Unifying National Agricultural Market-The Need Of Change
Post on 27,November 2015   2:00 AM
By - Miss. Smita Tiwari
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The Government realises the importance of agricultural sector for the growth and development of the nation’s economy.  With nearly 58 per cent of its people continuing to depend upon agriculture for their livelihood, the critical role of the sector cannot be gain said.  

Agriculture sector is also highly vulnerable to the vicissitudes of nature that impact the crop enterprise at its production stage.  Further, the sector is also exposed to the current weaknesses of the agricultural marketing system.

The annual income of a farmer depends upon both yield and the price that his produce fetches.  While the Government has rolled out large number of programmes to improve yield levels on a sustainable basis, it recognises the need for creating a competitive market structure in the country that will generate marketing efficiency.  

Only when the market is integrated over space and time, can market efficiency be real.

  • When the food inflation is high in the country, the government resorts to practices like export bans or raids on hoarders to ease the situation. But they have little impact over the long run. Indian agriculture needs meaningful structural reforms.
  • The need to unify the markets both at State and National level is, therefore, clearly the requirement of time, in order to provide better price to farmers, improve supply chain, reduce wastages and create a unified national market. 


  • The existing Agricultural Produce Market Committee (APMC) Acts force farmers to sell their produce only to government-designated mandis.
  • Agents in APMCs often harass farmers by deliberately restraining from higher bidding.Produce is bought at lower price and is sold at very higher price.
  •  Multiple levy of mandi fees, requirement for multiple license for trading in different APMCs.
  • Licensing barriers leading to conditions of monopoly, poor quality of infrastructure and low use of technology, information asymmetry, opaque process for price discovery, high level of market charges.
  • The economic freedom of farmers is restricted as they are captured by local political elites. Chairmen and the members of APMCs are usually elected by agents, who are least bothered about farmers.

It was in this situation that the model APMC Acts were circulated to the states in 2003. But the model has remained a mere blueprint in many states. Even the states, who have implemented this act, have created entry barriers by prescribing either prohibitive license fees for setting up such markets, or the minimum distance between private markets and APMC markets. Thus, even this act has been partially successful.

Karnataka model: In this respect, Karnataka stands out from the other states. Its Rashtriya e Market Services Pvt. Ltd (ReMS), a joint venture with NCDEX Spot Exchange Ltd, is a good working example of what the model APMC envisaged.

What has been done ?

  • To ensure ease of doing business, it integrated 51 of the 155 main market yards and 354 sub-yards into a single licensing system.
  • For improving efficiency and transparency, it introduced automated auction and post-auction facilities (weighing, invoicing, market fee collection and accounting).
  • To guarantee quality, assaying facilities were made available in the markets.
  • In collaboration with NCDEX, it linked all APMCs in the state electronically, and enabled the discovery of a single state price for every commodity on a single platform.

How has this model helped?

  • It gave the farmer the power to accept, reject and bid the prices for his commodity on the basis of a transparent system.
  • It increased the revenues of APMCs.
  • It helped in effective management of its funds and assets, and curbed corruption.
  • It improved efficiency and transparency, and also ensued ease of doing business.
  • The Karnataka model can help resolve the issues of all the stakeholders. The other states need to learn from this model.

Recent initiatives by the centre in this regard: 

  • The Department of Agriculture & Cooperation in the Union Government’s Ministry of Agriculture is keen to increase the net returns of the farmer.  Hence, its emphasis is on creating an unified market, that is well integrated across the nation.Following successive Budget announcements of 2014 and 2015 on setting up an “Agri-Tech Infrastructure Fund” and on ‘Unified National Agriculture Market’ respectively, the Department of Agriculture & Cooperation has formulated the Central Sector scheme for Promotion of National Agriculture Market through Agri-Tech Infrastructure Fund (ATIF) through provision of the common e-platform. A budgetary provision of Rs.200 crores has been made to be spent over the next three years (2015-16 to 2017-18). 
  • Under the scheme, the Small Farmers’ Agribusiness Consortium will be the lead agency responsible for the development of the national agricultural market under the ministry of agriculture.
  • The scheme seeks to integrate 585 regulated markets in the country through a common e-platform. It will also allow access for private markets.
  • For integration with the national e-platform and eligibility for assistance under the scheme for promotion of National Agricultural Market, the states and Union territories will need to undertake three reforms. These include a single licence valid across the state, a single-point levy of market fee, and provision for electronic auction as a mode for price discovery.
  • Provisions are also being made for establishing soil testing laboratories in the Mandis. Big private mandis will also be allowed access to the e-platform for purposes of price discovery.  However they will not be supported with any funds for equipment / infrastructure.
  • The Scheme is applicable on All-India basis. There is no State wise allocation under the Scheme.

How this scheme would helpful ?

  • It provides farmers and traders access to opportunities for purchase/ sale of agri-commodities at optimal prices in a transparent manner across the country.  
  • Under the scheme, private markets will also be allowed access to the e-platform thereby enhancing its outreach.
  • It promotes free flow of agri commodities across the country and hence will result in greater farmer satisfaction as prospects for marketing of his produce would be significantly enhanced.
  • e-marketing platform should promote reform of the agricultural marketing sector and apart from promoting free flow of agri commodities across the country should result in greater farmer satisfaction as the prospects for marketing of his produce would be significantly enhanced.
  • It also provide farmers improved access to market related information and better price discovery through a more efficient, transparent and competitive marketing platform, which gives them access to a greater number of buyers within the State and from outside, through transparent auction processes.
  • It would also increase farmers’ access to markets through warehouse based sales and thus obviate the need to transport his produce to the mandi.

ConclusionAgriculture is in the state list of the Constitution, and the unified agricultural market can be executed only in collaboration with the states. The states have already taken the lead in policy innovation, be it labour laws in Rajasthan, land acquisition reforms in Tamil Nadu or land pooling for urbanization in Andhra Pradesh. The Karnataka model of agricultural markets reforms should be seen as a similar case—a state innovation that can guide the whole country.

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