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ENDING APMC MONOPOLY (Way Forward (Creating Market Infrastructure…
ENDING APMC MONOPOLY
Way Forward
Creating Market Infrastructure
Physical integration
Digital integration
Changing the target market
Transport and storage infrastructure for perishables
India’s cold storage capacity is nearly 3.5 cr tonnes, short by 30-40 lakh tonnes, and it needs to be increased
Establishing Markets of National Importance (MNI)
Setting up Farmer Producer Organizations and Cooperatives
Restructure Essential Commodities Act
incentivize corporate companies to invest in commodities.
exemptions from stockholding limits mustbe given to exporters, food processors,multiple outlet retailers, large departmental retailers etc.
Alternative marketing options
contract farming, direct marketing through FPOs/cooperatives etc, commodity trading through National Commodity and Derivatives Exchange, e-RaKAM (digital spot trading market), NSEL (where warehouse receipts of commodities are traded) etc.
Nation-wide Price Dissemination Mechanism
Forward Market Commission (FMC) has set up e-portal AGMARKNET that displays real time wholesale price of agricultural commodities on e-portal connected with APMC markets, Kisan mandis, Kisan Vikas Kendras (KVKs), State Agricultural Boards etc.
Why do APMCs need reform?
monopoly of APMCs in agriculture market reduces buyer competition in comparison to integrated markets, as it limits the geographical range of the mandis, number of buyers and sector specialization of buyers
High Spatial Price Dispersion
indicates that markets are not well integrated and logistics cost is high
Cartelization: Cartelization by traders prevents price discovery mechanisms from functioning in mandis.
High Degree of Intermediation
High License fees + APMC Cess and Taxes
Wastage (poor storage and transportation): APMCs do no value addition in terms of storage and transport facilities leading to high wastage