Policy Measures to Improve Agricultural Marketing in India
The sources highlight various policy measures implemented in India to improve agricultural marketing, reduce risks for farmers, and enhance their profitability. These measures primarily focus on regulating markets, improving infrastructure, promoting contract farming, and strengthening farmer cooperatives.
Regulated Markets
- Establishment of Regulated Markets: To protect farmers from exploitative practices in traditional unregulated markets, the government introduced regulated markets under the Agricultural Produce Marketing Act (APMA) in 1954. These markets aimed to ensure fair pricing through open auctions, transparent weighing, and standardized charges.
- Features of Regulated Markets: Regulated markets are characterized by features like open auctions, licensed weighmen, cleaning and grading of produce, dissemination of market information, specified market charges, timely payments to sellers, and licensed functionaries. They also offer amenities like link roads, spacious market yards, rest houses, cattle sheds, and other infrastructure like banks, canteens, and post offices.
- Addressing Inadequacies: Despite their benefits, the APMA markets, over time, developed restrictive and monopolistic tendencies, hindering direct marketing and private investment. This led to the formulation of a Model Agricultural Produce Marketing Act in 2003 to address these shortcomings.
- Model Act 2003: This model act promotes reforms such as removing restrictions on direct marketing, encouraging private sector participation in market infrastructure development, and establishing a framework for contract farming. It specifically encourages Public-Private Partnerships (PPPs) in agricultural markets.
Infrastructure Development
- Warehousing: The absence of proper warehousing facilities in villages forces farmers to resort to unscientific storage methods, leading to significant losses and distress sales at low prices. To address this, the government implemented schemes like the “Construction of Rural Godowns” to encourage the development of scientific storage capacity with allied facilities in rural areas. This scheme provides subsidies for constructing godowns and aims to prevent distress sales by facilitating pledge loans and marketing credit.
- Marketing Infrastructure, Grading and Standardization: The Ministry of Agriculture also implements a scheme for “Development/Strengthening of Agricultural Marketing Infrastructure, Grading and Standardisation”. This scheme offers investment subsidies for developing marketing infrastructure, promoting grading, and standardization of produce.
- Market Research and Information Network: Timely and accurate market information is crucial for farmers to make informed decisions about production and marketing. The government established the “Agricultural Marketing Research and Information Network (AGMARKNET)” to collect and disseminate price and market-related information. AGMARKNET provides electronic connectivity to major agricultural markets, improving access to real-time price information.
Contract Farming
- Contract Farming as a Solution: Contract farming is emerging as a viable solution to link farmers directly with processors and retailers, ensuring assured markets, reduced risks, and better prices.
- Model Act 2003 and Contract Farming: The Model Act 2003 includes provisions to promote contract farming, facilitating agreements between farmers and firms for specific quantities, quality, and pre-agreed prices.
- Benefits of Contract Farming: This approach offers farmers benefits like access to inputs, technology, credit, and extension services, while ensuring a stable market for their produce.
- Direct Procurement: In states that have amended their APMC Act, direct procurement from farmers is permitted, allowing retailers and processors to bypass regulated markets and directly purchase produce from farmers based on quality criteria.
- Contractual Buyback Arrangements: Some firms engage in contractual buyback arrangements with farmers, providing them with back-end support like extension services, inputs, and credit facilities. This model ensures a consistent supply of quality produce for the firms.
Strengthening Farmer Cooperatives
- Role of Cooperatives: The cooperative sector plays a crucial role in assisting farmers with marketing their produce.
- National Agricultural Cooperative Marketing Federation (NAFED): NAFED, established in 1958, coordinates the activities of state cooperative marketing federations and provides guidance on various aspects of marketing, processing, and trade.
- Weaknesses of Cooperatives: Despite their potential, cooperative marketing structures face challenges like lack of forward and backward linkages, limited engagement in marketing activities, financial weaknesses of primary societies, and a focus on low-risk activities.
Other Policy Measures
- Insurance: To mitigate risks associated with agricultural production, the government has launched various agricultural insurance schemes, including the National Agricultural Insurance Scheme and the Pradhan Mantri Fasal Bima Yojana. These schemes provide financial support to farmers in case of crop losses due to natural calamities, pests, and diseases.
- Subsidies: Input subsidies, like those on fertilizers, seeds, and irrigation, aim to reduce production costs and enhance productivity. Output price subsidies, offered through higher procurement prices, ensure remunerative returns for farmers.
- Policy Focus on Eastern States and Rainfed Regions: Recognizing the regional disparities in agricultural development, the government has initiated policies to focus on the agricultural development of eastern states and rainfed regions that have lagged behind.
- Promoting Private Investment in Agri-business: The government is encouraging private sector participation in agricultural R&D, storage, marketing, and processing, particularly in high-value segments like horticulture, floriculture, and livestock.
These policy measures demonstrate the government’s commitment to improving agricultural marketing in India. While progress has been made, the sources also acknowledge the need for continuous improvement and a focus on inclusive growth, ensuring that small and marginal farmers benefit from these initiatives.