Why Maharashtra farmers don’t trade APMCs for private firms

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Even as the Uddhav Thackeray-led Maharashtra Vikas Aghadi (MVA) government has stayed the implementation of the three Central legislations on farm sector reforms amid strong opposition from farmers’ organisations as well as the ruling Congress and Nationalist Congress Party (NCP), Maharashtra has already ended the monopoly of the Agriculture Produce Market Committees (APMC) by adopting major reforms in agriculture marketing since 2006.

Maha attempts, results

Maharashtra has 305 APMCs, most of which are controlled by traders and politicians. The APMC Act mandates these markets must have facilities such as auction halls, warehouses, weigh bridges, shops for retailers, police station, post office, bore-wells, farmer amenity centres and soil-testing laboratory.

In 2006, Maharashtra became one of the first few states to adopt the model APMC Act, paving way for opening up of private markets on the lines of APMC and contract farming. In 2016, the state decided to de-regulate fruits, vegetables, onions and potatoes.

However, 14 years after Maharashtra adopted the change, APMCs continue to record a turnover of ₹48,000 crore and remain preferred by farmers as they offer price protection. On the other hand, the alternative system, too, has gained ground, with an annual turnover of ₹13,000 crore.

De-regulation of fruits, vegetables, onion and potatoes, however, has got tepid response from farmers in the past four years, as their arrival at APMCs have come down by 4-5%, according to an official from the marketing department.

Contract farming has not clicked, as farmers claim they don’t get the promised remuneration, amid doubts over the quality of their produce, as there is no provision in the law to protect their interests.

Officials claim contract farming is limited to hybrid seed farming and poultry business, whereas de-regulation of fruits, vegetables, onions and potatoes also got limited response in the past four years.

They believe reforms take time to show results, citing how the changes brought about in 2006 are now showing results.

Why the protests?

Farmers feel the Centre is trying to hand over agriculture marketing to a few corporates with the help of the three legislations —Farmers’ Produce Trade and Commerce (Promotion and Facilitation) Act, Farmers (Empowerment and Protection) Agreement on Price Assurance and Farm Services Act, and amendment in Essential Commodities Act 1955. They claim there is no guarantee that the farmer will get at least minimum support price (MSP) for their produce from a private trader, and the dispute mechanism is too weak to give them justice.

“The Shanta Kumar committee set up by the Centre to bring reforms in food procurement mechanism has recommended abolishment of MSP. It has also recommended scrapping of the public distribution system (PDS) and system of procuring food grains through Food Corporation of India (FCI). The acts have been brought as another step to implement these recommendations. The only difference is the Centre is not accepting this overtly. Once MSP is abolished, farmers will certainly be exploited,” said Raju Shetti, who heads Swabhimani Paksha, a political outfit that had left National Democratic Alliance (NDA) in 2017.

Ajit Nawale, state general secretary, Akhil Bhartiya Kisan Sabha, said the Centre should have considered Maharashtra’s experience before bringing in the legislation. “The APMC law provides a security to farmers that if a buyer doesn’t pay remuneration against the produce, it can be recovered from the trader. In contrast, there is no such security for farmers trading outside APMC. Even in the new Bills, the Centre deliberately chose to remain silent on this aspect. Anyone having a PAN or Aadhaar card can become a trader. Is there any guarantee that the trader will not cheat farmers,” asked Nawale, who was the driving force behind the farmers’ agitation in June 2017 that eventually led then chief minister Devendra Fadnavis to announce a farm loan waiver scheme. “In Nashik, traders from Kerala and Andhra Pradesh bought onions from us and didn’t pay the remuneration. Despite all efforts, we could not get our money,” he added.

“The new Farmers’ Produce Trade and Commerce (Promotion and Facilitation) Act says in case of a dispute, the parties can approach a sub-divisional magistrate means deputy district collector, a post considered among the most corrupt in the revenue department,” says Girish Patil, agro-market expert.

Under this law, the farmer can sell his finished produce to any merchant anywhere in the country. There will be no compulsion to sell it at APMC.

“If the Central government is so sure that farmers would get better price than MSP outside APMC limits and under contract farming, why haven’t they made a provision in any of the bills saying no agreement can be for less than MSP,” asked Vijay Jawandhia, agriculture expert from Vidarbha.

According to Jawandhia, ITC, under an initiative called e-Choupal, started procurement of soybeans in the state. They procured soybean from Vidarbha farmers for four years, as the prices in the international market were high and MSP declared by the Central government was low. As soon as prices of soybean in the international market started to decline and MSP comparatively went up, they stopped the procurement. “The point is if a big firm like ITC could not survive the volatile market, how will this dream shown by the Narendra Modi government of forming 10,000 Farmers’ Producer Organisations (FPO) survive,” he asked.

A senior official from the state marketing department said the laws are formed on three principles — assurance of weighment, assurance of payment and competitive bidding by means of auction, whereas there is no such security if a farmer chooses to trade outside APMC limits. “This is the reason farmers are opposing the new legislations, as these aspects are not being considered by the Centre even now,” he said.

Will it work?

Anoop Kumar, principal secretary, state marketing department, said, “Maharashtra has been at the forefront for reforms in agriculture marketing. We have adopted most of the tenets of model APMC 2003. In the exercise of ranking states in marketing reforms, the state was ranked at first position by the NITI Aayog in 2017-18. Even after the facility of direct marketing was made available, big retailers are relying on middlemen and don’t prefer dealing with the farmers directly. This could be the reason farmers may not be getting much profit from direct marketing.”

Fresh reforms do provide an alternative to farmers, according to another official from the state marketing department. Sunil Pawar, managing director, Maharashtra State Agricultural Marketing Board, that aims to coordinate the functioning of APMCs and their development, agreed.

“The annual turnover of the alternative marketing system of agriculture produce, adopted in 2006, has reached ₹13,000 crore against the ₹48,000 crore annual turnover of APMCs in the state. We have issued 1,100 direct marketing licences that allow trading outside APMC, 60 private market licences and 50 single licences to traders that allow them to operate anywhere in the state,” Pawar said.

With the same approach towards reforms, the state marketing department on August 10 issued a notification for strict implementation of the ordinances that have now been converted into laws by Parliament.

“As per the provisions in the ordinances, the farmers are free to market their produce at field, factory, warehouse or cold storage without any hindrance and without any market fee applicable under APMC Act. Any other fee or charges applicable under APMC Act cannot be charged now as per the provisions made in the ordinances. The law and judiciary department has vetted the ordinances and validated its applicability. Though the existence of the APMCs has not been affected by promulgation of the ordinance, the farmers will have a parallel mechanism to get fair prices for their produce,” states the notification issued on August 10.

But as farmers’ bodies decided to fight it and got support from the Congress and NCP, the MVA government, comprising the Shiv Sena, Congress and NCP, on Wednesday took a step back and not only stayed its implementation, but also formed a cabinet sub-committee to look into concerns and objections.

Having powers of a quasi-judicial authority, state marketing minister Balasaheb Patil, who is also from the NCP, conducted a hearing on an application filed by another NCP leader Shashikant Shinde and passed an order of interim stay on implementation of the notification. He has scheduled the next hearing on October 27. It was followed by a cabinet decision of setting up a sub-committee of ministers.

Vilas Shinde, chairman, Sahyadri Farms, a farmer produce company, said that allowing farmers to sell produce outside APMC is giving bargaining power to them. “The provisions in the new laws are logical as both the traders and farmers should get the rights to decide what is better for them. We are moving towards fair trade.”

Sahyadri Farms was set up in 2010 and has 8,000 farmers as members. They trade in fruits and vegetables and mostly export the commodities. The annual turnover of the firm is ₹450 crore.

Vishnu Harak, a farmer from Shivde village, Nashik, said, “There are no facilities in APMCs and the governing body is found involved in corruption. Despite that, 90% farmers still believe in APMC because it offers security. We know that we will get our money against the produce,” he said. He also said the system of private trading is not for small farmers as traders don’t approach them. “Even if traders approach a marginal farmer they quote a lower price for produce and the farmer agrees, considering it saves transportation cost and trouble at APMC,” said Harak, who has a two-acre plot and prefers vegetable crops. He has taken tomato crops for this season.

“Contract farming is more visible in vegetable seed, grapes and poultry farming. The production of most of the hybrid seeds such as cotton, jowar etc. comes under contract farming. In fruits, farming for grapes is being done under this system as they are fragile, difficult to handle and contract farming is beneficial for both the sides — farmers as well as the traders,” said a senior official from the state agriculture department.

“Contract farming could not be successful in the state as the weather situation is exactly opposite to foreign countries. Maharashtra often faces natural calamities such as drought, floods, hailstorms, which affect quality of the produce. One of the major clauses of a contract is related to quality,” Nawale said.

Despite opposition by many farmer organisations and political parties, no upsurge is observed in Maharashtra compared to Punjab and Haryana. NCP chief Sharad Pawar in a press conference held recently said wheat is a major crop in Punjab, Haryana and Western Uttar Pradesh and the Food Corporation of India (FCI) procures 90% of their wheat produce at MSP.

This is the reason they are more aggressive towards the apprehensions of MSP to be eliminated. In Maharashtra, major crops are sugarcane, cotton, soybean, tur and paddy.

Harak said, “We don’t know yet why the new laws will hurt farmers’ interests. Those fighting for our rights should also inform us the reason behind it, so that we can take a stand.”

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