9th February – How to weaken the Mandi monopoly?
The Maharashtra government’s recent amendment of the Maharashtra Agricultural Produce Marketing (Development and Regulation) Act, 1963, aims to bring the state’s agricultural economy up to speed.
Details about the amendment –
- In 2016, the Maharashtra government delisted horticultural produce like fruits and vegetables from the purview of APMCs.
- It has now allowed the farmers to trade in the open market for all produce and livestock.
- APMCs’ authority to regulate sales and levy a cess, which had earlier covered all activity in the talukas, has now been restricted to “principal market yard, sub-market yard and market sub-yard”.
Need for the change –
- The extortioner nature of the mandi system is an open secret.
- The Dalwai Committee on Doubling Farmers’ Income, set up in 2016, has noted that farmers’ share in consumer prices range from as low as 15% to an anaemic 40%.
- Cartelisation by middlemen and traders prevents price discovery mechanisms from functioning in mandis.
- Poor mandi infrastructure increases the problem as only a quarter of them have common drying yards, less than a third have grading facilities and less than a tenth cold storage. It leads to post-post-harvest losses in around 6-18 percent range.
- All this leads to farmers demanding higher minimum support prices (MSP) which leads to additional burden on the fiscal capacity of the state and increases inflationary pressure on the economy.
It will dismantle APMC monopoly and open up the state’s agricultural sector to private actors.
What needs to be done?
- The Centre’s Model Agricultural Produce and Livestock Marketing (Promotion and Facilitation) Act, 2017 attempts to bring private actors into the sector to provide competition for APMCs.
- As long as agricultural commodities remain within the ambit of Essential Commodities Act, corporates will face major disincentives for investing and trading in them. Union Government needs to remove agricultural commodities from ECA.
- It makes little sense for agricultural markets to remain constrained by state boundaries when the goods and services tax has created a common market in other sectors.
- The lack of basic and agricultural rural infrastructure makes farm gate sourcing and storage a costly proposition—one that may well lead private markets, companies and the like to rely on the same old middlemen cartels. It needs to be upgraded to ensure private participation.
Given that agricultural reforms are not easy due to political dynamics in the state level politics, the Maharashtra government must be lauded to implement such reforms. Hopefully, more states would follow the suit.
Source – Livemint
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