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• Jurisdiction
– Agricultural production and marketing : State Subject
– Food security/ Market Intervention/ Implementation of MSP : Central Subject
– Key Legislations
– Agricultural Produce Marketing Act (APMC)
– Essential Commodity Act (ECA)
– Tenancy Act
Need for Agri Market Reforms: Value Chain of Processed
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Why is Reform Required
• The objective of higher farmer share in the customer price has not been achieved
– Multiplicity of intermediaries
• Major share of marketed surplus is transacted through private trade, but options for
private investments in agricultural marketing is limited
– This hinders the much needed investments in agriculture
Proposed Reforms
Proposed Reforms
Market
Infrastructure
• Market Infrastructure
• Promoting alternate markets with a view to disintermediate and enhance investments
in post-harvest infrastructure
– Terminal Markets
– Rural Hubs/ Agri service centres
• Direct Selling by Farmer
– Facilitation by government promoted markets
– Contract farming
• Access to Market
• Governments role in linking farmer with the commodity market
• Legal Reforms
• Legal reforms required to achieve the above
Alternate Markets
Terminal Market: Proposed Ownership
Structure
Government (Central / State)
Equity
Contributio
Working n
Banks Capital SPV (Company)
Long term
debt
Equity
Equity Contributio
Contributio n
n
Private Enterprise Commission Agents
& Traders
Association
• Increase farmers’ share in end consumer price and reduce the role of intermediaries
• Farmer associations would aggregate supply from farmers at village level
– Reducing the role of village commission agent / consolidator
• Collection centres would ensure that farmers produce is properly graded and
farmers’ remuneration is fixed as per the grades
• Price discovery mechanism would be more transparent to farmers
• Farmers would have access to market information and auction prices
• As per Rabo estimates
– Farmer realisation in consumer price would increase from 27% to 50%
– Price for consumers to come down by 15-20%
– Wastage in the value chain to come down from 22% to 5%
Rural Hubs / Agri Service Centres
Is an innovative concept emerging in the rest of the world and many parts of India
Stakeholders Benefits
Farmers • Assured supply of inputs
• Assured quality
• Improved yields
• Market linkages
ITC e-Choupal Choupal Sagar DSCL Hariyali Kisan Tata Kisan Sansar Mahindra
Bazar Shubhlabh
Value Information, services, Farm and non-farm Agri-inputs, technical Agri-inputs, Agri inputs, farm
proposition procurement, products sale products, guidance, crop finance, agronomic services. management
Procurement petrol retailing solutions
Geographic MP, UP, Rajasthan, MP Punjab, Rajasthan, UP UP, Punjab, Haryana. TN, Rajasthan,
reach Karnataka, AP, Maharashtra. 14,000 villages Punjab, MP,
31,000 villages, 3.1mn Maharashtra, Gujarat
farmers.
Revenue Procurement, sale of agri- Procurement, selling Farm inputs. Agri-inputs, rentals, Farm inputs, rentals
streams inputs, farm machinery, edible of consumer goods On the anvil- personal services on equipment, crop
oil/ semi durables, rentals. and farm inputs, products, staples. management
services. advisory
Land area On 8 acres of land, On 2.5-3 acre, 6-7 persons Store area: 800-1200 Store area-2000sq.ft.
15 people per store per store sq. feet Warehouse-
1000sq.ft.
Time to reflect
Direct Selling
Direct Marketing: Facilitation by Government
• Examples
– Uzhavar Sandhai (Farmer market)
– Rythu Bazaar
• Complete disintermediation
• Market for only fruits and vegetables
Direct Selling: To processors & Traders
• Example
– Contract farming in seed production
– Contract farming in poultry
– Contract farming in Gherkin, Tomato etc
• Key requirements
– Ability of the contracting firm to offer higher returns to the farmer while being competitive in
pricing
– Ability to provide embedded services like inputs, credit and insurance
– Farmer level organizations for better negotiation
– Dispute settlement mechanism
• Drawbacks
– Can’t be practiced in all crops (crop characteristics is a critical factor in contract farming)
Linking Farmer to the
Market: Access to Market
Linking Farmer to the Market
• State governments could permit electronic spot markets (by amending APMC act)
which could help
– Create a common market
– Reduce logistics cost
Direct Marketing
• Allowing private individuals/ corporates to procure directly (at farm gate) from the
farmer under contract farming mechanism
• Creation of a dispute settlement mechanism for contract farming
• Tenancy acts to be amended for leasing of agricultural land for integrated farming
(specially for high tech agriculture)
Essential Commodities Act: Amendments