Transcript (Presentation by Mr. Lallan Rai).

Market Regulation and Reforms
COSAMB General Body Meeting
at Nainital 7-8th September, 2009
Lallan Rai
Asstt. Agricultural Marketing Adviser
Dte. Of Marketing and Inspection
N.H.IV Faridabad
Regulated Markets - Background

Challenges during 30s
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Illiteracy was high among farmers.
Asymmetry in market information.
Lack of transport and communication infrastructure.
Lack of Standard weights, Measures and Grading.
High incidence of exploitation of farmers.
History of establishment of Regulated Markets traces
back to1886 – First Karanja Cotton Market – Regulated.
With the establishment of these Regulated Markets,
Britisher’s interest was fully served by getting good
quality cotton at central place, thereafter, legacy
continued.
Need of Market Regulation
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Objective was that State alone could protect farmers from exploitation
at the hand of traders.
Democratically elected APMCs set up - as provided in Market
Legislations with the following Objectives:
-Ensure proper method of sale;
- Correct weighment of the produce; and
- Prompt payment of sale proceeds and settlement of
disputes between buyers and sellers as per procedures laid down.
Concentration was confined to the Secondary Markets seldom visited
by producers (Small farmers).
By now, almost all Secondary Markets have been brought under the
ambit of Regulation.
Rural Primary Markets (RPMs), the focal point for small and
marginal farmers remained out of the ambit of Regulation and
development.
Agri-Markets in India
 No of Regulated Wholesale Markets - 6507
 No of Rural Primary Markets -- 20,868
(about 15% are regulated markets)
Total – 27375
Availability of Markets
Area Served
 Average area Served by a Market
116 sq. km
 Av. Area Served by a Regulated market
435 sq. km
 Area served per Regulated Market
varies from 115 sq km in Punjab to 11215
sq km in Meghalaya
 Recommendations by National Farmers
Commission - Availability of Markets within 5 km radius
(approx. 80 sq km)
Progress of Regulation of Markets
Year
1940
1950
1960
1970
1980
1990
2000
2009
Number of Markets
73
286
715
2481
6052
6217
7127
7139
Review of Existing Legal and Administrative Framework
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More than 27 Regulated Market Acts – differ in vital contents.
Manner of notifying the commodities for regulation varies from State to
State.
Membership of Market Committee ranges between 8 and 20.
Constituents of the Market Committee – 33 Organizations are represented
on the Market Committee under different Acts.
In majority of the Acts, Powers of Market Committee as such have not
been specified.
Variation in Market Fee/ License charges.
Broad variation in composition/constitution and functioning of State
Agricultural Marketing Boards.
Demarcation of functions between DOM and SAMB – Vary.
Complete vacuum about data on RPMs.
Lack of Uniformity in recruitment and cadre management of functionaries
of APMCs/DOM/SAMBs.
Raj
MP
UP
J&K
Chhat
Guj
Asam
Kar
Mah
WB
India
TN
HP
Ori
AP
Utchl
Bih
Har
Goa
Pun
Ker
6
0
Source: World Bank Study
10
10
21
20
20
19
17
16
15
15
13
13
13
24
23
31
29
29
28
15
30
GCA (000 ha)/w hole s ale m ark e t
Market density (2003)
41
45
6
All
14
retail
3
UP
12
w holesale
9
MH
20
6
OR
11
8
TN
0
16
5
10
15
20
Median Distance to Market, km
Distance of Wholesale Markets (2005)
Source:- World Bank Report
25
Drying area
Warehouse
Cold Storage
UP
Drainage
Parking (Trucks)
MH
Parking (all vehicles)
OR
Paved/pucca road in mkt yard
TN
Kutcha road in mkt yard
Market has covered shops
Market area enclosed
0
20
40
60
80
Percent of Wholesale Markets
Market Infrastructure in Wholesale Markets
Source:- World Bank Report
100
Other
Electronic screen/board
Media
Intermediaries
Other traders
Regular customers/ suppliers
Personal observation
0
10
20
30
40
50
60
Frequency of responses,%
Tamil Nadu
Orissa
Maharashtra
Uttar Pradesh
Sources of Price and Market Information by Trader
Source;- World Bank Report
Agricultural Marketing Constraints
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Predominantly marginal or small farmers – Hence small marketable surpluses &
limited bargaining power.
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Poor availability of markets & monopolistic tendencies of APMCs.
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Inadequate infrastructure in wholesale markets/ rural primary markets.
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Lack of fair price discovery mechanism.
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Multiple and exploitative intermediaries – low returns.
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Fragmented supply chain, poor cold chain & high post-harvest losses.
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Lack of cleaning, grading, packaging & quality certification facilities.
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Limited access to market information and marketing opportunities available.
Reforms in agricultural Marketing

Necessary to :

Enable producers to undertake market-driven production
planning.

Facilitate integration of farm production with domestic and
global markets.
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Attract massive investments needed for building post-harvest
infrastructures.
Market Reforms initiatives

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.
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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.
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NDC has resolved on 29th May, 2007 for completion of amendments in APMC Acts and
notification of Rules thereunder by March, 2008.
Amendments Proposed in Model APMC Act

Allow establishment of Private or Cooperative markets/ Farmer-consumer markets/
Direct marketing.
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Safeguard the interest of the farmers through provisions for Contract Farming.

Single point levy & payment of market fee/ Single point registration of
functionaries.
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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.
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Promotion of Grading & Standardization.
Progress of Market Reforms as on 31.08.09
Reforms in major areas done
Partial reforms done
Administrative actions initiated
No APMC Act
Provides for Reform
Status of APMC Act Amendments
States/ UTs having Amended Acts –
1.
Andhra Pradesh (26.10.05)
2.
Arunachal Pradesh (09.05.06)
3.
Assam (19.01.07)
4.
Chhattisgarh (10.02.06)
5.
Goa (06.08.07)
6.
Gujarat (01.05.07)
7.
Himachal Pradesh (26.05.05)
8.
Karnataka (16.08.07)
9.
Madhya Pradesh (15.06.03)
10.
Maharashtra (11.07.06)
11.
Nagaland (08.09.05)
12.
Orissa (17.05.06)
13.
Rajasthan (18.11.05)
14.
Sikkim (20.04.05)
15.
Tripura (11.05.07) &
16.
Jharkhand ( 06.12.2008)
Reportedly no Amendment Needed –
1.
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) Uttarakhand, (2) U.P., (3) West Bengal, (4) NCT of
Delhi & (5) Puducherry
Remaining States –
(1) Haryana, (2) J&K, (3) Meghalaya & (4) Mizoram
Desk Review of Market Reforms
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Initiative for setting up of new market by any
person, local authority or grower.
Setting up of Special Markets and Special
Commodity Markets.
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PPP in Market-led Extension activities.
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To promote and encourage e-trading.
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CEO shall be appointed by the Market
Committee from the panel maintained by the
Director/Board
which
may
include
professionals from open market.
Contract Farming Sponsor shall register
himself with the Marketing Committee or with
a prescribed officer in such a manner as may
be prescribed.
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Chhattisgarh, Goa, M.P. Nagaland, Sikkim,
Tripura and Jharkhand.
Andhra Pradesh, Gujarat, Maharashtra,
Karnataka, Nagaland, Sikkim, Tamil Nadu
Tripura and Jharkhand.
Andhra
Pradehsh,
Himachal
Pradesh,
Karnataka, Nagaland and Sikkim.
Gujarat, H.P., Karnataka, Nagaland, Sikkim,
Goa and Maharashtra (under Rule 5 license
granted to Commodity Exchanges registered
under FMC).
Nagaland, Sikkim.
Andhra Pradesh, Arunachal Pradesh, Assam,
Goa, Himachal Pradesh, Karnataka, Haryana,
Maharashtra, Madhya Pradesh, Nagaland,
Orissa, Rajasthan, Chhattisgarh,
Sikkim,
Tripura and Jharkhand.
Conti......
Desk Review of Market Reforms
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The contract Farming Sponsor shall get the
contract farming agreement recorded with the
prescribed officer.
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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
contract farming agreement.
Dispute settlement mechanism.
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Exemption of Market Fee on the sales to the
contract farming sponsors taking place outside
the market yard under the contract farming
agreement.
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Andhra Pradesh, Arunachal Pradesh, Assam,
Chhattisgarh, Gujarat, Goa, Karnataka,
Haryana, Madhya Pradesh,
Maharashtra,
Nagaland, Orissa, Rajasthan, Sikkim, Tripura
and Jharkhand.
Arunachal Pradesh, Assam, Goa, Haryana,
Maharashtra, Nagaland, Orissa, Rajasthan,
Sikkim, Tripura Jharkhand, Andhra Pradesh
and Karnataka.
Andhra Pradesh, Arunachal Pradesh, Assam,
Chhattisgarh, Gujarat, Goa,
Karnataka,
Haryana, Madhya Pradesh,
Maharashtra,
Nagaland, Orissa, Rajasthan, Sikkim, Tripura
Jharkhand and Himachal Pradesh.
Arunachal Pradesh, Goa, Karnataka (Reduced
by 30%), Maharashtra, Nagaland, Orissa,
Rajasthan,
Sikkim, Tripura and Punjab
(exempted under the Rules).
Conti…..
Desk Review of Market Reforms
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Specification of model agreement for
contract farming.
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Single point levy of market fee.
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Registration (not licensing) of market
functionaries and single registration for
trade / transaction in more than one
market.
No commission agent shall act on behalf
of agriculturist seller and no deduction to
be made towards commission.
Establishment of private market yard and
direct purchase from farmers.
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Chhattisgarh, Gujarat, Goa (As may be
prescribed), Karnataka (As may be prescribed,
Maharashtra (Rules), Nagaland, Rajasthan,
Sikkim, Tripura and Jharkhand.
Chhattisgarh, Gujarat, Goa,
Himachal
Pradesh, Madhya Pradesh, Nagaland, Sikkim,
UT of Chandigarh, Punjab and Jharkhand.
Assam, Goa, Himachal Pradesh, Maharashtra,
Nagaland, Sikkim, and Jharkhand.
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Madhya Pradesh, Chhattisgarh, Nagaland and
Sikkim.
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Andhra Pradesh, Arunachal Pradesh, Assam,
Gujarat, Goa, Himachal Pradesh, Karnataka,
Madhya Pradesh (can be done under the bylaws),
Maharashtra, Nagaland, Orissa
(excluding for paddy / rice), Rajasthan,
Sikkim, Tripura, Punjab (not for direct
purchase), UT of Chandigarh (not for direct
purchase) and Jharkhand.
Cont…
Desk Review of Market Reforms
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Establishment of consumer / farmer
market .
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Power to grant exemption from
market fee by the State Government.
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Setting up of separate Market
Extension Cell in the Board,
establishment of State Agricultural
Produce
Marketing
Standard
Bureau.
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Arunachal Pradesh, Assam, Gujarat,
Goa, Himachal Pradesh, Karnataka,
Madhya Pradesh (can be done under
the
by-laws),
Maharashtra,
Nagaland, Rajasthan,
Sikkim,
Tripura, Punjab (only enabling
provision), UT of Chandigarh (only
enabling provision) and Jharkhand.
Andhra
Pradesh,
Chhattisgarh,
Gujarat, Goa, Madhya Pradesh,
Maharashtra, Nagaland and Sikkim,
Himachal Pradesh.
Nagaland, Sikkim and Karnataka.
Salient Features of Model Rules

Model Rules Based on Existing Rules

Chapter-III – Appointments, Composition and Elections to Market
Committee (Rule 5-12).
Chapter-V – Conduct of Business, Powers and Duties of Market
Committee. (Rule14-38).
Chapter-VII – Regulation of Trading (Rule 49-74).
Chapter- VIII- Levy of Market Fees and its Collection (Rule 75-81).
Chapter- X- Market Committee Fund, Budget and Accounts
(Rule 88-104).
Chapter- XI- Constitution and Functioning of State Agricultural
Marketing Board (Rule 105-113).
Chapter-XII –Capital Works of the Market Committee (Rule 114).
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Salient Features of Model Rules

Model Rules under New Provisions
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Chapter-IV – Special Market/Special Commodities Market (Rule13).
Rule 15 – Powers and Duties of Market Committee.
Rule 27 – Promotion of Grading Services.
Chapter- VI - Contract Farming (Rule 39-48).
Rule 75 (1) - Single Point Levy of Market Fees.
Chapter IX – Establishment and Functioning of Private Market/ EMarket, Consumer/Farmers Market and Direct Marketing (Rule 82 -87).
Rule 113 – Establishment of Agricultural Produce Marketing
Standards Bureau.
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Status of Amended APMC Rules
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Rules not notified in many States
for amended provisions - Notified only
in Andhra Pradesh, Rajasthan, Maharashtra,
Orissa, Himachal Pradesh, Karnataka,
Madhya Pradesh (only for special license for
more than one market) and Haryana (only for
contract farming).
These amended Rules also vary in contents
and coverage across States.
Essentials of Marketing Information
Accuracy
Availability
Does AGMARKNET
fulfill these ?
Applicability
Analysis
Marketing Research And Information Network (AGMARKNET)
Present Status
 Coverage - 3024 markets (46% of total about Agricultural Produce Wholesale
Markets); ~ 300 commodities.
 ~ 1700 markets have started reporting data; ~700 markets reporting data on daily
basis (Markets operate on daily / weekly/ bi-weekly/ seasonal basis)
 Portal service includes country-wide information on commodity prices and arrivals,
Grades and Standards, Commodity Profiles, Market Profiles, Atlas, Research Studies
etc.
 Dissemination in 10 local languages besides English.
 Present delivery channels: Internet, Doordarshan, few newspapers, Kissan Call Centre
(Toll free no. 1551),
~ 100 kiosks installed by IFFCO in rural areas;
 Country-wide sensitization/awareness programmes being organized through
MANAGE and SAMETIs; ATMAs; AGMARKNET Yatra organized in MP and being
encouraged in other states.
Measurable outcome of the Project (Impact)

In short AGMARKNET initiative has achieved:
•
A national database comprising daily market information in respect of about 300
commodities and 2000 Varieties and more than 3000 markets to facilitate agricultural
marketing research and planning.
•
A unique single Window Service to access information needs of multiple
stakeholders in respect of various markets spread across the country.
Information generated from the project is being used by Farmers, Exporters,
traders, Agri-business firms, researchers, Banks, National Commodity Exchanges.
Apart from farmers, user community includes prominent entities like World Bank, US
Deptt. of Trade and Commerce, Reliance Industries, ITC, Cargill,
PricewaterhouseCoopers, Harvard University, ICICI, HDFC, SBI, Yes Bank, M&M,
MMTC, National Commodity Exchanges, IITs, IIMs, NCAER, IFFCO, Newspapers
like Agri-Watch, NGOs like CHIRAG in Uttarankhand, Reuters, T.N. Agricultural
University, IFPRI, etc.

AGMARKNET- Problems Specific to States

States with inadequate
Computer Connectivity
& Data Reporting:
Bihar(35%,100%)
Gujarat(52% & 47%)
Haryana(61% & 57%)
J&K(63% & 34%)
Kerala(46% & 39%)
U.P. (64% & 40%)
West Bengal (76% & 63%)

States with inadequate
Data Reporting:
Madhya Pradesh (49%)
Tamil Nadu (53%)
Arunachal (100%)
Mizoram (22%)
Nagaland (100%)
Sikkim ( 28%)
Rest NER States (<50%)
Marketing Research And Information Network
(AGMARKNET)
Future Plans
Bottlenecks

Remaining wholesale markets (about
3500) and Village markets (about
21,000), which cater to small and
marginal farmers, not covered in the
project due to limited resource

Low awareness level at grassroots

Inadequate forward linkages for
delivering market information at the
grassroots

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Inconsistent reporting and data
quality issues by some markets
localization of portal contents

Wider
dissemination
by
collaborating
with
CSCs,
FMC(display boards at markets),
Mass Media Scheme of DAC,
Newspaper
agencies,
telecom
operators (for delivery through SMS)

Extensive publicity campaigns at
grassroots

Dissemination
languages

Pursuing states for market level
computerization
to
bring
transparency in market functioning.
in
key
local
Issues for discussion

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NDC has resolved to Encourage development of Modern Markets by
completing the process of amending APMC Act and notifying Rules by
March, 2008.
Some States have made only partial amendments- adversely affecting
implementation of reform linked Schemes.
Rules have not been framed in majority of States- hindrance for new
entrepreneurs to set up markets.
Regular
information
to
DMI/COSAMB
in
any
new
interventions/improvements on market legislations brought out by States.
Clear demarcation of functions of DOM and SAMB.
Strengthening the role of COSAMB for proper Coordination and sharing
of information relate to agricultural marketing with others.
Regular Reporting of data at AGMARKNET.