The Central government will enact a law to dismantle the monopoly of APMC mandis in the wholesale trading of farm commodities.
The initiative for APMC reforms should have come from the states.
What is the similarity?
1966 - Agriculture is a state subject under the Constitution.
But the Green Revolution wouldn’t have happened without the Centre approving the import of 18,000 tonnes of seeds of high-yielding wheat varieties from Mexico in 1966.
Now - The same goes for the Centre’s decision to enact a Central law to dismantle the monopoly of the Agricultural Produce Market Committee (APMC) mandis in wholesale trading of farm commodities.
It is all very well to say that “agriculture” and “markets and fairs” fall under the State List of the Seventh Schedule.
What the state governments should have done?
In an ideal situation, from a cooperative federalism perspective, the initiative for APMC reforms should have come from the states.
However, state governments have done very little all these years to remove barriers to trade in farm produce.
Farmers, like any businessmen, should have the freedom to sell their produce to anyone, anywhere and anytime.
This, in turn, is also contingent upon processors, traders, retailers or exporters being able to buy directly from them.
But there have been times (for Green Revolution or the nod to Bt cotton cultivation in 2002) when the Centre had to necessarily take the lead.
What is the justification?
Most state APMC laws permit first sale of farm produce to take place only in notified mandis within the particular tehsils or talukas.
Buyers, too, need to obtain individual licenses from each APMC in order to transact.
Effectively, there is no national market for agricultural commodities.
Instead, there are some 2,500 markets controlled by commission agents who mediate between sellers and buyers even when not required.
This arrangement is anathema to the spirit of liberalisation.
This arrangement also goes against Article 301 of the Constitution.
[Article 301 - Freedom of trade and commerce throughout the territory of India]
If states haven’t freed agricultural produce trading within their own territories, the Centre is well within its rights to enact a law using the provisions of entry 33 of the Concurrent List.
The latter specifically deals with agricultural produce, including “foodstuffs”, “cattle fodder” and “raw cotton”.
How the Central law should be?
The Central government must make it clear that the objective behind its proposed law is not to dismantle APMCs.
Farmers will continue to bring their produce to mandis that have good infrastructure and where they are likely to find more buyers.
But that should be a matter of choice, both for farmers and buyers, not APMC.
