Agri reforms: APMC has outlived its purpose, use e-NAM for price discovery, says FM Sitharaman

FE Bureau

Finance minister Nirmala Sitharaman on Tuesday said the Agricultural Produce Marketing Committee (APMC) law had outlived its utility and states should adopt the electronic-National Agriculture Market (e-NAM) system to offer farmers a better platform for price discovery.

Highlighting the PM-Kisan model for the direct benefit transfer, she also said that the large-scale usage of Aadhaar had helped curb pilferage of incentives to the farmers.

"E-NAM has been pushed very much by the central government. We will ensure that states are cajoled to reject the APMC Act, which had served its purpose," the FM said.

The FM was addressing the World Congress on Rural and Agri Finance, hosted by Nabard here. Today, there are various difficulties associated with APMC law, because of which farmers are not getting fair value for what they grow, she said.

The e-NAM is an online trading platform for agricultural commodities across states. Although this has been tried in a limited scale in states like Haryana and Maharashtra, the objective of empowering farmers with access to markets beyond their proximate mandis and even to those located in other states is yet to be met.

Last year, as part of its efforts to reform marketing of farm produce, the government accorded accredited warehouses the status of mandis that are being linked to the online e-NAM platform to help farmers get better market access and realise higher returns. FE reported earlier that Maharashtra's 60 APMCs, which are already part of the Centre's eNAM platform, will soon move towards inter-state trade of farm products with access to markets in Telangana, Andhra Pradesh, Madhya Pradesh, Tamil Nadu and Gujarat.

However, even e-NAM has not taken off the desired way, with states like Haryana having included the government’s procurement operations to the sales data under e-NAM to show inflated numbers.

The Centre came out with a draft model APMC law in 2003 and has been pushing for its enactment by states. Even experts have long advocated the dismantling of the APMC Act in states to have competitive markets for agricultural produce which the farmers could get unhindered access to. However, while around two dozen states have enacted the model APMC law, though with some modifications, others are reluctant to replace their existing legislation.

Even where the model APMC law is supposedly adopted, the old, archaic law still continues to govern the behaviour of market participants. As Ashok Gulati, chair professor of agriculture at ICRIER, has pointed out: "The system kept suffering from highly fragmented markets with insufficient infrastructure; levies and intermediation fees remained high and uneven across states; APMC licensees monopolised trade, leading to rent-seeking and lower share of farmers in the selling price."

Thus, the unshackling of farmers from the organised trade that exercises control on designated APMC mandis remains a herculean task. In fact, last year, Maharashtra did a U-turn within a month of removing all farm produce, including livestock, from the APMC purview through an ordinance. Bihar has long abolished the APMC Act but didn’t come out with a suitable to attempt such a comprehensive APMC reform.

According to the Dalwai Committee Report, there are close to 29,547 marketing points in the country. Of these, 22%, or 6,615, are regulated markets under the APMC and 22,932 are regional periodical markets (RPMs).

Stressing that the Centre had put rural and farmer development on a larger map, Sitharaman said the government was aiming at setting up about 10,000 farmer produce organisations (FPOs), which was announced in the Budget for 2019-20. She also asked Nabard to increase the presence of FPOs in Jammu and Kashmir by focussing on helping farmers market saffron, peach and walnut for better prices.

On empowering self-help groups (SHGs), the finance minister said the Budget announcement of Rs 1 lakh to each of these groups would help build growth momentum in rural areas. In the 2019-20 Budget, she had announced that one woman in every SHG would be able to avail of a loan up to Rs 1 lakh under the MUDRA Scheme.

Sitharaman also announced that the Centre would set up a fish processing centre in coastal areas, which would not only help meet nutritional needs of people but also realise better value for their products from the export market.