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Maharashtra government likely to deregulate foodgrain prices

LiveMint logoLiveMint 02-05-2017 Abhiram Ghadyalpatil

Mumbai: Enthused by farmers’ response to the delisting of vegetables and fruits from the purview of the Agriculture Produce (Marketing and Regulation) Act, the Maharashtra government now plans to deregulate foodgrain to facilitate a direct market between farmers and consumers.

Maharashtra’s minister of state for agriculture and marketing Sadabhau Khot announced this on Monday at the inauguration of a “farmer-consumer foodgrains and mango market” in Thane near Mumbai.

The move assumes significance in the wake of the tur dal procurement crisis in Maharashtra. Under current APMC (Agricultural Produce Market Committee) regulations, tur dal and other foodgrains are sold by farmers only at government-designated procurement centres at APMC markets.

At the APMC markets, the farmer is paid the minimum support price (MSP) fixed by the government if his produce is graded as “Fair Average Quality” (FAQ) by APMC graders. Produce graded below FAQ can be sold only to licensed traders at the APMC markets at a price below the MSP.

If foodgrains and pulses are deregulated from the APMC Act, farmers would become legally free to sell their produce outside APMC markets. According to the estimates of Maharashtra’s agriculture department and APMC industry, 30% to 35% of Maharashtra’s total tur yield of 2.35 million tonnes in 2017 remains unsold as the government has not bought it at MSP.

A senior official at the state’s agriculture and marketing department said Khot had asked the officials to draft a proposal for deregulating foodgrains and pulses.

The official, who requested anonymity, pointed out that it would be “difficult to see the proposal through”. “It requires a long legislative process. The minister also understands that the APMC lobbies will oppose it as they have opposed previous reforms,” the official said.

Interestingly though, Maharashtra’s minister for cooperation and marketing and BJP’s Subhash Deshmukh said he was “unaware of any such proposal and would seek information”. Khot is from Bharatiya Janata Party (BJP) ally Swabhimani Shetkari Sangh, a political party avowedly committed to farmers’ interests. He has been an enthusiastic supporter of the Devendra Fadnavis government’s efforts to establish direct farmer-to-consumer markets outside APMC regulations.

The APMC lobby has reacted strongly to the announcement. Sudhir Kothari, chairman of the Hinganghat APMC in Vidarbha, a big regulated market for cotton, foodgrains, and pulses including tur dal, said deregulation of foodgrains and pulses would “finish off the APMC sector”. “This will have a vast impact on the functioning of all APMCs in the state as foodgrains and pulses form the bulk of the APMC contracts. Sugar cane is already out of APMC purview. Last year the government deregulated fruits and vegetables. If foodgrains and pulses are deregistered, what will be the APMCs left with,” Kothari said, adding that the government was “punishing APMCs for its incompetence and failure to buy Tur at MSP.”

The announcement is in keeping with the Maharashtra government’s efforts to break the monopoly of APMCs over the buying and selling of farm produce as per the APMC Act of 1961.

In August 2016, the Fadnavis government deregulated fruits and vegetables from the APMC regulations and facilitated establishment of weekly farmers’ markets outside APMC mandis in major cities including Mumbai. Currently 48 such markets are operating across Maharashtra.

The first phase of APMC reform, however, came in 2006 when the then Congress-Nationalist Congress Party government amended the APMC Act and allowed initiatives such as direct marketing licences to retailers to buy farm produce from farmers without APMC intervention or farmers being required to obtain licences.

Before these two reforms, all farm produce in the state, except sugar cane, had to be compulsorily brought to APMC-regulated markets. Sugar cane farmers in Maharashtra have to sell their cane to sugar factories who pay them the government-mandated fair remunerative price (FRP).

The APMC monopoly has led to cartels of traders, commission agents, transporters, and politicians being formed that ensure that farmers have little role in determining the prices of their produce and the end user is forced to buy farm produce at exorbitant prices due to multiple levies.

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