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Although the APMC regulations were designed to safeguard the interests of the farmers, the actual implementation of these regulations has remained far from ideal and several problems in the functioning of the APMC markets persist. It has been found that commission agents and Marketing Committee members often form cartels and collude to manipulate prices. Given the inadequacy of formal-sector credit, particularly for small peasants, it is common for the traders and commission agents to provide credit to farmers and tie crop sales with repayment of credit, charging a high rate of interest from the farmers.

The problems of existing regulated markets — cartelization, use of unfair practices, interlocking of trade with provision of credit, and negligible participation of women — are rooted in lack of implementation of agrarian reforms and effective democratisation of the social, political and economic institutions in Indian villages. Failure of governance and ineffective regulation are an outcome of political dominance of big capitalists, merchants and landlords. The end to economic exploitation of peasantry can only be achieved through implementation of redistributive agrarian reforms and effective democratisation. These are critical to make the regulatory systems more effective. Farmers need more effective regulation, and not less regulation, in the arena of agricultural marketing. Making agriculture remunerative for farmers is a key challenge. This requires an overarching review of policy changes that have been introduced in the areas of input pricing, trade liberalisation and prices of agricultural produce as part of the liberalisation programme. These changes have been responsible for the deep agrarian crisis that rural India finds itself in today.

It is highly likely that public investment in creating new APMC markets and improving infrastructure of APMC markets will fall dramatically in the coming years because of the poor resource position of the central and State governments and the likely fall in revenues of Market Committees of the existing regulated markets. Secondly, given the low density of regulated markets in many States, there was already plenty of scope for private corporate investment in development of agricultural marketing infrastructure. Despite this, the investment by private agribusiness corporations in development of agricultural market infrastructure has remained small.  Little private investment has taken place in States that do not have APMC laws or have liberalised APMC laws considerably.

Over the last few years, the central government has used various ways to coerce the State governments to amend their respective APMC Acts to liberalise agricultural markets. In the terms of reference of the Fifteenth Finance Commission, the central government specifically asked it to consider using performance-based incentives for the provision of grants. Consequently, in its report for the year 2020-21, the Finance Commission introduced performance-based grants and recommended that the States that pass the model “Agricultural Marketing Produce and Livestock Marketing (Promotion and Facilitation) Act”, “Model Agricultural Produce and Livestock Contract Farming and Services (Promotion & Facilitation) Act” and the “Model Agricultural Land Leasing Act, 2016” in their legislatures would “become eligible to avail the grants awarded by us from 2021-22 onwards”. This was an unusual recommendation. Although several Finance Commissions in the past have used developmental indicators to measure resource requirements of States, to facilitate them to take policy measures for development in the States, and more recently, to impose fiscal discipline on the States, there are not many precedents of Finance Commissions demanding specific legislative changes by States for them to become eligible for grants. The most important, and perhaps the first such case, was when the 13th Finance Commission made amendment/enactment of the FRBM Acts by States as a precondition to get the State-specific grants. But the Fifteenth Finance Commission went a step further, unprecedented in the history of Finance Commissions, to demand that States enact legislation in areas that were not  directly related to State finances or fiscal discipline of the States.

Letter from Maoists : వికల్ప్‌ పేరుతో మావోయిస్టుల సంచలన లేఖ

Public procurement has become exceedingly important in recent years because returns from agriculture have been squeezed due to increasing cost of production and greater integration with the world markets. Deregulation of input markets and withdrawal of public provisioning of various services has been responsible for the increase in cost of production. Public procurement is, however, limited primarily to rice and wheat. Government neither has infrastructure for storage nor an institutional structure for distribution of other commodities. Even in case of rice and wheat, there is a close relationship between the existence of market infrastructure and public procurement. In fact, the existence of regulated markets and procurement centres is a precondition for procurement. Government agencies carry out procurement in the market yards and in the special procurement centres established by the Market Committees and the State Marketing Boards. Farmers in States that do not have enough designated market yards or procurement centres do not have the option of selling grain to government agencies. The FPTCA would create conditions in which maintenance, upkeep and modernization of regulated markets will become uneconomical and suffer because of lack of resources. There is no doubt that degeneration of the regulated market system will work to reduce the access of farmers to public procurement.

Would tax and other economic incentives provided under the FPTCA make investments in agricultural marketing more attractive and draw private corporate investors? There are at least two reasons why this might not turn out to be the case. First, public and the private investment are complementary. Creation of basic infrastructure in the public sector results in downstream private sector investment in cold-storages, agro processing and retail. A decline in public investment could become a barrier for private corporate investment as well. Secondly, an unprecedented economic crisis caused by the COVID pandemic (and reckless policies used to deal with it) is likely to result in a general slowing down of private investment. While world over countries are using public investment to rebuild the economies, relying on private investments for creating basic infrastructure in the current context does not seem to be a promising strategy.

It has been argued  by proponents of liberalisation of agricultural marketing that restrictions imposed by the APMC Acts have discouraged private investment. The natural question that follows then is whether the FPTCA is likely to result in an increase in investment in agricultural marketing. First, there has been a sharp deceleration in the public investment for creation of market infrastructure since the 1990s. In most States, APMC mandis are too few and far between. The  Swaminathan Commission in 2004 recommended that a regulated market yard should be available for every 80 sq km. However, in reality, the all-India average of the area served by a regulated market is about 496 sq km. The density of regulated markets in no State is close to the benchmark recommended by the Swaminathan Commission. Investment for creation of agricultural marketing infrastructure declined and not many new regulated markets were created after liberalisation of the economy started in 1991. In fact, the number of regulated markets has declined over the last 15 years.