EXPERT COMMITTEE REPORT
P R E F A C E
1.
2. As the earlier marketing system was developed in the context of a planned economy afresh approach to marketing is necessary in the atmosphere of liberalization and globalization. The National Agricultural Policy indicates the need for new demand driven marketing set up. The Expert Committee was therefore appointed to suggest ways and means to meet this new challenge through strengthening and developing agricultural marketing system in the country.
3. The National Agriculture Policy (NAP) envisages promotion of demand driven agriculture growth catering to domestic as well as export markets. As the efficient agricultural marketing system lies at the core of agriculture growth, the Government of India constituted an Expert Committee under my chairmanship to review the present system and suggest ways and means to strengthen and develop it. The order of the Government of India regarding constitution of the Committee and its Terms of Reference is at Annexure-I & IA.
4.
The
Committee worked through 4 Working Groups which dealt with TOR I and II; III,
IV; and V, VI, VII respectively. TOR VIII was common to all The Working Groups were headed by Dr.
B.D.Pawar, Shri G.Ramachandran, Prof. S.S.Acharya and Shri T.R.Verma
respectively. It held three meetings of each of the Working Groups and four
meetings of the full Committee. The present report is based on deliberations
during these meetings. The Committee wishes to place on record appreciation
for efforts of the conveners of the Working Groups for their contribution and
support. The Committee expresses its
thanks to all of its Members for their support and guidance. Particular thanks are due to Dr. S.L.Bapna of
IIM Ahmedabad and Sh. A.D. Rane of R.B.I. Munbai for their fruitful
participation in deliberations. Shri M.K.Mandal, AMA to the Government of India
was associated as Member Secretary of the Committee till
5. The Committee submitted its Interium report on 10th April 2001as desired by the Honourable Union Minister of Agriculture. The Committee is grateful to Hon’ble Union Minister of Agriculture Sh. Nitish Kumar, Minister of State for Agriculture Sh. S.Y. Naik and Sh. J. N.L. Srivastava, Secretary to GOI (DAC) for their guidance and contribution from time to time.
6. The Committee expresses its thanks to Hapur Chamber of Commerce and Shri D.S.Kolamkar, Director, Forward Market Commission, Mumbai for fruitful discussions on the subject of forward and futures markets in Agricultural products. The officials of NIAM and DMI extended wholehearted cooperation and support to the Working Groups and Expert Committee during the deliberations. The committee recognises sincere and hard work put in by Sh. G.H. Dhankar, Deputy AMA, Dr. Kamal Mathur, Dr. M.S.Jairath and Dr. Hema Yadav.
7. I hope that the report will be useful to agricultural marketing policy planners and practitioners in the Centre and the States in initiating measures to strengthen and develop agricultural marketing in the country to meet the challenges of new economic order.
Dated 29th June (Shankerlal Guru)
Chairman
SUMMARY & RECOMMENDATIONS
1. Government is
promoting organized marketing of agricultural commodities in the country
through a network of regulated markets.
Most of the state Governments and
2. Regulated
markets have helped in mitigating the market handicaps of producers/sellers at
the wholesale assembling level. But, the rural periodic markets in general, and
the tribal markets in particular, remained out of its developmental ambit. It was envisaged that physical markets with
facilities and services would attract the farmers and the buyers creating
competitive trade environment thereby offering best of the prices to the
producers/sellers.
3. The
Institution of regulated market has, however, achieved a limited success. These
markets were supposed to ensure smooth and orderly development of
agri-marketing by ensuring fair play of trade practices and market forces. Over
a period of time these markets have, however, acquired the status of
restrictive and regulated markets, providing no help in direct and free
marketing, organized retailing, smooth raw material supplies to agro –
processing, competitive trading, information exchange and adoption of
innovative marketing systems and technologies. Monopolistic practices and modalities
have prevented development of free and competitive trade in agri- marketing,
future markets, use of latest technologies in post harvest technology and
handling exports, agro based industries, warehousing etc. Now these markets
have failed in containing the scenarios of plenty’s and scarcities.
4. An efficient
agricultural marketing is essential for the development of the agricultural
sector. In as much as it provides
outlets and incentives for increased production, the marketing system
contributes greatly to the commercialization of subsistence farmers.
World-wide, Governments have recognized the importance of liberalizing
agricultural markets. Government policy
has to effectively address issues of marketing liberalization and help to
overcome the constraints faced by various organizations including private
sector involved in agri-marketing. The ever increasing production, spread of
latest technologies, changing socio – economic environment, increasing demand
for downsizing the distribution chain and reducing the margin between farmers
and ultimate consumers, challenges emerging out of liberalization and
globalization in the post WTO period requires a vibrant, dynamic and assimilative marketing structure and system.
5.
In promoting vibrant competitive marketing systems,
Government need to examine all existing policies, rules and regulations with a
view to remove all legal provisions inhibiting free marketing system. Today,
State Governments alone are empowered to initiate the process of setting up of
a market for certain commodities, which are regulated and for certain areas, in
which the Regulation is enforced. These provisions will have to be replaced by
providing an omnibus provision that anybody can set up a market, provided
minimum standards, specifications, formalities and procedures which may be let
down by the Government of India are complied with. The Government of Karnataka
has set the ball rolling by amending its Act to allow the National Dairy
Development Board to set up wholesale fruit and vegetables market at
6.
The institution of regulated markets, set up to
strengthen and develop agricultural marketing in the country has achieved a
limited success. The restrictive legal
provisions did not augur well with competitive market structure. Promoting
competition in the trade and facilitating farmers with supporting services like
grading, standardization, storage with pledge finance and facilities in the
markets have become secondary activities. Funds from the Agricultural Marketing
Boards have been siphoned off in many states to Public Ledger Account by the
State Authorities. Consequently, the
modernization/infrastructure development conducive to operational efficiency of
the markets has suffered heavily. The
Committee recommends that by an appropriate amendment in the Act the
utilization of funds by the market committees and the Marketing Boards for
these activities may be made mandatory.
7.
The spot markets, have not been linked with the
forward and future markets to receive price signals. The futures trading in
agricultural commodities is also regulated by the Government. The linkage
between the spot and futures markets seems to be poor due to domination of the
speculators. Government has, to continue
its efforts to strengthen and institutionalize commodity exchanges to instill
confidence and awareness among market players.
8.
There is an imperative need to make Government
administered marketing organizations administratively viable and managerially
competent in keeping with liberalized trade atmosphere. The marketing activities are many-folded and
need liaison and collaboration with related organizations. Market committees including sub-yards, should
be headed by professionals. Existing
Secretaries need to be trained in professional management of the markets. The functions of APMC and Marketing Boards
may have to be remodeled for this purpose.
9. The nature of legal framework within which
agricultural markets operate has a fundamental effect on the functioning of the
agricultural marketing system. Legal reforms can play an important role in
making the marketing system more effective and efficient by removing
unnecessary conditions and by establishing a sound framework to reduce
uncertainty of the market. A review is, therefore required in respect of all
laws which regulate participation in market such as registration/licensing,
commodities traded, controls on packaging and labeling, laws affecting market
place, laws affecting supply including controls on movement of produc and
volume of commodities traded, laws relating to access to credit and capital
dispute resolution mechanism.
10.
The Essential Commodities Act, 1955 which has
resulted in restrictions on storage and free movement of stocks, initiative by
the trade in innovation and investment, should be repealed to make way for play
of free market forces in real sense. The
Committee recommends that a Task Force be set up under the Ministry of
Agriculture, Department of Agriculture & Cooperation to undertake a review
of all marketing legislations, policies and programmes and suggest various
reforms in the statutory arrangements relating to agricultural marketing as
well as policies and programmes for development and strengthening of
agricultural marketing with specific reference to needed investment, package of
incentives and easy and adequate marketing credit.
11.
Direct marketing enables farmers to meet the specific
requirements of wholesalers from the farmers' inventory of graded produce and
of retail consumers based on consumers' preferences, thus enabling farmers to
dynamically take advantage of favourable prices and improve their net margin.
It encourages farmers to undertake grading of farm produce at the farm gate and
obviates the necessity of farmers to haul produce to regulated markets that are
not necessarily spaced on the principles of efficiency. Direct marketing thus
enables farmers and buyers to economize on transportation costs and to improve
price realization considerably.
12.
The Committee suggests promotion of direct marketing
as one of the alternative marketing structure that sustains incentives for
quality and enhanced productivity, reduce distribution losses, improving farmer
incomes with improved technology support and methods. The market will operate
outside the purview of the Agricultural produce Marketing Act and will be owned
by professional agencies in private sector, wholesalers, trade associations and
other investors. The government’s role
should be that of a facilitator rather than that of having control over the
management of the markets.
13.
Direct marketing by farmers to the consumers was
experimented through Apni Mandis in
14.
The similar logic holds good for consumer
organizations also who can procure directly from producers and distribute to
the consumers commensurate with their purchasing powers. The Government should support these
organizations with schemes like providing back ended incentives for
refrigerated as well general transport, setting up of grading and packing houses,
credit at low interest etc., till they become financially self-sufficient on
commercial lines.
15.
Direct marketing through SHGs or informal groups,
NGOs, cooperatives, Farmers Associations, Companies, partnership, joint
ventures may be encouraged by government to various policy back up and
programmes. These organizations may be encouraged to create and manage markets
physical as well as futures. The cooperatives however, will have to be freed
from the shackles of politician and bureaucrats.
16.
As another form of direct marketing, the unemployed
youth could be involved in procurement of orders and supply of graded and
packed products to different city dwellers.
The youth could be trained in marketing practices of procuring products
and supplying them. The financial
assistance from the public sector to such ventures would generate
entrepreneurship and provide profitable employment to the younger
generation. They could be given
assistance in the form of working capital to start the enterprise along with the
necessary agri-business training.
17.
The use of information technology in agri-marketing
has become indispensable. Therefore encouragement may be provided to generate
and host useful portals, websites, databases, information packages and other
soft wares, generic as well as customize on agricultural marketing. Info kiosks may be encouraged to be set up in
the markets, spot as well as futures, farmers organizations, Associations of
traders and other functionaries for exploiting the opportunities of information
revolution, especially for online demand of different products; product
specifications with regard to quality, pack size, packaging material, quantity
and the time frame of supply; the transport cost involved and the marketing
charges likely to be incurred in the market where the goods are to be
delivered; facilities available to the farmer in the buying market; Re-handling
of the produce, if necessary, in the supplying market to suit to the
requirement of the buyer market; the rules and regulations of the destination
market, if it is located outside the state at distant place, and other specific
information as may be conducive for the seller to transact the business with
the purchasers; and the legal provisions related to storage, transportation, phyto-sanitary
requirements etc.
18.
Forward contract
may well be regarded as direct and alternative marketing facilitator. With the
initiation of the liberalization process in India, interest in futures markets
has been revived for their price risk management and price discovery roles, as
well as handling the situation of plenty’s and scarcities. In the country currently, futures contracts
are traded in nine commodities in 20 commodity exchanges. It is suggested that
more and more commodities be added to facilitate competitive and free marketing
system.
19.
A recent study conducted by the IIM, Ahmedabad
has indicated that the performance of the Indian commodity futures markets is
varied across the commodities, exchanges and contracts. They are deficient in several aspects such as
infrastructure, logistic, management, linkages with financial institutions,
reliability, integrity and an efficient information system which do not
encourage a large group of the market players in the commodity sector to trade
in this market. Government has,
therefore, to continue its efforts to strengthen the exchanges and to instill
confidence and awareness among market players.
20.
Poor credit
flows have had an adverse effect on the development of agricultural marketing
systems in the country. Certified
warehouses and a system of negotiable warehouse receipts could lead to improved
credit delivery, better loan recovery and convenience in asset management. The
existing Government warehousing corporations should play a leading role in the
development of warehousing. However,
they can only cover part of the field, which should be opened up to private
operators, particularly those who already provide storage services. The
institutionalization of the warehouse receipts system through the commodity
exchanges is most likely to yield the best results in the context of promoting
and propagating warehouse receipts, in particular electronic warehouse
receipts, and a national system of warehouse receipts.
21.
Pledge financing
enables the usage of inventories of graded produce as collateral for accessing
credit from the organized credit market at cheaper rates of interest that
reflect the lower credit and collateral risk, thus enabling farmers to
dynamically take advantage of favourable prices and improve their net margin.
It enables farmers to hold inventory of graded produce under favourable storage
conditions and standardized preservation under supervisory conditions; promotes
rural godowns and warehousing. It also advances grading of farm produce to the
farm gate, thus enabling farmers to improve price realization considerably;
identifying preserved storage closer to farms.
22.
Produce market
loan for a period up to six months to farmers availing crop loans up to Rs. One
lakh are reckoned as priority sector advance. Banks are financing Artiya’s for
provision of inputs to farmers. Finance to wholesaler / traders is not treated
as agricultural finance. Loans for construction/ running storage facilities are
already included under priority lending. It is suggested that the existing
limit of priority sector advance should be revised upward suitably taking in to
consideration innovation in agricultural sector in the post WTO regime. The
credit flow to the agricultural marketing is very meager. The banking environment
and lending policies and programmes for financing is not found conducive for
the increased capital needs of agricultural marketing. Therefore government is
requested to design full fledged agricultural marketing credit policy
considering the requirement of increased production, market innovations,
technologies and socio-economic changes with specific reference to post WTO
regime.
23.
Market
infrastructure is important not only for the performance of various marketing
functions and expansion of the size of the market but also for transfer of
appropriate price signals leading to improved marketing efficiency. High
investment with entrepreneurial skills are required for creation and managing
these infrastructures. Therefore private investment in the market
infrastructure development may be encouraged by modifying various procedure
backed up by package of incentives. Nevertheless, for providing infrastructure
in remote and difficult areas, the public sector would need to continue to play
an important role.
24.
Projections of
production and marketed surplus of various farm products show that even at the
existing marketed surplus-output ratios, the quantities which the marketing
system will be required to handle in future, are quite large. The marketing
system backed by strong, adequate infrastructure is the core content of
agri-marketing. Development of infrastructure with in spot markets and others
places is a huge task. Committee based on the estimates of the State Master
Plan for Development of Regulated Markets found that there is a need of total
investment of Rs 6026 crores.
25.
Apart from
general purpose markets, there is need for developing specialized markets for
fruits and vegetables. It has been
assessed that there are at least 241 such places in the country where fruit and
vegetables markets should be developed.
The investment requirement for fruit and vegetables markets in the
country is around Rs.970 crores.
26.
Rural periodic
market is the first contact point for producer – sellers for encashing his
agricultural produce and buying other goods needed by them. There are in all
27294 rural periodic markets including those for livestock, in the
country. There is urgent need to
develop these rural periodic markets in a phased manner with necessary infrastructural
amenities to have a strong base level link in the marketing chain. The
investment requirement for developing these primary rural market places is
estimated at Rs.2146 crores.
27.
Encouragement by
way of policy back up as well as financial support is recommended for special
type of markets like floriculture, cattles etc. For export promotion and inter
state marketing setting up of 50 mega markets in the country with government
financial support in private, public, cooperative or joint venture is suggested.
Encouragement may be considered for promoting marketing of organically grown
produce, fruits & vegetables, medicinal plants, herbs etc.
28.
Storage
infrastructure is found necessary for carrying the agricultural produce from
production to consuming periods. Country
needs much more storage facility than
what is available now. This is specially
more important for hill and remote areas in several states. For an additional 20 million storage capacity
the investment required is estimated at Rs.5400 Crores. The private sector
needs to be encouraged to enter the storage and warehousing activity and make
investment of this magnitude. Village Panchayats, cooperatives, SHGs and
farmers organizations may be encouraged for undertaking warehousing.
29.
Committee deliberated
various alternative, competitive and affordable preservation and temperature
management technologies for perishables. The Expert Committee recommends
increased use of alternate use of technologies like, Irradiation, Nitrogen fill
packaging, Vacuum packaging, shrimp wrapping and others. However, the Committee
recognize the relevance and utility of cool chains and therefore supports the
government programme of end used subsidies for cold storages. Cold storages are
most important infrastructural need for perishable and semi perishable
commodities which need an immediate attention.
The present storage capacity available is sufficient only for 10 per
cent of total production of fruits and vegetables. In the next 10 years, 15000
cold storage units would need an investment of the order of Rs.27,000 Crores.
The investment should basically be made
by the private sector. In future,
there would be a need for multi-chamber type of cold storage units for various
perishable and other products in the country.
For encouraging private entrepreneurs there is a need to provide
incentives to make the units viable for some initial years.
30.
The country
require reefer containers/vans for transport of perishable items for domestic
and export marketing. At present their
availability in the country is negligible in
comparison to the present production of perishable commodities. For handling the expected higher production
in the next 10 years, at least 3000 reefer containers/vans with a capacity up
to 8 tonnes each would be required. This
would require an investment of Rs.600 crores, which shall be created by
private, cooperative and joint sector sector.
There is a need to encourage the investors in the area by providing
suitable incentives.
31.
There is a need
to create facilities for cleaning, grading and packaging not only in spot
markets but also in the villages from where produce is brought to the market
for sale. There is need to promote
proper packaging after grading so that further chances of adulteration may not
be there. Besides this there is a strong
need to educate the farmers for proper packaging and grading before they bring
the produce to the market. Scientific
packaging should be encouraged at the farmer level through various incentives.
The Expert Committee feels that this is an important activity, and an
investment of Rs.2000 crores should be earmarked for this purpose during the
next 10 years.
32.
With a view to
taking advantage of new international trade environment, there is a need to
encourage export of high value non-traditional products grown in various parts
of the country. The Government of India
(Ministry of Commerce) has announced a scheme of creating Export Oriented
Agri-Zone (EOAZ). It should be promoted by providing institutional and physical
infrastructure in each of these as per the needs of the specific
commodity. In some of EOAZs, there is
also a need to establish what is called Food Parks. In these parks, some common facilities like
electricity and warehouse should be created with central government assistance
which will help in attracting investment by the private sector and the state
government. While most of the investment
should be made by the private entrepreneurs, as a way of incentive, government
should invest in common facilities, and quality certification. The estimated public investment is Rs.200
crores and private investment of around 400 crores on fifty such EOAZs. In identification of EOAZs and
33.
Considering the
rising demand for value added and processed products, there is a need for
enhancing the capacity of agro-processing sector. For attracting private
initiative and investment in food processing, the Government of
34.
At present,
value addition is estimated at only seven per cent and processing only two
percent of the total production.
Within next ten year, there is a
need to increase value addition to 35 percent and processing at least 10
percent. Quality control and standardization
will be extremely important in this endeavour.
The Central government should
encourage a network of food analysis laboratories in the country. This will also be necessary to face
competition from imported processed products.
35.
Presently the
alcoholic beverages based on fruit & vegetables are clubbed with other
alcoholic beverages. Whereas world over
items like wines and beer which are based on fruit & vegetables and have
low content of alcohol (ranging below 11-12%) are considered as items of food
and are promoted as health drinks. This sector has not developed in
36.
The Word
“Plantation Crops” as mentioned in some labour laws and Land Ceiling Act has a
rather limited meaning pertaining mainly to coffee, tea, rubber, etc. If plantation is used as generic term for an
advanced form agriculture where various types of management from the selection
of land, selection of species to be grown, the financial support, the
management of labour, the processing & marketing are all done at a higher
level than what is done for ordinary agricultural crops, the horticulture is
bound to get a fillip. The existing
legal frame work will open new avenues for development of entire horticulture
sector if production of fruit & vegetables, medicinal & aromatic
plants, spices, is also brought under the definition of plantation.
37.
NIAM should
become ‘Centre of Excellence’ for Asian Region and be headed by Technocrat,
Marketing Practitioner, Academician of national/international repute. Training
in agricultural marketing should be strengthened and NIAM should take active
stance in the programme. Training modules of different duration should be
designed for farmers, NGOs, co-operatives, extension workers, development
functionaries, PRI representatives, development administrators, people’s
representatives and policy makers.
38.
In
39.
Considering the
limited reach of public extension service, it is felt that privatization of
extension services with appropriate financial backup from the public sector is
considered more appropriate and practical.
The NGOs, Cooperatives, Trade Associations, Private Limited companies,
and corporate bodies should be allowed and encouraged to undertake marketing
extension. To facilitate private
agencies to undertake extension programmes on regular basis for the country as
a whole, a 24 hours TV Kisan Channel on Doordarshan is necessary. The Kisan
Channel would be best visual media to educate farmers by public as well as
private agencies for both agricultural as well as marketing extension service.
40.
The agricultural
marketing research which is becoming increasingly important has received
inadequate attention in the past. There has been a need to set up a liaison,
linkages amongst the research activities findings and the field position. The
SAUs and the Regional & Other Centres of ICAR should be given a mandate for
applied research in agricultural marketing and functioning of these units.
Marketing organizations may be forced to set apart some funds for marketing
research.
41.
The probable
areas for training, research and information technology for producers as well
as different market functionaries could cover agri-business management; WTO and
its implementation; post-harvest management; grading, standardization and
quality assurance; information technology.
42.
The
sensitization programmes for state level, district level, farmers and stake
holders would also be conducted. The programme on post-harvest management for
agricultural, horticultural crops, livestock, marine products, etc. may be
conducted on regular basis. Quality
assurance specially for perishables awareness on standardization and grading
& quality control are the other areas for government support.
43.
Agricultural Produce Marketing requires
connectivity between the market and Exporter/Growers/Traders, through wide area
network (WAN) of National and International linkages in order to provide
day-to-day information with regard to commodity arrivals and prevailing rates
etc., to provide links for online International Market Information; to provide
export-related documentation, to inform about the latest research in
agricultural marketing, packaging/storage etc. related information and to
provide linkage/Connectivity with the World Trade Centre (WTC), APEDA, NIAM, NHB, DMI, IIP, State Agricultural
Marketing Boards, and universities.
44.
Other areas of
importance are a) Setting up of value added networks services, Information
Kiosks in rural areas; b) promotional E- Catalogue for Commodity Profiles; c)
Farmer advisory services in the fields of agricultural marketing, d) National
Atlas of Agricultural Markets.
45. Till today, agricultural marketing in the planning process has not received the required priority, therefore the Committee recommends that highest priority may be given to the needs of agricultural marketing in the planning process. The investment requirement for strengthening agricultural marketing infrastructure comes to Rs. 268742 crores. Most of these would need to come from private sector. This may require a conducive and favourable environment consisting of (a) making complementary investment by the state and Central Government (b) subsidizing a few activities to enable private sector initiatives to attain viability (c) active stance by the Central Government in some initiatives (d) reducing the regulatory control and simplifying the procedure and (e) ensuring adequate credit flow to agricultural marketing activities.
46.
Government is
promoting organized marketing of agricultural commodities in the country
through a network of regulated markets.
Most of the state Governments and
47.
Regulated
markets have helped in mitigating the market handicaps of producers/sellers at
the wholesale assembling level. But, the rural periodic markets in general, and
the tribal markets in particular, remained out of its developmental ambit. It was envisaged that physical markets with
facilities and services would attract the farmers and the buyers creating competitive
trade environment thereby offering best of the prices to the producers/sellers.
48.
The
Institution of regulated market has, however, achieved a limited success. These
markets were supposed to ensure smooth and orderly development of
agri-marketing by ensuring fair play of trade practices and market forces. Over
a period of time these markets have, however, acquired the status of
restrictive and regulated markets, providing no help in direct and free
marketing, organized retailing, smooth raw material supplies to agro –
processing, competitive trading, information exchange and adoption of
innovative marketing systems and technologies. Monopolistic practices and
modalities have prevented development of free and competitive trade in agri-
marketing, future markets, use of latest technologies in post harvest
technology and handling exports, agro based industries, warehousing etc. Now
these markets have failed in containing the scenarios of plenty’s and
scarcities.
49.
An efficient
agricultural marketing is essential for the development of the agricultural
sector. In as much as it provides
outlets and incentives for increased production, the marketing system
contributes greatly to the commercialization of subsistence farmers.
World-wide, Governments have recognized the importance of liberalizing
agricultural markets. Government policy
has to effectively address issues of marketing liberalization and help to
overcome the constraints faced by various organizations including private
sector involved in agri-marketing. The ever increasing production, spread of
latest technologies, changing socio – economic environment, increasing demand
for downsizing the distribution chain and reducing the margin between farmers
and ultimate consumers, challenges emerging out of liberalization and
globalization in the post WTO period requires a vibrant, dynamic and assimilative marketing structure and system.
50.
In promoting vibrant competitive marketing systems,
Government need to examine all existing policies, rules and regulations with a
view to remove all legal provisions inhibiting free marketing system. Today,
State Governments alone are empowered to initiate the process of setting up of
a market for certain commodities, which are regulated and for certain areas, in
which the Regulation is enforced. These provisions will have to be replaced by
providing an omnibus provision that anybody can set up a market, provided
minimum standards, specifications, formalities and procedures which may be let
down by the Government of India are complied with. The Government of Karnataka
has set the ball rolling by amending its Act to allow the National Dairy
Development Board to set up wholesale fruit and vegetables market at
51.
The institution of regulated markets, set up to
strengthen and develop agricultural marketing in the country has achieved a
limited success. The restrictive legal
provisions did not augur well with competitive market structure. Promoting
competition in the trade and facilitating farmers with supporting services like
grading, standardization, storage with pledge finance and facilities in the
markets have become secondary activities. Funds from the Agricultural Marketing
Boards have been siphoned off in many states to Public Ledger Account by the
State Authorities. Consequently, the
modernization/infrastructure development conducive to operational efficiency of
the markets has suffered heavily. The
Committee recommends that by an appropriate amendment in the Act the
utilization of funds by the market committees and the Marketing Boards for
these activities may be made mandatory.
52.
The spot markets, have not been linked with the
forward and future markets to receive price signals. The futures trading in
agricultural commodities is also regulated by the Government. The linkage
between the spot and futures markets seems to be poor due to domination of the
speculators. Government has, to continue
its efforts to strengthen and institutionalize commodity exchanges to instill
confidence and awareness among market players.
53.
There is an imperative need to make Government
administered marketing organizations administratively viable and managerially
competent in keeping with liberalized trade atmosphere. The marketing activities are many-folded and
need liaison and collaboration with related organizations. Market committees including sub-yards, should
be headed by professionals. Existing
Secretaries need to be trained in professional management of the markets. The functions of APMC and Marketing Boards
may have to be remodeled for this purpose.
54.
The nature of legal framework within which
agricultural markets operate has a fundamental effect on the functioning of the
agricultural marketing system. Legal reforms can play an important role in
making the marketing system more effective and efficient by removing unnecessary
conditions and by establishing a sound framework to reduce uncertainty of the
market. A review is, therefore required in respect of all laws which regulate
participation in market such as registration/licensing, commodities traded,
controls on packaging and labeling, laws affecting market place, laws affecting
supply including controls on movement of produc and volume of commodities
traded, laws relating to access to credit and capital dispute resolution
mechanism.
55.
The Essential Commodities Act, 1955 which has
resulted in restrictions on storage and free movement of stocks, initiative by
the trade in innovation and investment, should be repealed to make way for play
of free market forces in real sense. The
Committee recommends that a Task Force be set up under the Ministry of
Agriculture, Department of Agriculture & Cooperation to undertake a review
of all marketing legislations, policies and programmes and suggest various
reforms in the statutory arrangements relating to agricultural marketing as
well as policies and programmes for development and strengthening of
agricultural marketing with specific reference to needed investment, package of
incentives and easy and adequate marketing credit.
56.
Direct marketing enables farmers to meet the specific
requirements of wholesalers from the farmers' inventory of graded produce and
of retail consumers based on consumers' preferences, thus enabling farmers to
dynamically take advantage of favourable prices and improve their net margin.
It encourages farmers to undertake grading of farm produce at the farm gate and
obviates the necessity of farmers to haul produce to regulated markets that are
not necessarily spaced on the principles of efficiency. Direct marketing thus
enables farmers and buyers to economize on transportation costs and to improve
price realization considerably.
57.
The Committee suggests promotion of direct marketing
as one of the alternative marketing structure that sustains incentives for
quality and enhanced productivity, reduce distribution losses, improving farmer
incomes with improved technology support and methods. The market will operate
outside the purview of the Agricultural produce Marketing Act and will be owned
by professional agencies in private sector, wholesalers, trade associations and
other investors. The government’s role
should be that of a facilitator rather than that of having control over the
management of the markets.
58.
Direct marketing by farmers to the consumers was
experimented through Apni Mandis in
59.
The similar logic holds good for consumer
organizations also who can procure directly from producers and distribute to
the consumers commensurate with their purchasing powers. The Government should support these organizations
with schemes like providing back ended incentives for refrigerated as well
general transport, setting up of grading and packing houses, credit at low
interest etc., till they become financially self-sufficient on commercial
lines.
60.
Direct marketing through SHGs or informal groups,
NGOs, cooperatives, Farmers Associations, Companies, partnership, joint
ventures may be encouraged by government to various policy back up and
programmes. These organizations may be encouraged to create and manage markets
physical as well as futures. The cooperatives however, will have to be freed
from the shackles of politician and bureaucrats.
61.
As another form of direct marketing, the unemployed
youth could be involved in procurement of orders and supply of graded and
packed products to different city dwellers.
The youth could be trained in marketing practices of procuring products
and supplying them. The financial
assistance from the public sector to such ventures would generate
entrepreneurship and provide profitable employment to the younger
generation. They could be given
assistance in the form of working capital to start the enterprise along with
the necessary agri-business training.
62.
The use of information technology in agri-marketing
has become indispensable. Therefore encouragement may be provided to generate
and host useful portals, websites, databases, information packages and other
soft wares, generic as well as customize on agricultural marketing. Info kiosks may be encouraged to be set up in
the markets, spot as well as futures, farmers organizations, Associations of
traders and other functionaries for exploiting the opportunities of information
revolution, especially for online demand of different products; product
specifications with regard to quality, pack size, packaging material, quantity
and the time frame of supply; the transport cost involved and the marketing
charges likely to be incurred in the market where the goods are to be
delivered; facilities available to the farmer in the buying market; Re-handling
of the produce, if necessary, in the supplying market to suit to the
requirement of the buyer market; the rules and regulations of the destination
market, if it is located outside the state at distant place, and other specific
information as may be conducive for the seller to transact the business with
the purchasers; and the legal provisions related to storage, transportation,
phyto-sanitary requirements etc.
63.
Forward contract
may well be regarded as direct and alternative marketing facilitator. With the
initiation of the liberalization process in India, interest in futures markets
has been revived for their price risk management and price discovery roles, as
well as handling the situation of plenty’s and scarcities. In the country currently, futures contracts
are traded in nine commodities in 20 commodity exchanges. It is suggested that
more and more commodities be added to facilitate competitive and free marketing
system.
64.
A recent study conducted by the IIM, Ahmedabad
has indicated that the performance of the Indian commodity futures markets is
varied across the commodities, exchanges and contracts. They are deficient in several aspects such as
infrastructure, logistic, management, linkages with financial institutions,
reliability, integrity and an efficient information system which do not
encourage a large group of the market players in the commodity sector to trade
in this market. Government has,
therefore, to continue its efforts to strengthen the exchanges and to instill
confidence and awareness among market players.
65.
Poor credit
flows have had an adverse effect on the development of agricultural marketing
systems in the country. Certified
warehouses and a system of negotiable warehouse receipts could lead to improved
credit delivery, better loan recovery and convenience in asset management. The
existing Government warehousing corporations should play a leading role in the
development of warehousing. However,
they can only cover part of the field, which should be opened up to private
operators, particularly those who already provide storage services. The
institutionalization of the warehouse receipts system through the commodity
exchanges is most likely to yield the best results in the context of promoting
and propagating warehouse receipts, in particular electronic warehouse
receipts, and a national system of warehouse receipts.
66.
Pledge financing
enables the usage of inventories of graded produce as collateral for accessing
credit from the organized credit market at cheaper rates of interest that
reflect the lower credit and collateral risk, thus enabling farmers to
dynamically take advantage of favourable prices and improve their net margin.
It enables farmers to hold inventory of graded produce under favourable storage
conditions and standardized preservation under supervisory conditions; promotes
rural godowns and warehousing. It also advances grading of farm produce to the
farm gate, thus enabling farmers to improve price realization considerably;
identifying preserved storage closer to farms.
67.
Produce market
loan for a period up to six months to farmers availing crop loans up to Rs. One
lakh are reckoned as priority sector advance. Banks are financing Artiya’s for
provision of inputs to farmers. Finance to wholesaler / traders is not treated
as agricultural finance. Loans for construction/ running storage facilities are
already included under priority lending. It is suggested that the existing
limit of priority sector advance should be revised upward suitably taking in to
consideration innovation in agricultural sector in the post WTO regime. The
credit flow to the agricultural marketing is very meager. The banking
environment and lending policies and programmes for financing is not found
conducive for the increased capital needs of agricultural marketing. Therefore
government is requested to design full fledged agricultural marketing credit
policy considering the requirement of increased production, market innovations,
technologies and socio-economic changes with specific reference to post WTO
regime.
68.
Market
infrastructure is important not only for the performance of various marketing
functions and expansion of the size of the market but also for transfer of
appropriate price signals leading to improved marketing efficiency. High
investment with entrepreneurial skills are required for creation and managing
these infrastructures. Therefore private investment in the market
infrastructure development may be encouraged by modifying various procedure
backed up by package of incentives. Nevertheless, for providing infrastructure
in remote and difficult areas, the public sector would need to continue to play
an important role.
69.
Projections of
production and marketed surplus of various farm products show that even at the
existing marketed surplus-output ratios, the quantities which the marketing
system will be required to handle in future, are quite large. The marketing
system backed by strong, adequate infrastructure is the core content of
agri-marketing. Development of infrastructure with in spot markets and others
places is a huge task. Committee based on the estimates of the State Master
Plan for Development of Regulated Markets found that there is a need of total
investment of Rs 6026 crores.
70.
Apart from
general purpose markets, there is need for developing specialized markets for
fruits and vegetables. It has been
assessed that there are at least 241 such places in the country where fruit and
vegetables markets should be developed.
The investment requirement for fruit and vegetables markets in the
country is around Rs.970 crores.
71.
Rural periodic
market is the first contact point for producer – sellers for encashing his
agricultural produce and buying other goods needed by them. There are in all
27294 rural periodic markets including those for livestock, in the
country. There is urgent need to
develop these rural periodic markets in a phased manner with necessary
infrastructural amenities to have a strong base level link in the marketing
chain. The investment requirement for developing these primary rural market
places is estimated at Rs.2146 crores.
72.
Encouragement by
way of policy back up as well as financial support is recommended for special
type of markets like floriculture, cattles etc. For export promotion and inter
state marketing setting up of 50 mega markets in the country with government
financial support in private, public, cooperative or joint venture is
suggested. Encouragement may be considered for promoting marketing of
organically grown produce, fruits & vegetables, medicinal plants, herbs
etc.
73.
Storage
infrastructure is found necessary for carrying the agricultural produce from
production to consuming periods. Country
needs much more storage facility than
what is available now. This is specially
more important for hill and remote areas in several states. For an additional 20 million storage capacity
the investment required is estimated at Rs.5400 Crores. The private sector
needs to be encouraged to enter the storage and warehousing activity and make
investment of this magnitude. Village Panchayats, cooperatives, SHGs and
farmers organizations may be encouraged for undertaking warehousing.
74.
Committee
deliberated various alternative, competitive and affordable preservation and
temperature management technologies for perishables. The Expert Committee
recommends increased use of alternate use of technologies like, Irradiation,
Nitrogen fill packaging, Vacuum packaging, shrimp wrapping and others. However,
the Committee recognize the relevance and utility of cool chains and therefore
supports the government programme of end used subsidies for cold storages. Cold
storages are most important infrastructural need for perishable and semi
perishable commodities which need an immediate attention. The present storage capacity available is
sufficient only for 10 per cent of total production of fruits and vegetables.
In the next 10 years, 15000 cold storage units would need an investment of the
order of Rs.27,000 Crores. The investment should basically be made by the private sector. In future, there would be a need for
multi-chamber type of cold storage units for various perishable and other
products in the country. For encouraging
private entrepreneurs there is a need to provide incentives to make the units
viable for some initial years.
75.
The country
require reefer containers/vans for transport of perishable items for domestic
and export marketing. At present their
availability in the country is negligible in
comparison to the present production of perishable commodities. For handling the expected higher production
in the next 10 years, at least 3000 reefer containers/vans with a capacity up
to 8 tonnes each would be required. This
would require an investment of Rs.600 crores, which shall be created by
private, cooperative and joint sector sector.
There is a need to encourage the investors in the area by providing
suitable incentives.
76.
There is a need
to create facilities for cleaning, grading and packaging not only in spot
markets but also in the villages from where produce is brought to the market
for sale. There is need to promote
proper packaging after grading so that further chances of adulteration may not
be there. Besides this there is a strong
need to educate the farmers for proper packaging and grading before they bring the
produce to the market. Scientific
packaging should be encouraged at the farmer level through various incentives.
The Expert Committee feels that this is an important activity, and an
investment of Rs.2000 crores should be earmarked for this purpose during the
next 10 years.
77.
With a view to
taking advantage of new international trade environment, there is a need to
encourage export of high value non-traditional products grown in various parts
of the country. The Government of India
(Ministry of Commerce) has announced a scheme of creating Export Oriented
Agri-Zone (EOAZ). It should be promoted by providing institutional and physical
infrastructure in each of these as per the needs of the specific
commodity. In some of EOAZs, there is
also a need to establish what is called Food Parks. In these parks, some common facilities like
electricity and warehouse should be created with central government assistance
which will help in attracting investment by the private sector and the state
government. While most of the investment
should be made by the private entrepreneurs, as a way of incentive, government
should invest in common facilities, and quality certification. The estimated public investment is Rs.200
crores and private investment of around 400 crores on fifty such EOAZs. In identification of EOAZs and
78.
Considering the
rising demand for value added and processed products, there is a need for
enhancing the capacity of agro-processing sector. For attracting private
initiative and investment in food processing, the Government of
79.
At present,
value addition is estimated at only seven per cent and processing only two
percent of the total production.
Within next ten year, there is a
need to increase value addition to 35 percent and processing at least 10
percent. Quality control and
standardization will be extremely important in this endeavour. The Central government should encourage a network of food analysis
laboratories in the country. This will
also be necessary to face competition from imported processed products.
80.
Presently the
alcoholic beverages based on fruit & vegetables are clubbed with other
alcoholic beverages. Whereas world over
items like wines and beer which are based on fruit & vegetables and have
low content of alcohol (ranging below 11-12%) are considered as items of food
and are promoted as health drinks. This sector has not developed in
81.
The Word
“Plantation Crops” as mentioned in some labour laws and Land Ceiling Act has a
rather limited meaning pertaining mainly to coffee, tea, rubber, etc. If plantation is used as generic term for an
advanced form agriculture where various types of management from the selection
of land, selection of species to be grown, the financial support, the
management of labour, the processing & marketing are all done at a higher
level than what is done for ordinary agricultural crops, the horticulture is
bound to get a fillip. The existing
legal frame work will open new avenues for development of entire horticulture
sector if production of fruit & vegetables, medicinal & aromatic
plants, spices, is also brought under the definition of plantation.
82.
NIAM should
become ‘Centre of Excellence’ for Asian Region and be headed by Technocrat,
Marketing Practitioner, Academician of national/international repute. Training
in agricultural marketing should be strengthened and NIAM should take active
stance in the programme. Training modules of different duration should be
designed for farmers, NGOs, co-operatives, extension workers, development
functionaries, PRI representatives, development administrators, people’s
representatives and policy makers.
83.
In
84.
Considering the
limited reach of public extension service, it is felt that privatization of
extension services with appropriate financial backup from the public sector is
considered more appropriate and practical.
The NGOs, Cooperatives, Trade Associations, Private Limited companies,
and corporate bodies should be allowed and encouraged to undertake marketing
extension. To facilitate private
agencies to undertake extension programmes on regular basis for the country as
a whole, a 24 hours TV Kisan Channel on Doordarshan is necessary. The Kisan
Channel would be best visual media to educate farmers by public as well as
private agencies for both agricultural as well as marketing extension service.
85.
The agricultural
marketing research which is becoming increasingly important has received
inadequate attention in the past. There has been a need to set up a liaison,
linkages amongst the research activities findings and the field position. The
SAUs and the Regional & Other Centres of ICAR should be given a mandate for
applied research in agricultural marketing and functioning of these units.
Marketing organizations may be forced to set apart some funds for marketing
research.
86.
The probable
areas for training, research and information technology for producers as well
as different market functionaries could cover agri-business management; WTO and
its implementation; post-harvest management; grading, standardization and
quality assurance; information technology.
87.
The
sensitization programmes for state level, district level, farmers and stake
holders would also be conducted. The programme on post-harvest management for
agricultural, horticultural crops, livestock, marine products, etc. may be
conducted on regular basis. Quality
assurance specially for perishables awareness on standardization and grading
& quality control are the other areas for government support.
88.
Agricultural Produce Marketing requires
connectivity between the market and Exporter/Growers/Traders, through wide area
network (WAN) of National and International linkages in order to provide
day-to-day information with regard to commodity arrivals and prevailing rates
etc., to provide links for online International Market Information; to provide
export-related documentation, to inform about the latest research in
agricultural marketing, packaging/storage etc. related information and to
provide linkage/Connectivity with the World Trade Centre (WTC), APEDA, NIAM, NHB, DMI, IIP, State Agricultural
Marketing Boards, and universities.
89.
Other areas of
importance are a) Setting up of value added networks services, Information
Kiosks in rural areas; b) promotional E- Catalogue for Commodity Profiles; c)
Farmer advisory services in the fields of agricultural marketing, d) National
Atlas of Agricultural Markets.
90.
Till today,
agricultural marketing in the planning process has not received the required
priority, therefore the Committee recommends that highest priority may be given
to the needs of agricultural marketing in the planning process. The investment
requirement for strengthening agricultural marketing infrastructure comes to
Rs. 268742 crores. Most of these would need to come from private sector. This
may require a conducive and favourable
environment consisting of (a) making complementary investment by the state and
Central Government (b) subsidizing a few activities to enable private sector
initiatives to attain viability (c) active stance by the Central Government in
some initiatives (d) reducing the regulatory control and simplifying the
procedure and (e) ensuring adequate credit flow to agricultural marketing
activities.
****
1.
INTRODUCTION
1.1 Agricultural Marketing includes the
movement of agricultural produce from farm where it is produced to the
consumers or manufacturers. This covers
physical handling and transport, initial processing and packing to simplify
handling and reduce wastage, grading and quality control to simplify sales
transactions and meet different consumers’ requirements, and holding over time
to match concentrated harvest seasons with the continuing demands of consumers
throughout the year. For the farmer, the
strategic function of the marketing system is to offer him a convenient outlet
for his produce at a remunerative price.
To the consumers and the manufacturers of agricultural raw materials,
assurance of a steady supply at a reasonable price is the vital service. Prices
are determined through free market process by negotiations at rural purchasing,
wholesale and retail stages, and represent a balance between the consumers’
ability to pay and the farmers’ need for incentive to produce. An effective marketing system will be geared
toward expanding the range and types of consumer service, and will thus offer
producers expanding outlets.
1.2 Agricultural marketing also includes
the marketing of production inputs and services to the farmers. Some of these
include fertilizers, pesticides and other agricultural chemicals; livestock
feed; and farm machinery, tools and equipment.
As the mass of small farmers in the developing world becomes aware of
the value of these supplies, the organization of distribution systems adapted
to their needs becomes vital. Through all the stages of marketing, financing
and easy access to credit is vital if goods are to move freely and bargains be
concluded without duress.
1.3 An efficient marketing system is vital to a) provide an incentive to farmer to produce more; b) convey the changing production needs of the economy to producers to enable production planning; and c) foster true competition among the traders and eliminate the exploitation of farmers particularly the small and marginal ones, who predominate agrarian sector in our country. The present Expert Committee has examining the issues related to only output marketing to make suggestions to strengthen and develop agricultural marketing in the country.
****
2.
PRESENT AGRICULTURAL MARKETING SYSTEM
2.1 Agriculture continues to be main stay
of life for majority of the Indian population.
It contributes around 25% of the GDP and employs 65% of the workforce in
the country. Significant strides have been
made in agriculture production during the last 50 years of independence. The agriculture production of food grains
increased from 51 million tones in 1950-51 i.e. before beginning of the 1st
Five Year Plan to 209 million tones in 1999-00. The output of oilseeds went up
to 22 million tones. Similarly, the production of fruit and vegetables also
increased to more than 134 million tones owing to the production efforts
through all these years. The subject of agriculture and agricultural marketing
is dealt with both by the States as well as the Central government in the
country. Balanced regional development
has been essential component of the development strategy and different Five
Year Plans aimed at achieving socio-economic development of the country.
2.2
Predominant Public Sector: Starting from 1951, the different Five Year
Plans laid stress on development of physical markets, on farm and off farm
storage structures, facilities for standardization and grading, packaging,
transportation etc.. Development of
horticulture marketing attracted attention of policy makers during the 3rd
Five Year Plan. The year 1965 witnessed
coming into existence of Central Warehousing Corporation, Food Corporation of
2.3
Free Market Forces: Most agricultural commodity markets generally operate under the
normal forces of demand and supply.
However, with a view to protecting farmers’ interest and to encourage
them to increase production, the Government also fixes minimum
support/statutory prices for some crops and makes arrangements for their purchase
on state account whenever their price falls below the support level. The role of Government normally is limited to
protecting the interests of producers and consumers, only in respect of wage
goods, mass consumption goods and essential goods. It is promoting organized marketing of
agricultural commodities in the country through a network of regulated
markets. To achieve an efficient system
of buying and selling of agricultural commodities, most of the state
Governments and
2.4
With a view to coping up with the need
to handle increasing agricultural production, the number of regulated markets
have also been increasing in the country.
While by the end of 1950, there were 286 regulated markets in the
country. Today the number stands at
7161(31.3.2001). The Central Government advised all the State Governments to
enact Marketing Legislation to provide competitive and transparent
transactional methods to protect the interests of the farmers. Barring a few, most of the States and
2.5
The projections of production and marketable
surplus of agricultural products
(2006 to 2007) are presented in Table –1.
Table
-1
India
|
Commodity |
Marketed
Surplus Ratio (%) |
Production
|
Marketed Surplus
|
||
|
1999-2000
(Estimated) |
2006-07
(Projected) |
1999-2000
(Estimated) |
2006-07
(Projected) |
||
|
Rice |
43.0 |
87.5 |
103.5 |
37.63 |
44.50 |
|
Wheat |
51.5 |
68.7 |
84.3 |
35.38 |
43.41 |
|
Coarse Cereals |
43.1 |
39.2 |
34.4 |
16.89 |
14.83 |
|
Total Cereals |
- |
195.4 |
222.2 |
89.90 |
102.74 |
|
Pulses |
72.4 |
13.5 |
21.0 |
9.77 |
15.20 |
|
Total Food grains |
- |
208.9 |
243.2 |
99.67 |
117.94 |
|
Oilseeds |
79.6 |
21.6 |
33.8 |
17.19 |
26.90 |
|
Groundnut |
68.3 |
5.9 |
11.5 |
4.03 |
7.85 |
|
Mustard & Rape |
84.3 |
6.1 |
8.9 |
5.14 |
7.50 |
|
Other oilseeds |
86.3 |
9.6 |
13.4 |
8.28 |
11.56 |
|
Sugarcane |
92.9 |
315.1 |
352.8 |
292.72 |
327.75 |
|
Cotton |
100.0 |
2.1 |
3.2 |
2.10 |
3.20 |
|
Vegetables |
83.0 |
85.0 |
110.7 |
70.55 |
91.88 |
|
Fruits |
97.0 |
49.5 |
70.5 |
48.02 |
68.38 |
Source:
1.
Market Surplus Ratio – Sub-Group on Estimation of
Marketed Surplus Ratio, Constituted by GOI.
2.
Production Projection – Kumar P. and V.C.Mathur,
“Agriculture in Future: Demand – Supply Perspective for the Ninth Five Year
Plan”, Economic and Political Weekly,
2.6 In
2.7
APMC and Boards: Agricultural Produce Marketing Committees (APMC) are corporate
bodies established under the respective State Agricultural Produce Marketing
Regulations Acts. They are either
elected or nominated by the Government from amongst representatives of agriculturists,
traders and other functionaries and local representatives. All the State Acts provide for constitution
of separate market committees for individual market except in Tamil Nadu where
it is constituted at the district level to administer all the regulated markets
in the district. The market committees
are either controlled by the Director of Agricultural Marketing or the State
Agricultural Marketing Board. States
like
2.8
The Expert Committee observed that both
the State Agricultural Marketing Departments as well as the Marketing Boards
are functionally strong in U.P., M.P. and Rajasthan. In these States, regulatory functions have been
entrusted to the State Marketing Departments while developmental functions are
performed by the State Agricultural Marketing Boards. In Andhra Pradesh, Tamil Nadu and Karnataka,
the Marketing Departments are functionally powerful, but the Boards are very weak
and are more or less advisory in
nature. In
2.9 The
State Agricultural Marketing Boards are represented by both official and
non-official members. There is an imperative need to make the Boards
administratively viable and managerially competent in keeping with liberalized
trade atmosphere. The marketing
activities are many-fold and need liaison and collaboration with related
organizations such as Railway Board, Forward Markets Commissions, Department of
Posts & Telegraphs, Doordarshan, All India Radio, State Planning
Commission/Board, consumers and farmers organisations, ports etc. It is desirable that the State Agricultural
Marketing Board is given appropriate official recognition in these
organizations so as to facilitate presentation of marketing activities and
programmes of the State in their meetings and accelerate the pace of
implementation of these programmes.
2.10 Although, market committees are, by and
large, constituted democratically, they lack in professional management. The marketing manpower is controlled by three
agencies, namely, Market Committee, State Marketing Department and State
Marketing Board. Market Secretaries are
yet to become market managers. The Committee strongly feels that all the market
committees including sub-yards should be headed by professionals. Existing Secretaries need to be trained in
professional management of the markets to facilitate liberalized, competitive
and free marketing system.
2.11 Restrictive
Regulated Markets: The institution
of regulated markets, set up to strengthen and develop agricultural marketing
in the country has achieved a limited success in providing transparent
transactional methods/marketing practices, need based amenities and services
conducive to efficient marketing. The
restrictive legal provisions such as “all agricultural produce brought into or
processed within market area shall pass through the principal market yard or
sub market yard and shall not be bought or sold at any other place within the market
area2” or “no such person shall carry on
business as trader in agriculture produce into market area except in accordance
with the license issued in this behalf by the Market committee3” did not augur well with competitive
market structure. The power of the
market committees to suspend and cancel the license granted to traders has
become an impediment to the free structure. The licensed traders also have not
favored new entrants in the arena to maintain their grip over trade in market
yard. The Agricultural Produce Market Committees have often yielded to
unethical practices, which they were supposed to control and have instead
become monopoly trading grounds. Promoting competition in trade and
facilitating farmers with supporting services like grading, standardization,
storage with pledge finance and facilities in the market yards have become
secondary activities. Even basic function of regulation, proper method of sale,
correct weighment and prompt payment have eluded the market authorities.
State-wise distribution of wholesale and rural periodic markets in the country
have been given at Annexure-II.
2.12 The programme of development of markets
in the country has remained confined mostly at the level of wholesale
assembling markets. The regulated markets
in the country generate income from market fee, license fee, rentals and
miscellaneous income. The rate of market
fee varies from 0.5% to 2% ad-valorum.
The market Committees contribute 5 to 50% of their income to the State
Agricultural Marketing Board, depending on the relevant provisions, for
development of market infrastructure in the State. The Rajasthan Government
recently constituted a separate Market Development Fund, discontinuing the
earlier practice of contribution to the Board by the Market Committees from
their income. While these Boards undertook infrastructure development in
respective States, instances are also common where funds from the Boards have been siphoned off to
Public Ledger Account by the State Authorities.Consequently,modernization/
infrastructure development conducive to operational efficiency of the markets
has suffered heavily.
2.13 The state Governments are empowered to
initiate the process of setting up of a market for certain commodities, which
are regulated and for certain areas, in which the Regulation is enforced. As a
result of this very process of initiation of a market, the service providers
for agricultural marketing do not have any role. Nobody can take initiatives in assessing the
viability and feasibility for setting up the markets equipped with the best
facilities at competitive cost.
Therefore, these provisions will have to be replaced by providing an
omnibus provision that anybody can set up a market, provided minimum standards,
specifications, formalities and procedures are complied with. The purchaser
should not be prevented from buying directly from the farmers. Products which
are not locally grown and which have no substantial marketed surplus need not
be included in notified commodities. Purchasers as well as sellers should be
free to transact anywhere without attracting any of the provisions of APMC
rules and byelaws. The Government of
Karnataka has set the ball rolling by amending its Act to allow the National
Dairy Development Board to set up wholesale fruit and vegetables market at
2.14 Although, technically the farmer/seller
is free to sell his produce in any mandi he likes, practically he has no
liberty to sell his produce in his village or to the retail chain/processor/bulk buyer directly. He has to take his produce to regulated
market where the sales and deliveries are effected. This has hampered development of retail
supply chain and direct supply to the processing, consuming factories or other
bulk purchasers. Wherever there is a
principal market, in the city or in the metropolitan, the sub-market or the
collection center is not permitted, though in recent times “Rythu Bazar” or
“Apni Mandis” or “Farmers’ Mandis” are coming up on the peripheries of the
metropolis, cities and towns. Therefore,
the very basic concept of a single market, as a “principal market” for one
agglomeration, has created monopoly in many respects, resulting a huge power
center with plenty of exploitation practices.
2.15 The experience of the farmers, the
consumers and the trade functionaries indicates that, under the existing legal
provisions, there is no scope for –
a)
direct marketing by the farmers or their groups to
the retailers;
b)
the retailers can not directly approach the farmers
or their groups in their farms or
villages;
c)
the processors find it difficult to procure material
at the production source and hence have to go the Mandis for procurement of the
material;
d)
electronic trading as the marketing includes trade by
“electronic media”, which is subject to the Regulation. Therefore, the electronic media traders have
been shifting to the places, where there is no regulation, or where the
regulation is not enforced. These
markets resultantly have not seen any linkage with “futures” or “commodity
exchanges” so far.
2.16 Licensing:
Functionaries of the market yard such as
commission agent, trader, processor, weighman, surveyor, broker, hamal,
warehouse owner, transporters etc. to function in the area, as well as in the
market or sub-market, are required to
obtain a license. Instead of license, registration with APMC should be enough
for any body to trade/operate in the market.
Licensed functionaries in the markets such as traders, weighman,
mathadis (Hamals), procurers, surveyor etc. have over a period acquired a
monopoly status. New entrants are
normally not permitted at the behest of respective associations and
unions. The monopolies in marketing and
handling have added to marketing costs detrimental to both producers and
consumers. The typical example is that
of transport charge from the principal market (Gultekdi Market yard) in Pune to
various centers in the city. The
transporters in principal market yard, Pune have unwritten agreement that no
outsider would be allowed to enter into transport activity. As a result, transport charges from Pune
Principal Market for a distance of about 3 or 5 kms. are more than transport
from upcountry areas like Solapur,
2.17 The Rules and Bye-laws stipulate lot of
procedures and documentation for licensing.
The documentation mainly consists of Solvency Certificate, Certificate
of good behavior, cash security, Bank Guarantee or third party guarantee, etc.
The License is granted for the area, but they have to operate in the market or
the sub-market. Moreover, the license is
granted for only one year, which has to be renewed. Renewal takes time and business is
hampered. Therefore, only registration
with APMC should be there as has been suggested earlier. As the Rule provides
that no one shall market any declared agricultural produce in the market area,
other than the principal yard or sub-yard.
The very fact of licensing has converted the entire scenario into
handing over the monopoly to those, who have already got the license. The new-comers are normally kept aside on the
ground that there is no potential of additional business. This monopolistic circumstance has caused lot
of hardships to the producers and the consumers. They disallow latest systems of handling, like
cleaning, grading, packaging, weighing, transporting, etc. Their organizations, associations and unions
have become so strong that they can dictate their terms to anybody, including
the Government. Thus, the element of
cost efficiency and competitiveness is lost because of licensing.
2.18
Neglected
Rural Haats: The present haats or weekly bazaars which constitute first
contact point with commercial circuits for the producers have not been provided
with amenities and facilities required for operational, technical and pricing
efficiency. Improvement in the efficiency of the rural markets has direct
impact on farmers’ level of income.
These markets need improved services for users to facilitate marketing
of the local produce, creating an element of market security for the
growers. The rural market can also be
used for effective credit, input marketing and procurement activities. Haats
need to be provided with mobile banks on haat days by Gramin Banks.
2.19 Even though the 73rd
Amendment to Constitution bestowed management of rural markets to village
panchayats, different authorities still continue to own and operate these
markets. Moreover, where these markets
are brought under regulation as sub yards, and have turned to a case of
multiple collection of ground rent, market fee and other charges etc. by
different agencies disregarding their developmental responsibilities. The fees
or other charges collected in these markets are also disproportionate to the amenities
and facilities rendered. The rural periodic markets, besides transacting
agricultural and allied commodities, also perform the function of distribution
of items of daily needs of the rural population. Farmer is a seller, consumer
and even trader in these grass root level markets. 80% of the household income
of the rural masses is estimated to be spent at these markets. Their
development, therefore, with proper operational, pricing and technical
efficiency constitute foundation of integrated market system for distribution
of agricultural and allied produce.
Owing to their financial non-viability, these markets did not receive
adequate attention either from the State or Central Government for their
developmental requirements. Their development should be looked as
socio-economic development as multipurpose growth centers so that these places
could be used for other developmental activities related to health, education,
animal husbandry on days other than haat day and a scheme to this effect in the
sector is, therefore, necessary.
2.20
Multiple Legal Instruments: Apart
from the Agricultural Produce Markets Acts, activities of market functionaries
are regulated by several other legal instruments promulgated by the Central
government and the States. The important
ones are:
-
The Indian
-
Agricultural Produce
(Grading and Marking) Act, 1937, 1986
-
Drugs and Cosmetics
Act 1940.
-
Vegetable Oil
Products (Control) Order, 1947.
-
The Emblems and Names
(Prevention of Improper use) Act 1950.
-
Prevention of Food
Adulteration (PFA) Act, 1954, 1964, 1976, 1986
-
The Essential
Commodities Act, 1955
-
The Sugar Control
Order 1956.
-
The Export ( Quality
Control & Inspection) Act 1963.
-
Fruit Products Order
(FPO), 1965, 1997.
-
Solvent Extracted
Oil, Deoiled Meal and Edible Oil (control) Order, 1967
-
Monopolies and
Restrictive Trade Act, 1969.
-
Meat Food Products
Order, 1973
-
Vegetable Oil
Products (Standards of Quality) Order, 1975.
-
The Packaged
Commodities Order 1975.
-
Standards of Weights
and Measures Act, 1976
-
Pulses, Edible
Oilseeds and Edible Oils (storage control) Order, 1977
-
Consumer Protection
Act, 1986
-
Cotton (Control)
Order, 1986
-
Milk and Milk
Products Order, 1992
-
Bureau of Indian
Standards Act 1986.
-
Jute and Jute
Textiles (Control) Order, 2000.
-
The Trade and
Merchandise Marks Act.
-
The Town &
Country Planning Act.
-
The Muncipalities
Act.
-
Labour Laws.
2.21 These apart, in exercise of the
inherent powers of the Central Government and delegated powers to the
States/Uts, various orders in respect of foodgrains have been made by the
Central/State Governments relating to:
(i) licensing of dealers/retailers for trade in foodgrains; (ii) regulation of
stock limits; (iii) restrictions on movement of foodgrains; (iv) compulsory
purchase by the Government under the system of levy. The recent position with regard to
restrictions on movement of food and agricultural produce reveals that some of
the States have imposed restrictions on movement of some essential commodities.
Most of these restrictions relate to foodgrains and more particularly to
rice/paddy. States like Andhra Pradesh,
Tamil Nadu, Karnataka, J&K and Madhya Pradesh have imposed statutory
restrictions on movement of rice/paddy outside the State with a view to
maximizing procurement and to meet internal requirements (though Government of
Andhra Pradesh has kept in abeyance the order imposing restrictions on movement
of paddy from 27.7.2000). Besides the statutory restrictions, some States also
imposed informal restrictions on movement of foodgrains outside the state
during particular periods of the year. In the light of the present position
with regard to production and supply of foodgrains in the country, it is
essential to review all such restrictions. With the removal of restrictions on
stocking and storage, warehousing activities will get a fillip and stored
foodgrains acting as a collateral will facilitate marketing credit or pledge
finance for producers, as well as entrepreneurs. In the light of ‘one world one market’ there
is no use keeping such restrictions. In
order that market should be free and competitive, all restrictions must go.
2.22 The provisions under the legal
instruments, are used particularly during the periods of short supply as
reflected through high prices to regulate the activities of traders and
processors pertaining to trading, stocking, maintenance of quality, grading,
packing, processing, blending and movements.
These instruments are administered by different Ministries and
Departments of the Central government
and the States. Considering the fact that shortages have now been
replaced by surpluses, these restrictive provisions have to be put to an end
for uninhibited free marketing system.
The Essential Commodities Act, 1955 needs to be repealed in the new
context.
2.23 Linking
Spot Markets with Futures Markets: The
regulated markets, which are spot markets, have not been able to link
themselves with the forward and future markets to receive price signals. The
futures trading in agricultural commodities is also regulated by the
Government. Till recently, it was
permitted in jaggery, blackpepper, turmeric and hessian. The Kabra Committee
appointed by the Government of India in 1993 recommended for permitting futures
trading in 17 major agricultural commodities.
The Government has now notified the introduction of futures trading in
cotton, kapas, raw jute and jute goods, all major oilseeds and their oils and
cakes; rice bran oil and coffee. The recent addition to this list is
sugar. The Committee is of the view that
more and more commodities should be added to the list of commodities allowed
for futures trading to facilitate integration of domestic market with
international market.
2.24
Domestic
Market Reforms: Reforms in the
domestic markets for farm products have to precede trade liberalization. Certain provisions, which come in the way of
efficient functioning of the domestic market for agricultural commodities and
adversely affect both the growers and the consumers, should be done away with
in phases. These are levy on rice
millers, statutory rationing of rice and
wheat in
2.25 The
food grains marketing system has been a subject of considerable debate in
recent years. In this connection, it
needs to be noted that the intervention by the government in food grains
markets, specially of rice and wheat, in the form of price support, buffer
stocking and P.D.S., has helped the country in achieving near self-sufficiency
in staple food and in improving physical and economic access of masses to food.
The Committee recommends that the food security and food management system
built up over the years should be retained as an essential component of
national security policy. For this purpose,
a multi agency approach along with Food Corporation of
2.26 Government Marketing Support Programme:
Because of heavy dependence on
nature, the production of agricultural
commodities is uncertain.
Sometimes good harvest causes scenario of plenty’s, while the poor harvest
creates scarcity or short supplies. Both these situations adversely affect the farmers. Government’s
minimum price support scheme in this context has remained very useful to the farmers. The
minimum price support policy is applicable to 24 agricultural commodities.
Under this scheme government agencies are asked to start purchase of the commodities when market
prices fall below the minimum support price so as to save farmers from the
distress sales. Though scheme has proved very useful to the farmers, its
implementation has remained faulty and inefficient. The agencies involved in
such purchases do not start operations in time. They do not make payments in
time. They do not have sufficient
arrangement for weighing, bagging, storage, documentation and payment of
purchases. Sales of purchased commodities is normally not done in time and with
marketing efficiencies. Therefore heavy losses do occur. However it is
generally viewed that government intervention in food grains specially rice and
wheat, in this form of price support, buffer stocking and PDS has helped the
country in achieving self sufficiency in staple food and in improving economic
access of masses to food while protection the interests of the producers. The
committee therefore recommends the continuation of the food security and food
management system built up over the years as essential component of National
Food Security. However the agencies involved in this management should be
encouraged for optimum efficiency and diligence.
2.27 Market
Intervention is another marketing support policy of the government. Over
and above the commodities under minimum support price, the prices of some
commodities especially of horticultural crops tend to fall drastically forcing
the farmers for distress sales. Under these circumstances with the help of
state government , GOI launches Market Intervention Scheme for that particular
crop in that season so as to avoid distress sales by the farmers. Prices based
on the cost of production and other factors for that season are decided for
Market Intervention. Government agencies
are assign the job of intervention. The losses are shared equally by Government
of India and State Government.
2.28 This policy of Market Intervention also
has proved a boon to the farmers in distress. The operational efficiency of
purchasing agencies need to be toned up in the context of cost efficient
purchases vis –a –vis competitive sales so as to avoid or reduce losses.
Therefore the Committee not only recommends continuation of Market Intervention
Scheme but also suggests expanding the coverage of this scheme to more
commodities. The Expert Committee also recommends that the Government of India
may encourage the state government to initiated market intervention operations
well in advance for saving the farmers in distress.
2.29 The experience shows that while in most
of the surplus producing regions, the state governments and their agencies
remain active for effective implementation of the policy of assuring minimum
support prices, in those areas where the need for price support arises only
once in two or three years, the public agencies have not been able to provide
effective support to the farmers as they could not tie up with central nodal
agency for making necessary purchase arrangements in time. Such failures on the part of the state
agencies lead to a set back to the production programmes. Most of the upcoming regions like Eastern
Uttar Pradesh, Madhya Pradesh,
2.30
The minimum price support policy is currently applicable to 24
agricultural commodities which should be continued. However, there are several other commodities
which are of considerable economic significance in various agro-climatic
regions of the country. The fluctuations
in their prices are considerably more.
For protecting both the producers and consumers against wide
fluctuations in the prices, there is a need for initiating a comprehensive
price stabilization scheme applicable to selected important crops of each
agro-climatic region. The scope and contents
of market invention scheme of Ministry of Agriculture be expanded and state
governments should be encouraged to formulate and implement market intervention
programmes for establishing the prices of crops not covered by MSP policy.
2.40 There is a considerable variation in
the structure of taxes and fee on the agricultural produce in various states
which also distorts the operation of the domestic market, gives wrong signals
to the producers and leads to considerable fallacy in the efficiency of the
operation of private trade vis-à-vis farmers cooperatives and public
agencies. There is a need for bringing
uniformity in the state level tax structure for agricultural commodities for
improving the marketing efficiency.
2.41
2.42 The objectives and forms of intervention
in the marketing system have undergone a substantial change from mid sixties
when the country opted for a package of interventions for protecting and
reconciling the interests of consumers/producers as well as the industry. One of the important instruments used by the
Government to intervene in produce markets consists of fixation and
announcement of administered prices and arrangements for their implementation.
The administered price regime currently in vogue includes (a) minimum support
prices (MSP) for 23 commodities (7 cereals, 4 pulses, 8 oilseeds, copra, raw cotton,
raw jute and VFC tobacco); (b) statutory minimum prices for sugarcane; (c) levy
prices for rice; and (d) central issue prices for rice, wheat and coarse
cereals for sale under public distribution system. Direct entry of public
agencies in the marketing have influence on its structure, conduct and
performance. Maintenance of stock of
rice and wheat; distribution of cereals and sugar at prices lower than market
prices; and open market operations by public agencies cast their influences on
market.
2.43
Poor Credit Flow: Poor credit flow to agriculture and wholesale trade has been
one of the major bottlenecks in the country’s agricultural marketing
system. Most of the lending to the
agriculture sector is short term, and is in the form of crop loans. Farmers are expected to buy all the required
inputs to raise a crop with the credit made available to them and then return
all loans soon after harvest.
Post-harvest credit from banks is usually not available. Given the importance of a good credit history,
most farmers, especially small farmers, take the produce to market soon after
harvest. Most farmers face the same
objective function and produce is brought to market simultaneously by several
farmers. As a result of the temporal
supply conditions, prices fall. Often
such fall in prices leave little surplus for the next crop.
2.44 The wholesale trade combines several
functions. Financing is one of these
functions rendered by the Commission agents and traders known as adatiyas in many parts of the
country. Kuccha adatiyas are provided finance by pucca adatiyas to make payment to the farmers. Where produce can be carried in inventory
with associated incentives, farmers often access credit from the wholesale
trade. Pucca adatiyas often carry inventory consisting of produce sold by
farmers. The informal sector provides
significant credit to agriculture and wholesale trade, but the cost of credit
is high compared to the rate at which it may be provided by banks. Lending
against stocks or inventory of produce is a significant activity of banks. For example, banks lend to cotton spinning
mills against stocks of cotton. However,
bank credit to farmers against agriculture produce is quite uncommon. These lacunne should be corrected.
2.45
Post-Harvest
Losses: Although, India
produces a wide variety of fruits and vegetables, in the absence of adequate
post harvest and marketing infrastructure viz. irradiation facilities,
storage/cold storage and cold chain facilities, the horticulture produce suffer
heavy post harvest losses. The problem is further complicated due to the fact
that there are no storage facilities at the farm level and the farmers are
forced to dispose off the entire produce immediately on harvesting. This creates a glut situation in the
market. The margins of the wholesalers
and retailers are therefore much higher in our country. The entire burden of
the distress sale in the form of low prices falls on farmers.
2.46 The horticulture marketing practices
lack systems approach. Trading and marketing structure is traditional
consisting of a long chain of intermediaries.
As many as 75% of the farmers sell their produce at the farm level. They
cannot afford to go to distant mandis on account of lack of facilities,
expensive transportation and malpractices in the assembling markets. The long
marketing channel is detrimental to quality and safety of those perishable
products. It is essential to shorten the channels. As has been suggested earlier these
commodities can be taken out of the exclusive purview of State Agricultural
Marketing legislation to facilitate direct sales and other competitive outlet
after proper grading, packing, transportation such as through refer vans to the
final destination. The multiple
handling add costs and increase post-harvest losses, adversely affecting the
income of farmers and making produce comparatively costlier to the
consumers. To minimize these losses,
improvements are required at various levels, viz.: harvesting; grading;
transport; storage; processing, packing and marketing.
2.47
Need for Legal Reforms: The nature of legal framework within which
agricultural markets operate has a fundamental effect on the functioning of the
agricultural marketing system. Legal
reforms can play an important role in making the marketing system more
effective and efficient by removing unnecessary restrictions and by
establishing a sound framework to reduce uncertainty of the market. The
volatility of commodity prices has been one of the main justifications for
State intervention to control or direct the functioning of agricultural
markets. Today most developing countries
have adopted national policy committed to the liberalization of their domestic
agricultural marketing systems and to encourage an efficient and competitive
private sector. In
2.48 In promoting
private sector marketing systems, Government need to examine existing policies,
rules and regulations with a view to minimizing conflict in successful private
sector operations. A review is required
in respect of all laws which regulate participation in market such as
registration/licensing, commodities traded, controls on packaging and labeling,
laws affecting market place, laws affecting supply including controls on
movement of produce and volume of commodities traded. The Expert Committee recommends
that a Task Force be set up under the Ministry of Agriculture, Department of
Agriculture & Cooperation to undertake a review of all marketing
legislations and suggest introduction of necessary legal reforms to promote
free and fair marketing system for agricultural and allied products.
---
3.
DIRECT/ALTERNATIVE MARKETING AND PLEDGE FINANCING
3.1 Wholesale Markets: In almost all the states, wholesale markets
are established and regulated under their respective Agricultural Produce
Marketing Regulation Acts. Under these
Acts, the whole geographical area in the State is divided and declared as
market area where in the markets are managed by the Market committees
constituted by the state governments.
Within an area declared to be a market area, marketing of agricultural
produce specified in the notification is regulated in accordance with the
provisions of this Act. Once a
particular area is declared a market area under Agricultural Produce Marketing
Act and falls under jurisdiction of a particular Market Committee, no other
person or association/agency is allowed to carry on any wholesale marketing
activity. The monopoly of wholesale
markets due to regulation has created an oligopoly set-up and made the traders
a dominant market force. Most of the
agricultural produce marketing committees and board members are nominated. Therefore, they lack direct accountability to
the users of market, a problem accentuated by the monopoly role of regulated
markets. In actual operation of the
market, farmers lack effective voice and hence marketing power. Large number of the small farmers are unable
to effectively bargain in the market.
Intermediary and system inefficiency consume a disproportionate share of
consumer price, thereby eliminating incentive for improved productivity and
quality. Due to farmer’s dependency on
credit from trader, farmers receive small and irregular payment, perpetuating
dependence on trader credit. Farmers
loose freedom to find the best buyer.
Services to farmer are ineffective and inadequate, leaving them without
proper price information and technical advice.
3.2
Alternative Marketing Systems: Role of
government in managing markets is on the decline worldwide. The present system
being not amenable to easy transformation, the only way to modernize marketing
is to set up an ‘alternative marketing system’ that may operate parallel to,
and in addition to present Mandies. The
purpose of the proposed alternate marketing structure is to establish modern
efficient trade practice as a catalyst for changes in the market towards
improved transparency and efficiency.
Experience throughout the world has shown that markets depend in part on
growers having a say in the marketing of their produce. Growers Cooperatives and Marketing Boards own
and operate markets. In
3.3.
Government as Facilitator: In
most countries in the world, market operation is conducted by the corporate
sector. In countries similar to
3.4 The Committee suggests establishment
of an alternative marketing structure that sustains incentives for quality and
enhanced productivity, improving farmer incomes with improved technology
support and methods. Central to the new
structure are professionally managed ‘alternate markets’ that set prices based
on open auction in which all buyers participate. Transparency and fair competition,
standardization and quality control, efficiency and hygiene should be the
defining characteristics of alternate market operations. The market will operate outside the purview
of the Agricultural Produce Marketing Act and
be owned by professional agencies
in private sector, wholesalers, retail trade associations/corporates, joint
ventures and other investors. The
markets be professionally managed and financed by transaction-based charges to
sellers and buyers and fees for use of facilities. Volume and price information be disseminated
widely to farmers’ associations as well as to retailers and consumers. Key functions include efficient, professional
management of the market, coordinating retailer payments to producers and
resolution of disputes between users.
3.5
Forms of Alternative Marketing: The different
forms of alternative marketing could be:
a.
Direct
marketing by producers;
b.
Marketing
through Farmers Interest Groups;
c.
Setting up of
Terminal markets by the private sector;
d.
Forward
markets and futures exchanges;
e.
Electronic
trading – e-commerce;
f.
Setting up
mega markets covering all marketing functions for domestic as well as export trade; and
g.
Introduction of negotiable warehouse receipt system.
3.6 Direct marketing enables farmers to
meet the specific requirements of wholesalers from the farmers' inventory of
graded produce and of retail consumers based on consumers' preferences, thus
enabling farmers to dynamically take advantage of favourable prices and improve
their net margin. It encourages farmers to undertake grading of farm produce at
the farm gate, thus enabling farmers to improve price realisation considerably.
Direct marketing obviates the necessity of farmers to haul produce to regulated
markets that are not necessarily spaced on the principles of efficiency derived
through cost analysis based on operations research. Direct marketing enables
farmers and buyers to economise on transportation costs and to improve price
realisation considerably. It will also act as a break to monopoly of regulated
market.
3.7 Direct marketing to wholesalers and
agro-industrial processors presupposes prior knowledge of buyers' needs among
farmers and presupposes prior knowledge of the capability of farmers among
wholesalers and agro-industrial processors. Such prior knowledge cuts costs
related to the gathering and assimilation of needs and capabilities. Such
knowledge also has a favourable impact on the exchange of goods and payments
thereof. More importantly, such knowledge enables farmers on the one hand and
wholesalers or agro-industrial processors on the other hand to transact through
purchase orders for long-term deliveries and payments. Such orders constitute
the cornerstone for a range of contracts that include forward contracts at the
personal, bilateral level.
3.8 Direct
marketing (retailing) by farmers to the consumers was experimented through Apni
Mandis in
3.9 Direct
marketing by farmers’ organizations needs to be promoted in the light of the
continued criticism that both farmers and consumers suffer economic losses in
the existing agricultural marketing system/structure. The similar logic holds good for consumer
organizations also who can procure directly from producers and distribute to
the consumers commensurate with their purchasing powers. The Government should support these
organizations with schemes like providing back ended subsidy for refrigerated
as well as general transport, setting up of grading and packing houses, credit
at low interest etc., till they become financially self-sufficient on
commercial lines, development of communication links.
3.10 Marketing
through informal groups by hiring common facilities of post harvest management
and hiring joint transport have also been successful in Asian countries like
Philippines, Malaysia etc. The group action strengthens bargaining power of the
farmers and the marketing expenses get distributed resulting into better share
in the net returns. Whether self-help
groups or NGOs, everybody should be encouraged to market in the interest of farmers.
3.11 In a liberalized marketing environment,
for protecting the interest of growers, apart from the effective implementation
of price support policy, it would be important for the farmers to organize into
strong cooperatives or self-help groups (SHGs).
A market friendly economy, producer or member friendly cooperatives or
SHGs would be critically important in competitive trade environment but to
enable them to compete effectively with private trade it would be necessary to
allow them to function freely. The
experience shows that unless the cooperatives are freed from the shackles of
politicians and bureaucracy these may not become effective alternative to
private or corporate sector. There is a
need to drastically change the cooperative laws.
3.12 As
another form of direct marketing, the unemployed youth could be involved in
procurement of orders and supply of graded and packed products to different
city dwellers. The youth could be
trained in marketing practices of procuring products and supplying them. They will move into different localities to
obtain door to door orders and procure supplies of needed quality and packs
directly from the producers for onward transmission to the consumers. The financial assistance from the public
sector to such ventures would generate entrepreneurship and provide profitable
employment to the younger generation.
They could be given assistance in the form of working capital to start
the enterprise alongwith the necessary agri-business training.
3.13 The
international demand for organic products is increasing fast.
3.14
Risk
Management: Forward and futures
contracts enable price discovery. The price discovery function allows important
economic decisions to be made as to which commodities to produce; how to
produce the commodities ; how much of each commodity to be produced; how much
to sell and at what prices; how much to store and for how long; what
commodities to consume and how much to consume and at what prices. The above
questions and answers typically constitute the marketing function of an
economy. Of course, storing is an economic decision that is driven by the
opportunity costs and the availability of credit.
3.15 The
move towards direct marketing and the move towards hedging and delivery through
forward and futures contracts do not obviate the need for market yards for
conducting spot transactions in general between farmers and buyers. The Expert
Committee holds the view that direct marketing between farmers on the one hand
and (1) wholesalers and (2) agro-industrial processors on the other hand is
effective only if farmers have an opportunity to access reliable reference
prices for a range of grades, qualities
and time of deliveries. Effectiveness would narrow the spread between producer
and consumer prices and enhance incomes to farmers. Marketplaces of high
fidelity best generate such reference prices.
3.16
Forward contract
may well be regarded as direct and alternative marketing facilitator. It is an agreement between two parties to buy
and sell a commodity at a predetermined future date at a price that is agreed
when the contract is entered into between buyer and the sellers. The three principal elements of the forward
contract are:
a)
the commodity and its characteristics are known to
the buyers and the sellers but may not be known to other potential buyers and
sellers;
b)
the date on which the commodity will be bought and
sold is determined in advance by the buyer and seller;
c)
the price to be paid by the buyer to the seller at
the future date is determined on the day the contract is entered into between
the buyer and the seller, but is not made known to other potential buyers and
sellers.
3.17
Forward
contracts facilitate the lock in of prospective purchase and sale prices.
Future markets by devetailing its functioning with spot markets can work as a
tool to handle the situation arising out of good harvest as well as poor
harvest for stabilization of supplies along with prices. The estimated poor
harvest in the beginning of crop sowing/ planting would enable the buyers to
enter in to future contracts at higher rates. The spot market operaters if
given incentives for holding adeuate stocks to regulate the flow in spot
markets will facilitate the honouring of forward contracts. They may also after
knowing the stock position can request to imports of such quantities matching
the requirements of future as well as of spot markets. Thus the scenrio of good
harvest will enable the future to contract as lower prices so as to signal the
farmers to reduce the area of respective crops and encourage the farmers for
easy and timely diversion of cropping pattern. This itself will plan for
reduced/ adequate supplies for the markets in the time of good harvest. The
storage shall be regulated as per the futures requirement at one end and the
avilability of produce at the other. There by the sudden flow of produce at the
time of season gets rationalized. A
digramatic view can be seen at page …..
3.18 Commodity futures markets in the
country are regulated through Forward Contracts (Regulation) Act, 1952 and are
under the jurisdiction of the Department of Consumer Affairs, the Ministry of
Civil Supplies and Consumer Affairs, Government of India. The Forward Markets Commission (FMC) performs
the functions of advisory, monitoring, supervision and regulation in futures
and forward trading. Forward/futures
trading is done in exchanges owned by the private associations registered under
the Act. These exchanges operate
independently under the guidelines of their byelaws approved by the FMC. In the country currently, futures contracts
are traded for nine commodities in 20 commodity exchanges; pepper, castor seed,
castor oil, potato, gur, turmeric, hessian, sacking, cotton, and coffee. Futures contracts of only potato, gur and
castor seeds are traded in the multi-exchanges.
International futures trading has been initiated for pepper in
Price stabilization when poor harvest is expected
Price stabilization when good harvest is expected
3.19 Commodity futures contracts overcome
many of the inadequacies of commodity forward markets. In the main, futures contracts are designed
to overcome the two deficiencies of forward contracts; futures contracts retain
all other favourable properties and characteristics of forward contracts.
3.20 A
recent study conducted by the IIM, Ahmedabad has indicated that the performance
of the Indian commodity futures markets is varied across the commodities,
exchanges and contractors. However, they
reveal the potential of performing the functions of price discovery and risk
management. Nevertheless, they are still
not congenial markets for the hedgers and other economic agents. They are deficient in several aspects such as
infrastructure, logistic, management, linkages with financial institutions,
reliability, integrity and an efficient information system which do not
encourage a large group of the market players in the commodity sector to trade
in this market. The linkage between the
spot and futures markets seems to be poor due to domination of the
speculators. Government has, therefore,
to continue its efforts to strengthen and institutionalize the exchanges and to
instill confidence and awareness among market players. Efforts have also to be made to extend role
of exchanges in other services like warehousing, financing, investment and
market intelligence, which would improve existing working of future markets.
3.21
Liberalization of Trade: With the initiation of the liberalization
process in
3.22
In the process of the economic
liberalization and signing of the WTO Agreement, government has given a thrust
to enhance international trade in raw agricultural commodities and their value
added products. This would expose the
domestic market to international price risk.
Since exporters generally operate their business on a thin margin, an
efficient price risk management mechanism would be essential in the new
environment. Withdrawal of Government’s
intervention from commodity sector ensures only demand and supply forces will
determine market price in the new economic environment. It is also argued that an efficient price
management mechanism for agricultural commodities encourages commercial banks
to finance the commodity sector and attract direct foreign investment in the
agricultural sector. Therefore, in the
new economic environment, futures markets are expected to play a vital role in
the agricultural commodity sector.
3.23
Certified
Warehouses and Warehouse Receipts:
Poor credit flows have had an adverse effect on the agriculture produce
economies of the States. Certified
warehouses and a system of warehouse receipts could lead to better credit
delivery, better loan recovery and convenience in asset management. The banking sector might be more willing to
extend post-harvest credit facility to the agriculture sector for wholesale
trade and a system of warehouse receipts. The presence of certified warehouses
would enable the development of market instruments that may reduce the pressure
on State Governments to carry large inventories of agriculture produce.
3.24 Warehouse
receipt when backed by a suitable legal frame work, is an instrument that shows
proof of ownership of agricultural commodities. It states the quality and
quantity that is owned by the receipt holder and the warehouse in which the
commodity is stored. It is issued by warehouses approved by an independent
body. The warehouse receipt is issued after the produce is certified for
quality and quantity. The process involves rigorous but rapid testing and grading
often based on official standards. It can be successfully negotiated by
endorsement without returning it to the warehouse operator. These receipt may
be used in commodity linked loans. Warehouse receipts are being operated in
three commodity exchnages – Coffe Futures Exchange Indian Ltd. (COFEI), SOPA
Board of Trade (SBOT) and BOOE. These boards have setup institutional framework
for warehouse receipts. There is tremendous scope for massive expansion of use
of warehouse receipts.
3.25 Warehouse
receipts can play an important part in making indian agriculture more
responsive to market opportunities and more competitive in relation to world
markets. They can also be made an important instrument to make it more
attractive for banks to lend to the agricultural sector, to reduce the cost of
public support for agricultural marketing, to reduce transaction costs and to
improve price risk management. They enable to ensure increased liquidity in
rural areas, lower cost of financing, shorter and more efficient supply chain,
enhanced rewards for grading and quality, development of other productivity
enhancing agricultural services and better price risk management.
3.26
The Expert Committee proposes following
strategy for the Government of India:
a.
To promote
development of a national warehousing receipt system for agricultural
commodities, as apart of its policy of ensuring that indian agriculture is
globally competitive while enhancing rural welfare and food security;
b.
To declare CWC
and SWC as Acredition Agencies for certified warehouses for warehouse receipt.
c.
Laydown various
standards, specification for certified warehouses, so also rules and regulation
for managing them including fidality aspects.
d.
All licensed
warehouse to confirm to the minimum professional standards in order to provide
confidance to lenders and the public in general. They will be encouraged to
develop their own code of coduct for self regulation.
e.
Existing
warehousing laws may be suitably amended. A formal regulatory authority may be
consittuted to enforce standards and protect the interest of those holding
warehouse receipt against negligence malpractices or fraud. The regulatory
authority has to be strctured to ensure its complete autonomy and freedom from
political interfrence.
f.
To promote
latest information system for warehouse receipt to help in identifying
ownership of produce, transferors of lien, holder of lien, hypothycation of
receipt for loan and trading of the produce in the context of spot delivery.
g.
On the
negotiability of the instrument i.e. warehouse receipt there may be incidence
of various taxes and levies which should be exempted for five years to begin
with, to make these receipts popular.
h.
The negotiabity
of warehouse receipt require amendments to various Acts of Central ad State
Government which may have to be looked into.
3.27
Warehouse
receipts and a warehouse system where the objects of legislative efforts nearly
three decades ago. A warehouse receipt Bill was drafted in 1978 with the
principle, if not sole, objective of endowing upon warehouse receipts the
status of negotiability under the negotiable instrument Act 1881. The warehouse receipt Bill was initiated by
the Banking Laws Committee and did not proceed beyond the stage of discussion
of the draft. The constitution of a Task Force comprising representative of the
Commodity Exchanges, The FMC, The Ministry of Consumer Affairs and Public
Distribution, the Ministry of Agriculture, The Ministry of Information
Technology, NABARD and the RBI is recommended.
3.28
Warehousing Corporations: Outside of the ports, the Central and
the State Governments dominate the warehousing industry, both as client and as
service provider. Warehousing facilities
owned by the central and the state Governments account for 65.9 million tons of
warehousing capacity. About 46 million
tons of capacity is owned or leased by the Food Corporation of
3.29 While
Government warehouses have hitherto mainly served the public sector, they
constitute a major asset that can be used to further the employment of
warehouse receipts. Government
warehouses are present across the country.
They have developed homogeneous storage and quality practices, and their
warehouse receipts are accepted by most banks.
Their main weaknesses in the context of liberalization and globalisation
are that they are not well integrated with private supply chains; they do not
inspire confidence among some lenders, particularly, international banks and
they lack certain form of autonomy they need to improve services. They are also
not well managed.
3.30 The existing Government warehousing
corporations should play a leading role in the development of warehousing. However, they can only cover a part of the
field, which should be opened up to private operators, particularly those who
already provide storage services including loan facilities. Moreover,
divestment should be pursued with a view to increasing their private sector
orientation and autonomy. The existing usage of warehouse receipts by commodity
exchanges are extremely limited.
However, the institutionalization of the warehouse receipt system
through the commodity exchanges is most likely to yield the best results in the
context of promoting and propagating warehouse receipts, in particular
electronic warehouse receipts, and a national system of warehouse receipts.
3.31 Pledge Financing: Pledge financing enables the usage of
inventories of graded produce as collateral for accessing credit from the
organized credit market, thus enabling farmers to take advantage of favorable
prices; to hold inventory of graded produce under favorable storage conditions;
promotes rural godowns and warehousing, thus enabling farmers to hold inventory
without having to dispose of produce at adverse prices in the regulated
markets; advances grading of farm produce to the farm gate, and enables
identity preserved storage closer to farms, thus enabling farmers to improve
price realization considerably.
3.32 Produce Marketing Loan Scheme formulated by the Government in 1988, could not take off due to its limited applicability.There is an imperative need to improve the flow of credit to agricultural produce marketing to afford to the growers a reasonable opportunity to hold on to their produce in falling markets at the time of harvest. The recently announced 'National Agriculture Policy' of the Govt. of India lays emphasis on the need for adequate institutional credit for marketing of agricultural produce, creation of storage facilities, improving marketing infrastructure, etc. Marketing credit can be improved by introducing a user-friendly pledge financing scheme. The Committtee recommends that Credit policy of the Government should support pledge financing by treating it as priority sector lending to agriculture with the facility of concessional refinance and a major thrust given to its implementation to save the farmers from resorting to distress sales after harvesting.
---
4.
AGRICULTURAL
MARKETING INFRASTRUCTURE
4.1
The Rationale: Infrastructure consists of a combination of national assets which
sustain the addition of place, time and form utilities to the products and
services. These include apart from the
Government institutions and organizations, roads, railways, warehouses, market
yards, cold stores, processing units, research and training institutions, means
of communication and transportation including air cargo, sea cargo etc. The basic rationale of any infrastructure is
the sustenance it provides to production activity, income generation and social
service supplies. It has also positive
effect on income distribution because low per capita infrastructure limits the
access of small and marginal farmers to the market.
4.2
The relationship between agricultural
development and investment in infrastructure has been long recognized. Roads stimulate agricultural change and
modernization not only through their immediate effects on relative prices and
marketing opportunities but also through backward linkages. The roads open up opportunities for commercial
agriculture and encourage shifts to production of higher value, transport –
sensitive products (fruits, vegetables, dairy, poultry and marine
products). Roads also improve access of
the people to extension agents, banks, markets and health services. Market infrastructure is important not only
for the performance of various marketing functions and expansion of the size of
the market but also for transfer of appropriate price signals leading to
improved marketing efficiency. Infrastructure facilities lead to reduction in
marketing costs which is crucial for increasing the realization of growers and
reducing the costs to the consumer.
4.3 The infrastructural facilities can be
classified as physical and institutional.
The roads, railways, transport facilities, electrification and storage
structures are physical infrastructure whereas cooperatives, local
self-government, banking institutions, extension agencies, marketing
organizations and market intelligence net work are institutional
infrastructure. For over four decades after independence, the public sector in
4.4 Market Surplus: In order to assess the adequacy of agricultural marketing
infrastructure in the country, it is imperative to estimate the availability of
agricultural production and marketed surplus.
Generally, there is positive association between production and marketed
surplus. Several studies carried out by
individual researchers and national and international organizations provide the
projections of both demand and supply of agricultural commodities at different
points of time. Projections for too
distant a period involve several assumptions which may not hold good. The Committee has, therefore, used the
projections of production of various farm products as given by Kumar and Mathur
for the period 2006-07 (para 2.4-Table).
4.5 Projections of production and
marketed surplus of various farm products for the year 2006-07 as given in
Table 1(para 2.4) show that even at the existing marketed surplus-output
ratios, the quantities which the marketing system will be required to handle in
future are quite large. For example rice
output is projected at 103.5 million tonnes , meaning thereby that paddy output
available for milling with rice milling sector would be around 155 million tonnes. The marketed surplus of all cereals taken
together would be 102.74 million tonnes.
As regards pulses, the marketed surplus is projected at 15.20 million
tonnes which will require considerable increase in the pulse milling capacity.
Reduction of proporation of population on agriculture would enable rise in
market surpluses.
4.6 The marketed surplus of oilseeds is
projected to go up from 17.19 million tonnes during 1999-2000 to 26.90 million
tonnes during 2006-07. In the case of
sugarcane, the marketed quantity is projected to reach 327.75 million
tonnes. Raw cotton output is projected
at 3.2 million tonnes during 2006-07.
similarly fruit and vegetables marketing system will be required to
handle 91.88 million tonnes of vegetables and 68.38 million tonnes of fruits.
4.7
As regards livestock products, it is
projected that by 2006-07, the marketed surplus of milk would be 71.7 million
tonnes, meat and eggs 6.0 million tonnes and of marine products 9.80 million
tonnes. Considering all the perishables
together (fruits, vegetables and livestock products), the marketed surplus is
anticipated to go up by 43.4 percent during the next seven years from 172.69
million tonnes during 1999-2000 to 247.76 million tonnes during 2006-07. The capacity to clean, grade, pack, process
and transport these perishables would have to expand to handle the additional
marketed quantities.
4.8 From the view point of complete
supply chain, from farm to the market, the infrastructure for all types of
perishable horticulture produce is required at following levels:
(a)
Small pre-cooling units and or zero-energy cool
chambers in the production areas where the field heat of the produce is to be
removed at fast rate to bring down the temperature of the produce to the
desired level before putting the product in the cold storages. The refrigerated transport units from the
farm to the cold storages are also utilized as mobile pre-cooling units for
this purpose;
(b)
Collection Centers near to the farms;
(c)
Medium to small cold storages having multi-product,
multi-chamber facilities are the most popular segment where horticulture
produce is stored as transit godowns;
(d)
Specialized cold storage with facility of built in
pre-cooling; high humidity and Controlled/Modified Atmosphere are required for
storage of the produce for a longer period.
These specialized storages are essential for extended shelf life of the
produce and without these storages the requirement of storing the produce to
meet the demand in the off season is not feasible;
(e)
Other components like ripening chambers close to the
markets and display cabinets at retail outlets;
(f)
Linkages for conversion of fresh produce in other
marketable forms;
(g)
Integrated Pack Houses to serve farms in respective
regions having an area of around 5000-10000 hectare. Farms associated with each of the centers
would collect farm produce and bring them to common cold storage centers, where
these products could be given treatments, such as washing, sorting, grading and
packing. These products will then be
preserved in the appropriate cold storage facility. The services of these centers will not only
increase the value of the farm product, but will also remove most of the
unwanted bio-degradable bio-mass from the horticulture products, which can be
utilized as farm manure or even as cattle feed.
4.9 The
electronic trading would be more appropriate form of direct marketing
between different buyers and sellers.
Every market committee should be provided with facility of electronic
trading by setting up a special kiosk for the purpose. The young entrepreneur
who can set up portals on their own to provide such facilities could be
supported financially through a plan scheme.
Their responsibilities would include to inform the buyers and sellers
about online demand of different products; product specifications with regard
to quality, pack size, packaging material, quantity and the time frame of
supply; the transport cost involved and the marketing charges likely to be
incurred in the market where the goods are to be delivered; facilities
available to the farmer in the buying market; Re-handling of the produce, if
necessary, in the supplying market to suit to the requirement of the buyer
market; the rules and regulations of the destination market, if it is located
outside the state at distant place, and other specific information as may be
conducive for the seller to transact the business with the purchasers; and the
legal provisions related to storage, transportation, phyto-sanitary
requirements etc.
4.10 Telephone is the most convenient way of
communication which can reduce cost of marketing besides meeting other needs in
the villages. However, upto March 2001,
only 59 per cent of 6,70,000 villages were connected by telephone. The tele-density i.e. number of telephones
per hundred population was only 3.5 per cent compared to an average of 16 in
the world and 60 in the developed world.
Though, it has been targeted to increase this to 7 per cent by 2005 and
15 by 2010, the progress seems to be slow.
There is a need to speed up the investment in this regard. Telephone connection technology by telephone
lines seems to be slow and requires heavy investment for laying telephone
lines. Therefore, the option of wireless
technology (WCL), should be examined. The Committee recommends that all the
remaining villages should be connected within five years. Also, at the same time e-communication should
be encouraged either through village panchayat or private entrepreneurs. Such communication or Cyber Café or village
kiosks can become information centers.
4.11
Rural Connectivity: Rural roads constitute one of the most important marketing
infrastructure which reduce the cost of production and marketing by providing
external economies to farmers, traders and public at large. It is well known
that investment in infrastructure of this type has very high returns to the
society. The status of rural roads in
Table – Details of Road Connectivity in
India
|
Group of villages with population |
Villages connected with road |
% age of
villages connected |
Villages not connected with roads |
% age of villages not connected |
Total |
|
<1000 |
172062 |
37.45 |
280733 |
63.55 |
452795 |
|
1000-1500 |
44031 |
75.88 |
13904 |
24.12 |
57935 |
|
>1500 |
65698 |
91.73 |
5713 |
8.73 |
71411 |
|
Total |
281791 |
|
300350 |
|
582142 |
Source : Govt. of
Therefore, there is an urgent need
for investment in providing connectivity to remaining villages. Considering average road length as 4 km., to
connect each village with the main road, public yard or sub-yard, the total
length of rural roads required to connect to remaining 3.7 lakh villages comes
to around 14.8 lakh kms. If average cost is taken as Rs.5 lakhs per
km, the investment requirement is Rs.74,000 crores. Though the Government of India has made
special provision for link roads in rural areas under Prime Minister’s
programme there is a need for additional investment.
4.12
Physical
Facilities in Markets: Agricultural produce markets established under
market regulation programme have been playing an important role in providing
market places to the farmers to dispose off their produce. These have also
provided physical facilities and an institutional environment to the traders,
processors and other market functionaries for conduct of their trading
activities. The studies revealed that farmers, on an average, get a reasonably
higher price by selling their produce in the regulated market yards compared to
rural, village and unregulated wholesale markets. Most of the regulated market yards in the
country at present lack facilities for handling the produce arriving there. The space for auction platform is less and
the number of shops and godowns in the premises is small. It reduces the effective participation of
traders. Absence of storage godowns at
market level further perpetuates the problems of traders in general and
continuous movement of goods in particular. The number of fruit and vegetables
markets brought under regulation is small.
Further the markets, which have been exclusively developed for handling
of fruits and vegetable, do not have sufficient facilities for handling the
produce available in the area.
4.13 The
Directorate of Marketing and Inspection and several state governments have
assessed the requirements of investment for development of market yards in
respective states. Though several
questions relating to the desirability of continuing with government sponsored
market yards are being raised, the Expert Committee is of the view that
creation of physical infrastructure at primary market places is absolutely
essential irrespective of the institutional arrangements for managing these
yards. As shown in Annexure-III, the
investment requirement for development of market yards/sub-yards during the
next ten years is estimated at Rs.6026 crores.
4.14
Specialised
Markets: Apart from general
purpose markets, there is need for developing specialized markets for fruit and
vegetables. It has been assessed that
there are at least 241 such places in the country where fruit and vegetables
markets should be developed. The
infrastructure required for such markets depends on the volume of arrivals
which in turn depends on the size of population to which these markets
cater. The investment requirement for
fruit and vegetables markets in the country is around Rs.970 crores. The details are tabled below:
Investment
Requirements for Development ofFruits and Vegetables arkets
(Rs. In crores)
|
Size of
Population |
No.
of Markets |
Investment
Required |
|
1 to 2
lakhs |
126 |
252 |
|
2 to 5
lakhs |
72 |
288 |
|
Above 5
lakhs |
43 |
430 |
|
Total |
241 |
970 |
4.15
Farmers’ Markets: Several
State Governments have initiated a process of direct marketing by producers to
the consumers. The states of
4.16
Rural
periodic market is the first contact point for producer – sellers for
encashing their agricultural produce and buying other goods needed by them.
There are in all 27294 rural periodic markets including those for livestock, in
the country. But even minimum necessary
infrastructural facilities do not exist in most of these rural periodic
markets. There is urgent need to develop
these rural periodic markets in a phased manner with necessary infrastructure
amenities to have a strong base level link in the marketing chain. Once
developed, these places, where periodic markets function, can also serve as
farmers/consumers markets. The
investment requirement for developing these primary rural market places is
estimated at Rs.2146 crores (Annexure-III).
4.17
Storage/Warehousing:
Storage infrastructure is
necessary for carrying over the agricultural produce from production periods to
consuming periods. Lack of adequate
scientific storage facilities cause heavy losses to farmers in terms of huge
wastage in quantity and quality of products in general and of fruit and
vegetables in particular. Seasonal
fluctuations in prices are aggravated in the absence of proper scientific
storage facilities. Central and State Warehousing Corporations have constructed
warehouses in the different States. Food Corporation of
4.18 The Finance Minister in the 2001-2002
Budget has announced creation of Rural Godowns for non-perishables on the lines
of construction of cold storages under the back-ended subsidy scheme
implemented by the National Horticulture Board.
In this connection, in the light of past experience, the Expert
Committee recommends that definition of rural godown should include a house,
warehouse located in a rural area where a rural periodic market/market
yard/sub-yard/collection centers for different agricultural commodities already
exists. It may also include D class
municipalities or harvesting centers.
Any private entrepreneur, cooperative, APMCs, SWC/CWC, registered NGOs,
Farmers Registered Organisations, Accredited microcredit organisations and
shelf-help groups should be eligible to construct and operate rural godown under
the scheme.
4.19 The Godowns should be of viable
capacity and rat proof with scientific storage following the specification
drawn by CWC/SWC. The growers/process’s,
State procurement agencies, wholesalers, other agencies involved in PDS etc.
should be included as potential users. The subsidy to the construction of
godowns may be limited to 25% of the total cost. The godowns should be declared
as deemed warehouses under the State Warehousing. APMC market fee, sales tax, purchase tax,
octroi etc. should not be leviable on the goods stored. Similarly, provisions of Essential Commodity
Act, Labour Act, Mathadi Act, Shop Establishment Act, Industrial Disputes Act
etc. should not be applicable to these Warehouses. The material stored in rural godowns should
be backed by warehousing receipts with common regulatory framework for
negotiability. The godown
owners/operators should be permitted to play the role of on-lender so as to
channel credit to potential users.
Considering the importance of rural godowns to farmers,
bankers/financiers should be allowed maximum spread of 2% or less over the
NABARD refinance rate.
4.20
Cold
Storage:
Sector-Wise
Distribution of Cold Storage Facilities(as on
|
S. No. |
Sector |
Number
of cold storages |
Capacity( |
|
1 |
Private |
3739 |
146.13 |
|
2 |
Co-operative |
310 |
6.80 |
|
3 |
Public |
150 |
0.91 |
|
4 |
Total |
4199 |
153.85 |
4.21 The present storage capacity available
is sufficient only for 10 per cent of total production of fruits and
vegetables. In the next 10 years with
the anticipated increase in production of fruit and vegetables and other
perishable commodities, the cold storage capacity requirement would be much
higher. Foreseeing the future requirements of the fresh/precooked/frozen fruits
and vegetables and their products as well as anticipated change in the food
habits in favour of processed food, the capacity requirement for post harvest
management of perishables is estimated at more than five times the presently
available capacity. In the next 10
years, 15000 additional cold storage units with a capacity of 45 million tonnes
should be created. The additional
capacity requirement would need an investment of the order of Rs.27,000 Crores.
The investment should basically be made by the private sector only. In future, there would be a need for
multi-chamber type of cold storage units for various perishable and other
products. For encouraging private
entrepreneurs there is a need to provide subsidy to make the units viable for
some initial years. This apart, the regulatory arrangements should also be
reviewed and simplified for attracting private investment in this venture.
There is a need to provide incentives in reducing current expenses such as tax
relief in electricity.
4.22
Reefer
Vans/Containers: The country would
also require reefer container/vans for transport of perishable items for
domestic and export marketing. At
present their availability in the country is negligible in comparison to the present production of
perishable commodities. For handling the
expected higher production in the next 10 years, at least 3000 reefer
containers/vans with a capacity of 8 tons each would be required. This would require an investment of Rs.600
crores, which should be encouraged in the private and cooperative sector. There is a need to encourage the investors in
this area by providing incentives.
4.23
Cleaning,
Grading and Packaging: The importance of these facilities can be hardly
over emphasized. At present, the grading
facility is available only in 1321 markets out of total number of 7127
regulated markets. The quantity graded
at producers level is almost negligible.
There is a need to create facilities for cleaning, grading and packaging
not only at primary level but also in the villages from where produce is
brought to the market for sale. In the
absence of such facility at the village level, the kind of pollution and
congestion created at market yards during the peak arrivals period is well
known. The APMCs should encourage
private entrepreneurs to promote such units in or around the
yard/sub-yards. There is need to promote
proper packaging after grading so that further chances of adulteration or
temptation may not be there. Besides
this there is a strong need to educate the farmers for proper packaging and
grading before they bring the produce to the market. Scientific packaging should be encouraged at
the farm level through subsidy support.
The Expert Committee feels that this is an important activity, and an
investment of Rs.2000 crores should be earmarked for this purpose during the
next 10 years.
4.24
Export
Zones and Food Parks: With a view
to taking advantage of new international trade environment, there is a need to
encourage export of high value traditional/non- traditional products grown in
various parts of the country.
Commodities having export potential are several fruits and vegetables,
raw as well as processed and packed spices like cumin, fennel, coriander and
other farm products like fenugreek and hena for which there is significant
demand by Indian Diaspora and others in several countries. However, there is a need to educate and train
the growers of these crops in producing, grading and packing for overseas
markets and create necessary infrastructure.
A scheme of creating Export Oriented Agri-Zones (EOAZ) has been
announced by the Govt. of India
(Ministry of Commerce) which should be promoted by providing institutional and
physical infrastructure in each of these as per the needs of the specific
commodity. In some of EOAZs, there is
also a need to establish what is called Food Parks. In these parks, some common facilities like
electricity and warehouse should be created with central government assistance
which will help in attracting investment by the private sector and the state
government. While most of the investment
should be made by the private entrepreneurs, as a way of incentive, government
should invest in common facilities, and quality certification. The estimated public investment is Rs.200
crores and private investment of around 400 crores on fifty such EOAZs. In identification of EOAZs and
4.25
Processing
and Value Addition: Considering the
increase in demand for value added and processed products, there is a need to
enhance the capacity of agro-processing sector.
This will not only help in stabilizing the prices realized by farmers
but also in creating employment in rural areas.
The food-processing sector alone provides tremendous potential in this area.
For attracting private initiative and investment in food processing, the
Government of
4.26 At present, value addition is estimated
at only seven per cent and processing only two percent of the total
production. Within next ten years, there is a need to increase
value addition to 35 percent and processing to atleast 10 percent. Quality control and standardization will be
extremely important in this endeavour.
The Central government should
establish or encourage a network of food analysis laboratories in the
country. This will also be necessary to
face competition from imported processed products.
4.27 The investment potential in value
addition and food processing is quite large.
According to our esimates, the potential is Rs.150,000 crores. If conducive policy environment and incentive
frame work is created, private sector can be attracted to make investment of
this magnitude. The state-wise details
of investment potential in food processing are given in Annexure-IV.
4.28
Sources of Investment: The
investment potential in agricultural marketing system is quite considerable.
The investment in agricultural marketing system will go a long way in making
agricultural sector vibrant and enable it to face the competition of
liberalized international trade environment without adversely affecting the
livelihoods of those who depend on farming. However, for realizing the
potential of investment, a major part of which need to come from the private
sector, a conducive and favourable environment would have to be created. For
attracting the private sector investment at a level visualized by the Expert
Committee, there is a need for (a) making complementary investment by the State
and Central government; (b) subsidizing a few activities to enable the private
sector initiatives to attain viability; (c) active stance by the Central
government in some initiatives; (d) reducing the regulatory controls and
simplifying the procedures; and (e) ensuring adequate credit flows to
agricultural marketing activities. It is in this context, that the Expert
Committee recommends that agricultural marketing and trade activities like
construction of storage structure; rural godowns; cold storages, reefer vans;
cleaning, grading & packing houses; export oriented agri-zones; and agro –
processing and value addition should be included under the definition of
priority sector for the purpose of lending by financial institutions. The
sector-wise investment potential as visualized by the Expert Committee is shown
in Appendix- V.
4.29 For a long term
sustainable and integrated development of horticulture a fresh look is also
required to be taken at some of the legal provisions as laid down under various
acts and rules framed there under. The
following are important:-
a)
Excise
Laws: Presently the alcoholic
beverages based on fruit & vegetables are clubbed with other alcoholic
beverages. Whereas world over items like
wines and beer which are based on fruit & vegetables and have low content
of alcohol (ranging below 11-12%) are considered as items of food and are
promoted as health drinks. With removal
of quantitative restrictions there is a possibility that larger quantity of
such beverages will be imported into the country. This sector has not developed in
b)
i)
Wild pomegranate
ii)
Kaphal (Myrica nagi Thunb)
iii)
Wild fig
iv)
Lassora (Cordia oblique Wild)
Similarly,
there are vast varieties of forest produce falling into the sub-categories of
horticulture e.g. herbs, medicinal plants, vegetables, spices, flowers, honey,
mushrooms, staple food supplements like buckwheat in the hills, etc.
c) Narcotic Drugs and Psychotropic Substances
Act, 1985 : The present legal frame work
is restrictive to the extent that it discourages the commercial production of
the narcotic items which can be converted into pharmaceutical products. Therefore, provisions may be created for a
balanced development for cultivation and processing of such items.
d)
Plantations – A New Definition
: The word “Plantation Crops” as mentioned
in some labour laws and Land Ceiling Act has a rather limited meaning
pertaining mainly to coffee, tea, rubber, etc.
To cover a large number of crops under plantations with a more rationale
and more scientific approach is need of the day. If plantation is used as generic term for an
advanced form of agriculture where various types of management from the
selection of land, selection of species to be grown, the financial support, the
management of labour, the processing and marketing are all done at a higher
level than what is done for ordinary agricultural crops, the horticulture is
bound to get a fillip. The existing
legal framework will open new avenues for development of entire horticulture
sector if production of fruit & vegetables, medicinal & aromatic
plants, spices, is also brought under the definition of plantation.
---
5. MARKETING EXTENSION, TRAINING AND
RESEARCH
5.1
Multilevel Approach: In
order to strengthen and develop agricultural marketing system in the country,
efforts in the area of training and extension
have to be made at three levels. At policy level, it is necessary to
formulate an effective policy on agricultural marketing under which various
components of marketing programmes and activities can be integrated and
coordinated. At managerial level, the managerial and technical capabilities of
those technical institutions involved in the implementation of the marketing
policy needs to be improved to enable to work to be carried out more
efficiently and economically. At farm level, marketing policies and programmes
should assist farmers in marketing their produce, purchase their inputs and
raise their incomes. At farm level, however, the effectiveness of Government
policies and programmes often looses its impact, especially for those farmers
whose marketable surplus is too small and not oriented to marketing
requirements.
5.2 In
5.3 As the days of the mass production and mass
marketing are now being replaced by customer based or market driven strategies , an effective
marketing extension service is need of the hour. This has added significance in
the light of post WTO scenario. If the Indian farmers have to withstand the
possible onslaught of international competitors both in domestic as well as
overseas markets the marketing extension would be an effective instrument to
safeguard farmers interest through proper education and guidance on regular
basis . The marketing extension service to assist small and marginal farmers in
solving the problems faced in marketing their produce is therefore, a
sine-qua-non in the free trade environment.
5.4 The marketing extension
envisages:
i) Advise on product planning- Even for small
farmers, the concept of product planning i.e. the careful selection of the
crops and varieties to be grown with market ability in mind, is an important
starting point. Providing this basic advice to the farmers is very essential to
enable them to withstand the competition in the market.
ii) Marketing Information - The farmers need
information on two aspects of marketing viz. current price and market arrival
information and forecasting of market trends. This information has also to t)e
supplemented with other information about reaching a particular market to get
the particular price, arrangements available in the market related to storage,
transactional methods, quality requirements, post-harvest handling requirements
etc. Along with the information of spot market, the forward and futures market
prices are also required to be disseminated to the farmers. They have also to
be educated or trained in taking appropriate signals from the forward and
futures prices. In order that the information should be area specific, crop
specific buyer specific etc. there is a need that every agricultural market
should have an extension cell equipped with internet and other audio-video
facilities necessary to educate farmers in various aspects of marketing
functions and services. The information required by other market functionaries
should also be collected and disseminated to its users.
iii) Securing markets for farmers - The extension
agency can advise farmers 'in several ways.
For grains to be sold to the government procurement agencies the
extension workers can advise on how, when and at what price to sell the
designated food grains to the Government agencies. For cash crops, farmers need
assistance in making contract marketing arrangements with processors, wholesale
traders or other bulk buyers.
iv)
Advise on alternate marketing - In order to avoid
'gluts' in the small local markets, farmers can be advised to take benefit of
warehousing with pledge finance schemes, entering into forward contracts or go
in for futures trading. A planned marketing strategy will benefit the producers
in terms of i7eal income and help stabilize local market prices and market supplies
'in terms of raising farmers income .
V) Advise on improved marketing
practices - Farmers need education on improved harvesting methods,
standardization and grading, improved packing and handling practices,
appropriate storing methods etc. for profitable marketing of his produce.
vi) Advise on establishing and
operating markets - Marketing extension should help rural population to
establish and operate markets on their own to save from exploitative elements.
Run by the farmers the rural markets particularly can become centers of
training farmers as well as traders with regard to different marketing
practices. Operating within the framework of marketing rules and regulations,
the rural population will be able to protect their interests better when they
visit distant wholesale or terminal markets.
5.5
Need for Wider Reach in
Private Sector: Considering the
limited reach of public extension service, it is felt that privatization of
extension services with appropriate financial backup from the public sector is
considered more appropriate and practical. Privatization of extension
activities would facilitate tailor made extension services beneficial to both
farmers as well as entrepreneurs. The NGOS, Cooperatives, Trade Associations,
Private Limited companies, and corporate bodies should be allowed and
encouraged to undertake marketing extension. To facilitate private agencies to
undertake extension programmes on regular basis for the country as a whole, a
24 hours TV Kinas Channel on Doordarshan is necessary. There are 75 channels operated by
Doordarshan, out of this one channel should be devoted exclusively to the
farmers service. The Kisan Channel would be best visual media to educate
farmers by public as well as private agencies for both agricultural as well as
marketing extension service.
5.6 A micro level study for every district is required to be
undertaken with regard to research, training and extension requirements of
crops grown and the markets served by various agricultural products grown. The
rural periodic markets and wholesale assembling markets where farmers visit
frequently need to be provided with extension units to undertake regular
activity to educate farmers in various agricultural marketing issues.
5.7 Training in
Agricultural Marketing: A
substantial training effort wills he needed to upgrade technical, managerial
and organizational skills and knowledge of field and marketing personnel. The major thrust of the training in the
changing scenario should be :-
a)
Agri-business management
b)
WTO and its implementations
c)
Post-harvest management
d)
Grading, Standardization and Quality assurance
e)
Information technology
f)
Emerging areas in agricultural marketing
g)
Organic Food Marketing ( OFM)
h)
Market led extension
i)
Post-graduation courses in State Agricultural
Universities
j)
Entrepreneurship programmes for rural Agri - clinics.
k)
Training of Trainers ( TOT)
5.8 In view of the changes in agriculture in general and agricultural
marketing in particular, there is need to orient the faculty of the national
level nodal institutes. Until and unless the faculty is exposed to the complex
international problems and ground realities of Indian fields, it is not fair to
expect solution of all problems from them. At the same time, they should be
trained involving practical problems of farmers in the fields. The skill should be developed in management,
planning and leadership.
5.9
Research in
Agricultural Marketing: Research in agricultural Marketing assumes the most important role in
the agricultural marketing. Hence we should undertake need based research and
play proactive role in the area of
research marketing effectively. In its endeavor to impart training the
research in agricultural marketing would
establish strong relationship with client organization and strive to serve farmers, consumers and
select organization. Following area have
been identified for potential research marketing:
a)
Marketing technology
adaptable to Indian conditions
like labour intensive technology without compromising quality;
b)
Dynamic studies of comparative advantage of
commodities of
c)
Provide Outlook information for prices and production
for log, medium and short term decisions.
d)
Structure conduct and Performance of Agricultural
markets
e)
Study on cost and margins of agricultural crops
5.10
IT Application in
Agricultural Marketing: Agricultural produce marketing requires
connectivity between the market and exporter/growers/traders, industry
consumers, through wide area network (WAN) of National and International
linkages in order to provide day-to-day information with regard to commodity
arrivals and prevailing rates etc., to provide links for online International
Market Information; to provide export-related documentation, to inform about
the latest research in agricultural marketing, packaging/storage etc. related
information and to provide linkage/connectivity with the World Trade Center
(WTC), APEDA, NIAM, NBB, DNH, IIP, State Agricultural Marketing Boards, and
universities.
5.11 Agricultural
Marketing Information service ( AMIS) needs to be set up at the national
level. This service will be a integrated
service , incorporating the farmer
advisory service with Decision support System( DSS) . Such a system
will help farmers in taking a
intelligent decision related to storing
, pricing , marketing etc. One of the major problems in designing AMIS
is that the information needs of the individual target groups are diversified.
For evolving an information system, assessment of information needs of the
diverse target group is very important so that the information management is
holistic and integrated. For this, forums should be formed to assess the quest
of information among the beneficiaries.
5.12 The system should be broad based to cover information related to
storage, transport, weather forecast, export
potential etc. At the state
level, the Marketing Boards or the Directorates should provide the consolidated
information to all the market users. The coordinating agency will take stock of
information availability and its generation process and distribute it to the
need based target groups.
5.13
E-Catalogue for Commodity Profiles: In the present time of export competitiveness, each and every
product needs to the publicized highlighting its characteristics on nutrition values,
chemistry, quality standards, seasonally, quantity for supply and prices etc. A
brief commercial profile of the commodity would help the buyer in making
comparative analysis on account of cost and margins. Therefore, it is necessary
that each commodity have specific commercial profiles giving the details as
mentioned above. AR profiles should be transmitted to international markets
through "Web Pages". Main objective of the scheme will be a) to
prepare commercial profiles of exportable commodities and b) to give exposure
of commodities to the international markets.
5.14 The farmer advisory service should be leveraged to the platform of
Information Technology. This IT has the scope being a vehicle for transfer of
knowledge. The successful experiment for transferring "lab to land: needs
to replicated in dissemination of knowledge of post harvest management aspects
marketing and management aspects. A development of Expert System would provide
all the information from production to marketing of the commodity.
5.15
National Atlas of Markets
: The mapping of the agricultural markets of the country is a pre requisite for
carrying any planning/developmental activity.
All the regulated markets along with their classification on the
national maps will give synoptic view of the distribution of the markets. The
infrastructure facilities, the quantum transacted, the area and population
served, the outflow and the inflow of the commodities are the various aspects
which should be mapped out. This would be useful for research and policy
making The National Atlas of
Agricultural Markets will be based on the application of GIS tools, such
mapping activity then can also be put on the internet for it's greater usage.
***
Annexure-I
No.11016/3/2000-M.II
Government of
India
Department
of Agricultural & Cooperation
Krishi
Bhavan,
Dated
ORDER
SUBJECT: CONSTITUTION
OF THE EXPERT COMMITTEE ON STRENGTHENING AND DEVELOPING OF AGRICULTURAL
MARKETING.
The National Agriculture Policy (NAP) seeks to promote
agricultural growth maximizes benefits
from exports of agricultural products in the face of the challenges arising from economic liberalization and globalization. The main objective of an efficient
agricultural marketing system should be to ensure that a greater share of the
ultimate price of the agricultural produce goes to the farmers. In the context of the increase in the
production of agricultural commodities and the fast changing economic scenario,
issues relating to the development of agricultural marketing have assumed great
significance. Some of these issues
related to development of infrastructure for agricultural marketing,
establishing sound linkages between production and marketing, development of
market intelligence for the benefit of farmers and consumers, promotion of
direct marketing, application of Information Technology in marketing and
encouraging public, private and cooperative sectors to make investments for the
development of agricultural marketing.
2. Accordingly, the Government has decided to constitute an Expert Committee with the following composition:
| (i) |
Shri Shankarlal Guru,
Chairman,
International Society for Agricultural Marketing,
‘Matru
Ashish’ Nr. Naranpura Rly. Crossing,
B/h. Dena Bank, Usmanpura,
Ahmedabad – 380 013.
|
Chairman |
| (ii) |
Prof. S.S.Acharya,
Director,
8-B,
Jhalana Institutional Area,
Jaipur-320
004.
|
Member |
| (iii) |
Dr. B.D.Pawar,
Additional
Commissioner and Special Registrar, Cooperative Societies,
Government
of
Pune-411001.
|
Member |
| (iv) |
Shri G.Ramachandran,
Business
Economics and Risk Management,
2
B, Chola,
Gopalapuram,
Chennai-600 086.
|
Member |
| (v) |
Shri D.Rajagopalan,
Chairman,
Agricultural
and Processed Food Products Export
Development
Authority (APEDA)
3rd
Floor,
3,
Siri Institutional Area,
August
Kranti Marg,
New
Delhi-110 016.
|
Member |
| (vi) |
A representative of the Reserve Bank of
Mumbai
– 400 001.
|
Member |
| (vii) |
Principal Secretary/Secretary in charge of
Agricultural
Marketing,
Government
of Andhra Pradesh,
Secretariat,
|
Member |
| (viii) |
Principal Secretary/Secretary in charge of
Agricultural
Marketing,
Government
of Madhya Pradesh,
Secretariat,
|
Member |
| (ix) |
Principal Secretary/Secretary in charge of
Agricultural
Marketing,
Government
of
Secretariat,
Dispur, Guwahati.
|
Member |
| (x) |
Principal Secretary,
In-charge
of Agricultural Marketing,
Government
of Karnataka,
|
Member |
| (xi) |
Shri Amitabh Verma,
Secretary,
Cooperation,
Government
of
Secretariat,
|
Member |
| (xii) |
Shri D.S.Bains,
Managing
Director,
Mark
Fed House,
Sector
35-B,
Chandigarh-160022
|
Member |
| (xiii) |
Shri R.V.Deshmukh,
Managing
Director,
Board
(MSAMB),
Pune-411
037.
|
Member |
| (xiv) |
Shri Paul Joseph,
Joint
Secretary (Agricultural Marketing),
Department
of Agriculture & Cooperation
|
Member |
| (xv) |
Shri T.R.Verma,
Director
General,
National
Institute of Agricultural Marketing,
Jaipur
– 303 906.
|
Member |
| (xvi) |
Shri M.K.Mandal, Agricultural Marketing Adviser,
Directorate
of Marketing & Inspection,
Nirman
Bhavan,
|
Member Secretary |
3. The
Terms of Reference of the Expert Committee on Strengthening and Developing of
Agricultural Marketing will be as under:-
(i)
To review the present system of Agricultural
Marketing in the country in the context of increasing agricultural production
and liberalization of International trade;
(ii) To examine the organizational set-up and functioning of the different State Agricultural Produce Marketing Boards and Agricultural Produce Market Committees and to recommend measures to make them more effective instruments for providing better infrastructure and services to the farmers, traders and consumers;
(iii) To make recommendations for promoting pledge finance,
direct marketing and alternative marketing systems;
(iv) To study the requirements of additional investments in
infrastructure, supply chain management from farm to the consumer and other
facilities for the marketing system for the next ten years and to make
recommendations for encouraging public, private and cooperative sectors to make
such investments;
(v)
To examine the requirements of market intelligence
for the farmers, exporters, traders and consumers and to make recommendations
in this regard;
(vi)
To examine the requirements of Market Extension,
Research and training for the Agricultural Marketing system and to make
recommendations in this regard;
(vii) To recommend measures for effectively utilizing
Information Technology tools with special reference to E-Commerce, E-Business,
etc. for the development of a modern marketing system.
4. The
Expert Committee shall submit its Report
to the Secretary, Department of Agriculture and Cooperation, Government of
India, Krishi Bahvan,
5. The
Headquarters of the Expert Committee would be located in the National Institute
of Agricultural Marketing (NIAM), Jaipur.
NIAM would provide all the required Secretarial assistance to the
Committee.
6. The
Expert Committee may form expert groups/sub-committees for different purposes,
regions, etc. As may be required.
7. The
expenditure on account of TA/DA in respect of the Chairman of the Expert
Committee to attend the meetings of the Committee will be borne by NIAM as per
the existing TA Rules/DA Rules of the
Government of India. The expenditure in
respect of Non-official Members of the Committee will be borne by NIAM, Jaipur
as per rules and regulations of TA/DA as applicable to Group ‘A’ Officers of
Government of India.
(M.Senapaty)
Director (Marketing)
Copy forwarded to:-
All Members of the Committee (by
name)
Copy also forwarded to:-
1.
PS to AM
2.
PS to MOS(A)
3.
PS to Secretary (A&C)
4.
PS to AS(J)
5.
AMA
Annexure-IA
No.11016/3/2000-M.II
Government
of
Department
of Agricultural & Cooperation
Krishi
Bhavan,
Dated
ORDER
SUBJECT:CONSTITUTION
OF THE EXPERT COMMITTEE ON STRENGTHENING AND DEVELOPING OF AGRICULTURAL
MARKETING.
----
In continuation of Department of Agriculture & Cooperation’s Order of
even number dated the 19th December, 2000 regarding Constitution of an Expert
Committee on Strengthening and Developing of Agricultural Marketing under the
Chairmanship of Shri Shankarlal Guru, Chairman, International Society for
Agricultural Marketing, it has been decided to nominate the following as a
Member of the Committee:-
Shri
Priyadarshi Thakur,
Manager
Director,
National
Agricultural Cooperative Marketing
Federation
of India Limited (NAFED),
(i) Shri Shankarlal Guru, FAX-079-7509609
Chairman,
International
Society for Agricultural Marketing,
‘Matru
Ashish’ Nr. Naranpura Rly. Crossing,
B/h.
Dena Bank, Usmanpura,
Ahmedabad
– 380 013.
(ii) Shri Priyadarshi Thakur FAX-6840261
Managing
Director,
National
Agricultural Cooperative Marketing
Federation
of India Limited (NAFED),
NAFED
House, Siddhartha Enclave,
Ashram
Chowk, Ring Road,
Copy also forwarded to:-
1. PS to AM
2. PS to MOS(A)
3. PS to Secretary (A&C)
4. PS to AS(J)
5. AMA, Room No.538, A-Wing, Nirman Bhavan,
((Y.TSERING)
Director (Marketing)
Annexure-II
Distribution of Wholesale Assembling, Primary and Regulated Markets in the country ( As on 31.03.2001)
|
Sl. No. |
State/Uts |
No. of Markets |
Regulated Markets |
||||||
|
Whole-sale Markets |
Rural Periodic Markets |
Total |
Principal |
Sub-yard |
Total |
||||
|
1. |
Andhra Pradesh |
861 |
290 |
1151 |
294 |
567 |
861 |
||
|
2. |
Arunachal Pradesh |
- |
50 |
50 |
- |
- |
- |
||
|
3. |
|
172 |
650 |
822 |
16 |
19 |
35 |
||
|
4. |
|
443 |
7000 |
7443 |
122 |
691 |
813 |
||
|
5. |
Jharkhand |
||||||||
|
6. |
|
11 |
8 |
19 |
1 |
7 |
8 |
||
|
7. |
|
396 |
137 |
533 |
161 |
235 |
396 |
||
|
8. |
Haryana |
284 |
157 |
441 |
105 |
179 |
284 |
||
|
9. |
Himachal Pradesh |
35 |
30 |
65 |
8 |
27 |
35 |
||
|
10. |
Jammu & Kashmir |
26 |
47 |
73 |
APMR Act not yet
implemented |
||||
|
11. |
Karnataka |
473 |
941 |
1414 |
140 |
333 |
473 |
||
|
12. |
Kerala |
351 |
2000 |
2351 |
APMR Act not yet
implemented |
||||
|
13. |
Madhya Pradesh |
633 |
3000 |
3633 |
300 |
316 |
616 |
||
|
14. |
Chhatisgarh |
||||||||
|
15. |
|
857 |
3500 |
4357 |
266 |
591 |
857 |
||
|
16. |
Manipur |
20 |
49 |
69 |
APMR Act not yet passed |
||||
|
17. |
Meghalaya |
101 |
82 |
183 |
- |
- |
- |
||
|
18. |
Mizoram |
8 |
35 |
43 |
- |
- |
- |
||
|
19. |
Nagaland |
16 |
80 |
96 |
- |
- |
- |
||
|
20. |
Orissa* |
163 |
1150 |
1313 |
57 |
87 |
144 |
||
|
21. |
|
675 |
- |
675 |
143 |
532 |
675 |
||
|
22. |
Rajasthan |
412 |
558 |
970 |
125 |
287 |
412 |
||
|
23. |
|
10 |
30 |
40 |
- |
- |
- |
||
|
24. |
Tamil Nadu |
300 |
677 |
977 |
270 |
- |
270 |
||
|
25. |
Tripura |
84 |
554 |
638 |
21 |
- |
21 |
||
|
26. |
Uttar Pradesh |
645 |
3322 |
3967 |
265 |
380 |
645 |
||
|
27. |
Uttranchal |
||||||||
|
28. |
|
279 |
2925 |
3204 |
46 |
541 |
587 |
||
|
29. |
Andaman & Nicobar |
- |
- |
- |
APMR Act not yet passed |
||||
|
30. |
|
2 |
- |
2 |
1 |
1 |
2 |
||
|
31. |
Dadra & Nagar Haveli |
- |
6 |
6 |
APMR Act not yet passed |
||||
|
32. |
Daman & Diu |
- |
- |
- |
- |
- |
- |
||
|
33. |
|
30 |
7 |
37 |
9 |
12 |
21 |
||
|
34. |
|
- |
- |
APMR Act not yet passed |
|||||
|
35. |
|
6 |
9 |
15 |
4 |
2 |
6 |
||
|
Total |
7293 |
27294 |
34587 |
2354 |
4807 |
7161 |
|||
* Figures are provisional.
** In
Annexure-III
Investment Requirements for Development of Wholesale
and Rural Markets
|
State |
Total No. of Wholesale Markets |
Investment need for market Development (Rs. crores) |
No. of Rural Periodic Markets |
Investment Required
(Rs. crores) |
|
Andhra Pradesh |
861 |
800 |
290 |
29.00 |
|
Arunachal Pradesh |
- |
- |
50 |
5.00 |
|
|
172 |
234 |
650 |
65.00 |
|
|
443 |
221 |
7000 |
700.00 |
|
|
11 |
8 |
8 |
0.80 |
|
|
396 |
198 |
137 |
13.70 |
|
Haryana |
284 |
142 |
157 |
15.70 |
|
Himachal Pradesh |
35 |
35 |
30 |
3.00 |
|
Jammu & Kashmir |
26 |
55 |
47 |
4.70 |
|
Karnataka |
473 |
236 |
941 |
94.10 |
|
Madhya Pradesh* |
633 |
316 |
3000 |
300.00 |
|
Kerala |
351 |
174 |
2000 |
200 |
|
|
857 |
428 |
3500 |
350 |
|
Manipur |
20 |
20 |
49 |
4.90 |
|
Meghalaya |
101 |
30 |
82 |
12.30 |
|
Mizoram |
8 |
11 |
35 |
3.50 |
|
Nagaland |
16 |
22 |
80 |
8.00 |
|
Orissa |
163 |
82 |
1150 |
115.00 |
|
|
675 |
40 |
- |
- |
|
Rajasthan |
412 |
1900 |
558 |
55.80 |
|
|
10 |
5 |
30 |
3.00 |
|
Tamil Nadu |
300 |
135 |
677 |
67.70 |
|
Tripura |
84 |
42 |
554 |
30.60 |
|
Uttar Pradesh* |
645 |
322 |
3322 |
33.22 |
|
|
279 |
140 |
2925 |
29.25 |
|
Andaman & Nicobar |
- |
5 |
- |
- |
|
|
2 |
1 |
- |
- |
|
Dadra & Nagar Haveli |
- |
- |
6 |
0.60 |
|
|
30 |
420 |
7 |
0.70 |
|
|
- |
2 |
- |
- |
|
|
6 |
2 |
9 |
0.90 |
|
Total |
7293 |
6026 |
27294 |
2146.40 |
Includes
recently carved States.
Annexure-IV
Projections of Investment in Food Processing Sector
(Rs. crores)
|
State |
Project Investment |
|
Andhra Pradesh |
6433.00 |
|
|
2769.20 |
|
|
6970.60 |
|
|
792.40 |
|
|
6584.20 |
|
Haryana |
2153.20 |
|
Himachal Pradesh |
1429.40 |
|
Karnataka |
9864.40 |
|
Madhya Pradesh |
2942.80 |
|
Kerala |
14172.20 |
|
|
22786.40 |
|
Orissa |
6592.60 |
|
|
6529.60 |
|
Rajasthan |
515.20 |
|
Tamil Nadu |
17645.60 |
|
Uttar Pradesh |
10169.60 |
|
|
15451.80 |
|
|
6197.80 |
|
Other’s |
10000.00 |
|
Total |
150000.00 |
Based on
estimates of Department of Food Processing Industries, Government of India
|
|
|
|
|
|
Annexure-V |
||||||
|
|
|
|
|
|
|
|
|||||
|
Potential of Sources of Investment in Agricultural
Marketing Infrastructure |
|||||||||||
|
|
|
|
|
|
|
|
|||||
|
|
|
|
|
|
(Rs in Crores) |
||||||
|
S.No. |
Infrastructure Items |
Investment |
State |
Private |
Central |
Total |
|||||
|
|
|
Requirement |
Sector |
Sector |
Sector |
|
|||||
|
|
|
|
|
|
|
|
|||||
|
1 |
Rural Roads |
74000 |
37000 |
0 |
37000 |
74000 |
|||||
|
2 |
Market Yard Development |
6026 |
6026 |
0 |
0 |
6026 |
|||||
|
3 |
Development of F&V Markets |
970 |
485 |
0 |
485 |
970 |
|||||
|
4 |
Rural Periodic Markets |
2146 |
0 |
0 |
2146 |
2146 |
|||||
|
5 |
Storage |
5400 |
1350 |
2700 |
1350 |
5400 |
|||||
|
6 |
Rural Godowns |
NE |
NE |
NE |
NE |
NE |
|||||
|
7 |
Cold Storages |
27000 |
0 |
20250 |
6750 |
27000 |
|||||
|
8 |
Reefer Vans |
600 |
0 |
480 |
120 |
600 |
|||||
|
9 |
Cleaning & Grading |
2000 |
900 |
100 |
1000 |
2000 |
|||||
|
10 |
EOAZs |
600 |
50 |
400 |
150 |
600 |
|||||
|
11 |
Value Addition & Processing |
150000 |
0 |
112500 |
37500 |
150000 |
|||||
|
12 |
Telecommunication |
NE |
NE |
NE |
NE |
NE |
|||||
|
13 |
Total |
268742 |
45811 |
136430 |
86501 |
268742 |
|||||
REFERENCES
1. Agenda Notes for Conference of Chief
Ministers on WTO/Agreement on Agriculture and Food Management, Vigyan Bhavan,
New Delhi, May, 21, 2001.
2. Agriculture in Future: Demand – Supply
Perspective for Ninth Five Year Plan - A paper by P.Kumar and V.C. Mathur in
Economic and Polictical Weekly,
3. Agricultural Marketing Development Policy
in
4. Domestic Agricultural Marketing Policies,
Incentives and Integration by Prof. S.S.Acharya, Institute of Development
Studies,Jaipur December, 2000.
5. Exploration for Alternative Marketing
Arrangements and Self-Sustained Growth Process, Promotion of Private and Joint
Sector Investment and Rule of Government – A paper by Dr. M.S.Jairath, NIAM,
Jaipur.
6.
7. Interim
Report of the present Expert Committee
8. Marketing of Agricultural Products Act,
1996, as amended in 1997,
9. National
Agricultural Policy Document.
10. Reports
of the four Working Groups submitted by the conveners.
11. Report of the High Power Committee on
Agricultural Marketing headed by Shri Shankerlal Guru, 1992.
12. Report of Kabra Committee, 1994 on Forward
Trading.
13. Report of the Sub-Group on Infrastructure
for Horticulture Sector -Formulation of Xth Five Year Plan for Horticulture
Development.