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Will private players augment agri-market infra?

December 21, 2020 05:49 AM

Will private players augment agri-market infra?
Sukhpal Singh, MK Sekhon and Amarpreet Kaur

The three recent agri-laws, especially the Farmers Produce Trade and Commerce (Promotion and Facilitation) Act, 2020, would severely impact the regulated agricultural marketing system in the country. The de-regulated marketing system and the entry of the ‘two-market system’ will have adverse implications for farmers and state revenue.

Since its inception, under the prevailing Agricultural Produce Marketing Committee (APMC) system, the role of the Punjab Mandi Board (PMB) has been vital. It facilitated the state’s journey to becoming the breadbasket of India. The PMB provides facilities for sale of agricultural commodities in the mandis and earns income from the marketing of farm produce in the form of marketing fee and rural development fund from the buyer of the produce. The revenue so generated is then spent for agri-market infrastructure and rural development of the state.

The revenue generation by PMB during 2018-19 through market fee and rural development fund @ 3% on Ad Valorem (value) basis each was about Rs 3,900 crore. The system of public procurement, and subsequently generating revenue, for public development is acknowledged the world over as a unique system.

Contrastingly, the new laws allow tax-free purchase of agricultural produce by private buyers. This purchase by private players will be encouraged in tax-free markets, thus reducing sale and purchase in the APMC mandis. Resultantly, the revenue of the board will decline severely which would have adverse ramifications on developmental works in the state. The marketing infrastructure that PMB has created in the state includes 154 regulated markets, 280 sub-yards and 1,436 purchasing centres (4,006 in 2020) adding to a total of 1,870 purchasing points. These markets have ‘pucca auction’ places, covered sheds, office buildings and lighting arrangements.

Efficient Punjab mandi board

The phenomenal task of 326 lakh tonne of wheat and paddy (27% of the country) procurement is being efficiently performed by PMB. In addition to these markets, the modern retail markets, including for fruit and vegetable, fish, meat and wood markets are also developed. These markets have sufficient areas for parking of vehicles to farmers for free. Moisture meter, motorized sweeper and cleaner, electronic display boards, information kiosks and power cleaner are also available in the majority of the markets. The PMB has over 22,000 plots including shops, grain shops, booths etc and the area covered by market yards and sub-yards is around 1,700 acre.

PMB is a nodal agency for rural link roads taking care of 14,600 roads with a length of 31,988km in rural areas. The PMB repairs and re-carpets these roads every six years. This system of roads linking rural areas with the main roads and market committees for the convenience of farmers is nowhere developed by any private player, which is used without any charges. In Punjab, one can find a market or purchase centre at a distance between 2km and 5km. The recommendation of the National Farmers Commission is 5km radius for a market. To encourage diversification, PMB has set up seven maize dryers costing ₹55 crore with a capacity of 248 tonne per lot to ease drying and sale of maize. Likewise, for drying and pre-cleaning cotton seed, a unit has been established in cotton belt of the state. The PMB has established kinnow waxing plants, potato grading plants and pack-houses, which include cold-room and ripening chambers for encouraging value addition of farm produce. Despite developing such good market infrastructure, PMB is always keen to perk up livelihood security and crisis management of farmers and farm workers. The board has provided Rs 700 crore for debt-relief to farmers last fiscal. The PMB also provides health insurance to farmers, which include a cover of Rs 5 lakh for the head of the family and medical treatment of Rs 50,000 for all dependent family members and compensation in case of any accident or death, while performing farm operations.

Public welfare functions are generally performed by the public sector.

In the notion of ‘one nation one market’, it is unviable for private players to develop good infrastructure, which is free of usage charges as they incur induced investment for profit motive.

In this light, a lesson should be learnt from Bihar where the APMC act was repealed, and many other states where it was amended.

The Bihar State Agricultural Marketing Board has lost revenue, which led to the deterioration of pre-reform market infrastructure.

Unlike the promulgated view of massive investment, Bihar did not usher in private investment for creating new markets or strengthening facilities in the existing ones. Beyond doubt, the public sector, under the APMC regime, has made remarkable contributions in the development of sufficient market infrastructure in Punjab and Haryana. With the easy entry of private players under recent laws, agriculture markets would be deprived of the required marketing infrastructure and remunerative prices to all stakeholders.

The authors are from the departments of economics and sociology, PAU, Ludhiana; Sukhpal Singh is principal economist and former head of the department.Views expressed are personal

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