Analysis: Model APLM Act

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In light of the recent headlines where the Centre asked the States to “take the ordinance route to bring in APMC reforms to facilitate better market access for farmers during the prevailing lockdown” the importance of the model APLM Act 2017 arose. It was seen that the Agriculture Secretary Sanjay Agarwal in a letter to the state of Karnataka said that “In the present challenging time due to Covid-19, there is utmost need to facilitate farmers in all possible ways to make market access at the doorstep by limiting the market regulations within the physical boundaries of the mandis.

I would, therefore, request that your State should consider adopting the same urgency through the route of Ordnance in the interest of the farmers and producers to enable them to get better market access for their produce at this juncture for better remunerative prices”. The Agriculture Ministry has written to States to bring in amendments to the earlier APMC Act and adopt the new and refined Model Agricultural Produce and Livestock Marketing (Promotion and Facilitation) Act, 2017, issued by the Centre.

As, this Act aims at developing a state-level unified market through acquisition of at least nine essential areas of rehabilitation. Some of the areas of this unification would be through, limiting regulation of APMC to within the physical premises of the mandi, separation of power and functions of director of the mandi board, declaring warehouses and cold storages as market sub-yards, deregulating fruits and vegetables, private markets, direct marketing and adhoc wholesale buying, e-trading, unified licence across the State and single point levy of market fee. Attempts in the past have been made by the Centre to try and persuade States and UTs to carry out these market reforms letting the farmers to grow with the modern pace, but the responses were lukewarm. Now due to the present distressing scenario, finally the model APLM Act 2017 has got a chance to achieve its objectives of augmenting farmers’ stature.

Salient features

In 2003, a model APMC Act by the then Department of Agriculture & Cooperation was shared with all the States and UTs, and this marked the beginnings of next generation market reforms in the country and it followed up with sharing of Model APMC Rules in the year 2007. A review in the year 2016 was made by the Department of Agriculture, Cooperation and Farmers’ Welfare and also the NITI Aayog which unfortunately seemed to highlight glaring shortcomings in adoption of the Model Act across the country.

The reforms made in light of these shortcomings also were incapable of complementing the need of the hour. Even in case of those, where the Model Act was used to effect necessary amendments to their Acts the reforms. The pace and quality of reforms seemed patchy, sporadic and cosmetic and made it obvious that they had bypassed the agriculture sector. Marketing reforms emerged as the core of such intended reform basket, which hold definite potential of becoming a game changer.

Thus, a committee on Marketing Reforms was constituted on 12.08.2016 by The Department of Agriculture, Co-operation & Farmers’ Welfare in the Ministry of Agriculture & Farmers’ Welfare under the Chairmanship of Dr. Ashok Dalwai, Addl. Secretary in the Department. The Committee found it appropriate to formulate “The—- State/ Union Territory Agricultural Produce and Livestock Marketing (Promotion & Facilitation) Act, 2017” as a Model APLM Act with a firm belief that if adopted by States, it has definite potential of incorporating beneficial changes in agricultural marketing scene. This model encompasses a host of reforms that address the diverse and complex segments of a large sector like Agriculture. Taken verbatim, the salient features of the Model APLM Act, 2017 are:

• Abolition of fragmentation of market within the State/UT by removing the concept of notified market area in so far as enforcement of regulation by Agricultural Produce and Livestock Market Committee (APLMC) is concerned (State/UT level single market).
• Full democratization of Market Committee and State/UT Marketing Board.
• Disintermediation of food supply chain by integration of farmers with processors, exporters, bulk retailers and consumers
• Clear demarcation of the powers and functions between Director of Agricultural Marketing and Managing Director of State/UT Agricultural Marketing Board with the objective that the former will have to largely carry out regulatory functions, while the latter will be mandated with developmental responsibilities under the Act.
• Creation of a conducive environment for setting up and operating private wholesale market yards and farmer consumer market yards, so as to enhance competition among different markets and market players for the farmer’s produce, to the advantage of the latter.
• Promotion of direct interface between farmers and processors/ exporters/ bulk buyers/ end users so as to reduce the price spread bringing advantage to both the producers & the consumers.
• Enabling declaration of warehouses/ silos/ cold storages and other structures/ space as market sub –yard to provide better market access/ linkages to the farmers.
• Giving freedom to the agriculturalists to sell their produce to the buyers and at the place & time of their choice, to whom so ever and wherever they get better prices.
• Promotion of e-trading to enhance transparency in trade operations and integration of markets across geographies.
• Provisions for single point levy of market fee across the State and unified single trading licence to realise cost-effective transactions. 4
• Promotion of national market for agriculture produce through provisioning of inter- state trading licence, grading and standardization and quality certification.
• Rationalization of market fee & commission charges.
• Provision for Special Commodity Market yard(s) and Market yard(s) of National Importance (MNI).
• Providing a level playing field to the licensees of private market yard, private market sub-yard, electronic trading and direct marketing vis-à-vis the APLMCs and removing the conflict of interest that the latter are likely to practise, if both development and regulatory functions are centred in the same authority.

Objectives and purposes

The model APML Act went through a scrutinizing process for its formation. The committee which formulated the same examined and addressed the entire gamut of post-production activities and recommended this Model Act capable of pushing the entire farm enterprise forward, in the way towards realizing the vision to double the income of farmers as intended by the Prime Minister. This Model Act aims at developing an environment of healthy competition by building a platform for both public sector and private sector ‘players’ to indulge into a domain of agriculture marketing and build appropriate market structure.

It provides a framework that brings out unbiased conduct and performance of marketing targeted to the advantage of consumers and farmers with the latter in particular. The Model Act addresses not only marketing of field crops, but multiple other commodities including fruits, vegetables, flowers, spices, medicinal plants, livestock, poultry, fisheries etc. based upon the Government’s desire to enhance farmers’ income. It is intended to introduce visionary interference in the present agricultural market environment of the country.

Critical analysis

Benefits of Model APLM Act, 2017 are such that they cover the farmers, consumers, government and the Reserve Bank of India all at the same time. The Act will aid, the farmers in better price realisation as they are allowed to sell their produce to the buyers of their choice, the consumers will be benefitted as the prices of agricultural products will come down, the government in achieving the goal of ‘doubling farm income by 2022’, in boosting the prospects of food processing industries as the raw material will be available at lower prices, the Reserve Bank of India (RBI) in maintaining a healthy food inflation.

Despite this model being an innovative intervention, the draft APLM and APLCFS acts are feared of lacking adequate safeguards for the farmers. The acts seem to open up the agricultural markets without these passable safeguards for the primary stakeholders of the system. The exclusion of the alternate channels from the APLMC domain surfaces the concern that the reforms are jabbed in their political economy dimensions. The various gaps suggest a hurry in the preparedness of these acts, that maybe through discussion and debate the gaps would have been filled and also the purpose of making APLM markets more efficient and inclusive would have been served. The fact that the APLM markets are the markets of the last resort for small and marginal farmers is also worrisome. As there is a requirement of a vehicle for the diversification of crops, technologies and markets for farmers. Some governance and conceptual issues have also raised concerns. The reform of APLM markets is also important as they serve as competitors private wholesale markets, “direct” buyers, and to contract farming. Thereby they help enhance the terms offered by food supermarkets to growers. As the APLM prices have been set as a benchmark for the contract and the act also takes this route to contract prices by linking them to MSP.

Albeit, there is a need for APLM Act 2017, which cannot be ignored due to some shortcomings, which are quite obvious to arise. Seeing the silver lining to this situation, the issues create a room for criticism which eventually ends up in refining all the aspects carefully. This act provides a solution to the earlier problems faced due to the inefficiencies of the rather inexperienced preceding acts.

Scope of improvement

Nothing is wholly refined in nature and there is always a scope for improvement. So does the model APLM Act. To ensure better market access for farmers across the country, creation of One India Agriculture Market can be considered.

• Speedy uptake of this act is needed at state level. As it recommends progressive provisions such as single levy of market fee, single licences for traders and de-listing perishables from the ambit of the APMCs.
• Introducing an online platform, which can be done through the pre-existing National Agriculture Market or e-NAM, would allow better price realization for farmers for the growth of the agriculture sector.
• This platform would enhance competition in terms of increased biddings. But for e-NAM to perform to its full potential, the government is needed to create probing, grouping and grading infrastructure at the mandis.
• Aimed to help reduce variation in quality of produce from mandi to mandi, and encourage retailers and processors to procure through e-NAM. Besides this, to strengthen the markets, the government can adopt Electronic Negotiable Warehouse Receipts (e-NWRs).

These steps will enable finer market access and earning for farmers across India.

Conclusion

The model APLM Act was enacted in 2017 with an aim to,  liberalise agri-market by creating a single agri-market where with single licence one can trade agri-produce as well as livestock, set up a wholesale market at every 80 km, end the monopoly of APMC and allow more producers to set up markets and create a healthy competition so that farmers can accordingly discover prices and sell their produce.

This law seeks to promote multiple market channels like private market yads, direct marketing and even storage spaces namely go-downs and silos could be notified as markets and set a separate authority to regulate all agri-markets including APMC and provide trading licences. Through enacting this ambitious Act, the government targeted to double the farmer’s income by the year 2022. Also, this model has shortcomings, it does have areas where the government can work upon and overcome those blemishes. Albeit it’s various interpretations, the model does have the required potential and through corruption-free execution its holy grail can be attained.  

During such afflicting times of COVID-19, through bringing in reforms through this act the states are of the capacity to not let the framer’s position annihilate, who make up nearly half of this country’s humungous population by maintaining and aiming to improve their footing.

Author: Ramya Singh from Dr. Ram Manohar Lohiya National Law Univeristy, Lucknow.

Editor: Priyanshu Grover from Symbiosis Law School, NOIDA, Uttar Pradesh.

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