Role of Market Prices in Indian Agriculture Market
In India, the agricultural marketing sector is catching eyes from all over and has been a prime subject of discussion for different intellectuals. Disagreements begun as soon as the government decided to implement schemes that double the farm income by 2022.
As proposed by some agriculture experts, it is important to bring agriculture marketing into the Concurrent or Union list to benefit farmers. But this move has been criticized heavily by many.
If the above stated can surely benefit farmers, why are many opposing the implementation of the move? The proposal to shift agriculture marketing from state list into Concurrent or Union list, has been accepted by many states in the nation. Some major states where agriculture is vast and important are resistant to the shift. They consider this shift will decline the agriculture economy and the practice is opposite to spirit of cooperative federalism.
In a situation where agriculture market has no boundaries, farmers need a pan-India operation in order to meet the demand all over India. The APMC — Agriculture Produce Marketing Committee Act 2017 model has also been started by the ‘Committee on Doubling Farmers Income’ which has some specific responsibilities.
- To facilitate single point levy of taxes
- To promote direct interface between farmers and end users
- To give freedom to farmers to sell their produce for better prices
If states in India oppose a committee that has a better vision to improve farmer income by expanding operations beyond a local mandi, the most affected would be again the farmers themselves.
How Important is Agriculture Market?
Situation Assessment Survey of farmers’ households and Cost of Cultivation Survey data reveals that the country’s food production has increased tremendously from 51 mn tons in 1950–51 to about 252 mn tons in 2014–15. But there was no substantial growth in terms of farmers income. The NCF 2006 (National Commission on Farmers) and NCA 1976 (National Commission on Agriculture) highlighted that higher quantity of produce would not provide higher income to farmers if it is not marketed well.
Farmers dumping their bumper produce (tomatoes, onions) and emptying of milk cans into drains is a perfect example of the above statement. The excess produce can easily be transferred to the deficit areas if effective marketing solutions can be implemented. Schemes that contribute to market integration that offers a viable solution to the paradox of plenty, better farmer income can be witnessed.
Present Agricultural Market Scenario
The participation of farmers in agriculture markets is limited to only local mandis. The farmer share in consumer’s price is very low and it generally varies from 15–40%. The middlemen has higher share in the agriculture market involvement and that leads to low farm income and profitability for the farmer.
In a current scenario, the agriculture market is dominated by middlemen and commission agents. In Delhi, commission agents charge fees ranging from 6%–15%. Where as in Punjab, there are as many as 22,000 commission agents and innumerable middlemen in each market.
Some reports by experts also state that open auction platforms exist only in two-thirds of the regulated markets and one-fourth have common drying yards. Cold storage units exist in less than one-tenth of the markets and grading facilities in less than one-third. Electronic weigh-bridges are available only in very few markets. Due to lack of proper market and reach farmers have no choice but to demand higher minimum support price (MSP) and procurement.
Digitizing Agriculture Markets Can Help
Production and Marketing should march together to benefit farmers and consumers. The prime power to decide when, to whom, where and at what price to sell the produce should lie with the farmer. The system that exists between the farmer and the end consumer should be scrapped. Innovative market reforms need to be introduced in order to address the food inflation caused by seasonal spike in prices of perishable commodities.
Almost 40% of all fruits and vegetables are lost annually in India between the grower and the consumer mainly due to lack of storage facilities, a weak transportation system and bad roads. Climate change is one more factor that worsens the situation. Primarily due to paucity of funds and technology, states alone cannot revamp the agricultural marketing sector. Private investment on a massive scale needs to be invited to upgrade and build large storage and warehousing systems that are climate resilient. India will achieve food security only when the income of farmers is secured and doubled.
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