Customers browse bags of onions displayed for sale at a wholesale market in Nashik, Maharashtra, India. This is a file photo. (Photographer: Kuni Takahashi/Bloomberg)

Maharashtra Dismantles APMC’s Monopoly But Experts Await Fineprint

Maharashtra has become the second state to allow farmers to trade in the open market, at least in principle.

The state government passed an ordinance on Oct. 25, paving the way for farmers growing agricultural commodities and livestock breeders to sell their produce outside the ambit of the APMC.

“The first step was to pass the ordinance. The rules will be notified within 15 days,” said Sadabhau Khot, agriculture minister of Maharashtra. The idea is to create private markets with similar facilities as APMCs, while ensuring healthy competition and trading options for farmers, he said.

The state had allowed farmers growing horticulture products like fruit, spices and vegetables, to sell their produce in private markets from Aug. 2016.

Bihar is the only other state which allows its farmers to sell their produce outside government-controlled markets run by the state agricultural board.

The ordinance can come into effect only after the rules are notified, said Siraj Hussain, a senior visiting fellow with Indian Council for Research on International Economic Relations and former agriculture secretary.

Agricultural Produce Market Committee markets are mandated to have certain facilities like banks, toilets, auction halls, cattle sheds, canteens, dispensaries, godowns, drinking water facilities, shopping centres and rest houses for farmers. The private markets will also need to have similar amenities.

There are currently 307 main markets and 597 sub-market yards in Maharashtra, as per the 2017-18 annual report of Maharashtra State Agricultural Marketing Board.

Also read: The Challenges Of Procurement At MSP

A worker stands beside sacks of onions loaded on a truck in the rain at the Vashi Agricultural Produce Market Committee (APMC) wholesale market in Mumbai. (Photographer: Dhiraj Singh/Bloomberg)
A worker stands beside sacks of onions loaded on a truck in the rain at the Vashi Agricultural Produce Market Committee (APMC) wholesale market in Mumbai. (Photographer: Dhiraj Singh/Bloomberg)

Early Days

“This is a half-baked attempt at breaking the monopoly of agriculture produce marketing committees,” said Ashok Gulati, agricultural economist and former chairman of the Commission for Agricultural Costs and Prices. The government has allowed farmers to approach alternate markets, but setting up private mandis would require land allocation, speedy permits and proper infrastructure, and there is still no framework for that, he said.

A lack clarity in certain operational aspects in the 2016 ordinance acted as a deterrence for private players to come in, said former Planning Commission member, Abhijit Sen. Private players may be interested, but they are not confident of investing in a market with no defined rules, he added.

That was one of the reasons why large scale trade outside mandis did not pick up even when the market was opened up for horticulture produce, according to Hussain. But all is not lost. “In the long run that may change, with modern retail chains, exporters and food processing companies buying directly from farmers’ consortium,” said Hussain.

The state government believes there are already enough incentives for private players to step in. “We have given direct marketing licence to private and co-operative bulk buyers of fruits and vegetables, who are presently allowed to buy and export produce of up to Rs 15 crore. The state government gives subsidy to set up private mandis and organises kisan bazaars for farmers to sell directly to consumers,” said Khot .

“The move will expand trade outside the regulated market yards and will boost trade and investments in the agriculture sector,” said Deepak Taware, director of marketing, Maharashtra state. “The ordinance will help in developing parallel online and private trading hubs,” he said.