APMC changes stuck since 2003, Rahul plan to cut prices stares at hurdles

Rahul GandhiRahul Gandhi

Congress vice-president Rahul Gandhi has directed party CMs to exempt fruits and vegetables, which have contributed extensively to the persistent food inflation, from the purview of the Agricultural Produce Marketing Committee (APMC) Act. However, ensuring this so as to make any impact before the 2014 elections may prove easier said than done.

The archaic APMC provisions virtually restrict agricultural trade to within the confines of state-regulated mandis. Anyone other than a farmer needs a licence to trade in agricultural commodities there. Over the years, traders holding these licences have come to function as "cartels", fixing prices of the produce procured from farmers through an opaque system and maximising their gains.

The Centre's attempt to reform this through a model APMC Act circulated to states in 2003 has achieved little success as agricultural marketing is a state subject under the Constitution. Several appeals by Prime Minister Manmohan Singh to state governments to reform agricultural marketing have gone unheeded.

Rahul's suggestion may also face resistance given the ties that have developed between the political class and traders as well as between state governments. If traders will oppose a move that seeks to demolish their monopoly, state agricultural marketing boards will be averse any blow to the established network of mandis, as the transactions there contribute to their revenue.

Rahul's directive, in a way, seeks to allow traders without licences in mandis, allowing retail chains, aggregators and processors to source fruits and vegetables directly, bypassing the intermediaries. This is expected to result in more competition for the farm produce, benefiting farmers, and by making pricing more transparent, eventually the consumers. Fruits and vegetables, in particular, have several layers of intermediation between the producer and consumer.

"APMCs have been restricting agricultural trade. Most of the traders at mandis have got warehouses and resort to hoarding to maximise profits. Through cartelisation, they fix prices. Mandi tax and other levies in the name of development also add up to the cost for consumer," says Vijay Sardana, a Delhi-based agri-business expert.

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