Agriculture Policy

Don’t Bypass APMC Mandis; Allow Farmers to Sell Directly Outside Them, Say Ag Experts

Trading at Gulbarga regulated mandi in Jan 2017. Photo by Vivian Fernandes

Farmers should have the option of selling outside the regulated APMC mandis (without paying mandi charges). That gives them an edge with buyers. Bypassing the regulated mandis as one of the three repealed farm laws proposed diminishes their bargaining power. Farmers’ decision to sell outside the regulated mandis is largely dependent on the price difference between the two and is an example of farmers using APMCs as a bargaining chip. If farmers have more options to sell it is because of the various APMC model acts rather than the three farm laws that would have resulted in bypassing the existing APMCs. This is the conclusion of Poornima Varma, Chairwoman of the Centre for Management in Agriculture, IIM Ahmedabad and Nikita Gupta, a doctoral student at the centre. Their article in the Indian Express can be read here.

The authors say the regulated markets need reform. Their infrastructure should be upgraded. Most are riddled with layers of kachcha arhtiyas and pakka arhtiyas. These middlemen just mediate a transaction and charge commission without providing any grading or sorting facilities. Though quality testing in laboratories is available in principle, in practice only a small quantity is machine tested. Quality assessment is mostly done though visual examination. APMCs should adopt artificial intelligence machines for quality testing in order to hasten the testing process, they say.

The authors of the article also say that e-NAM, which the PM announced with much fanfare in April 2017, is in a shambles. Only a small share of APMC trades take place through e-NAMs. Traders use them mainly for inter-mandi arbitrage. The government says that markets linked to e-NAM should have laboratories with computers, crop testing machines and trained professionals to operate them. In an e-NAM system, farmers have to register at the market gate, get their produce weighed and samples tested and then accept or decline the e-auction prices sent to their mobile phones via SMS. Such digital interventions are needed to increase farmers’ integration into e-NAM markets. Otherwise, e-NAM will be limited to traders, they say.

(Top photo of trading at Gulbarga regulated mandi in January 2017 by Vivian Fernandes)

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