, the other 60-70% or 50% was coming indirectly to the APMC or going into the APMC after traders were taking charge of the produce.
Let me also tell you that there is variation in the performance, efficiency and effectiveness of AMPCs across states. For example, Punjab is completely dependent on APMCs. Nothing is sold outside by and large. The other states like Bihar, have no APMCs for the last 14 years. So, everything is already free for all, free for anybody to buy and sell from anywhere. So, it depends, when you talk of the role of the APMC. The initial role of the APMC was to help protect the farmer’s interest. The farmers should not be taken for a ride by the buyer. Therefore, the rules of the game were specified, the permission was required because you have to give bank guarantees to have the counterparty risk coverage for the farmer.
In your assessment, how much of the overall agri-produce trade today broadly takes place under APMC jurisdiction?
Every growing area was APMC jurisdiction, now it is reduced to the APMC yard (after the central laws were passed). By jurisdiction, what we mean is actually yard or a sub-yard. So, that is the domain of APMC.
Earlier, it was the entire area where the produce was being grown that was called the notified area. So, anything transacted there was within the APMC regulation. The APMC would intervene and say, why are you buying? Why are you selling and so on. Now (after the new farm laws), it is restricted only to the yards. Now, we have the physical place where the actual transaction takes place under the APMC yard or the sub-yard.
How much in your assessment is being traded through APMCs?
It’s anywhere between 30 to 50%, depending on how you look at it because fruits and vegetable markets by and large now are de-notified. I told you, about 15 or 20 states, they don’t care what happens. The mandis are there but they’re under no regulation. So, I would not call them APMC Mandis but are the almost like free markets where anybody can buy, nobody monitors the charges and so on. So, if you take that out then I would say in terms of volumes, it maybe 25% to 30% and in terms of value it may be even lower because fruits and vegetables are high value crops. Others are low value crops. One-third happens through APMCs.