In the last few days, huge farmers’ protests broke out throughout New Delhi and adjoining areas in protest of the newly launched Farm Acts. As per the official government statement, the new laws on agriculture (particularly Farmers trade and commerce in produce (Promotion as well as Facilitation) Act 2020and the FPTC Act) are designed to help farmers by creating private markets, the elimination of middlemen, and farmers will be able to sell for free to anyone who wants it.
But, the farmers who are protesting are not convinced by these assertions. They think that if the mandis (emandi.up.gov.in) decrease in strength while private marketplaces with the absence of a commitment MSPs grow, this will cause an erosion in the guarantee of pricing i.e. Minimum Support Price (MSP) system.
So, these protests by farmers call for a more thorough analysis on the system of mandi in India as well as reforms to ensure the sustainability of agriculture in the interest of Aanadata (Farmers) from India.
Intended Benefits of Liberalising Mandis
- Playing field that is level The new law allows farmers to interact with wholesalers, processors, wholesalers, aggregators, big exporters, retailers and so on. and on a level playing field with no worry of being exploited.
- Transmits the risk It shifts risks of market uncertainty between the producer and the owner and allow the farmer to gain access to the latest technology and more efficient inputs.
- attracts investment from the private sector investment: This law acts as a catalyst in attracting private sector investment in the construction of supply chains that will allow for the supply of Indian agricultural products to global and national markets, as well as in the infrastructure for agriculture.
- Eliminates intermediaries Farmers will be able to engage directly in marketing, thereby getting rid of intermediaries and resulting in complete realisation of the price.
The History of Indian mandi System
The idea of India’s Agricultural Produce Marketing Regulation dates back to the time of the British Raj, the role of the British Crown in the Indian subcontinent. It was in 1886 that India created its first controlled marketplace, Karanja. In 1887, in accordance with the Hyderabad Residency Order, they approved their first legislation known as that was the Berar Cotton and Grain Market Act that allowed British inhabitants to proclaim any area within the designated district as an agricultural market for the purchases and sales of agricultural products. They also established an advisory committee to oversee the markets under regulation. The Berar Cotton and Grain Market Act Act was the basis to be used in other areas of America. The first crop that was produced by a farm that attracted notice from the federal government was raw cotton. The reason for this was the desire of British ruling elites to provide pure cotton at affordable prices for the textile mills of Manchester (UK).
Mandi as a concept system was first implemented in 1928, when it was decided that the Royal Commission on Agriculture wanted to regulate markets. One of the steps that were taken to improve the conditions was to regulate trading practices and establish market yards in rural areaswhich was similar to the mandi model we are familiar with to this day. One of the initial implementations of the market that was regulated by the government – currently called APMCis thanks to Sir Chhotu who was a farmer’s leader as well as the Development Minister at the time in the interim government of Punjab. It was the Punjab Agricultural Produce Markets Act that established APMC for Punjab was introduced by the minister in 1939. In response the Government of India prepared a Model Bill in 1938 and sent it out across all states. However it wasn’t until 1947, when India gained independence, that any real progress was achieved.
APMC Mandi System: Inefficiencies and Reforms
APMC system isn’t perfect and comes with some issues of its own. From 1991 to the present, the APMC markets were at their prime , and was described as”the “golden period”. As time passed, there was a constant loss of growth in the facilities for market trading. In 2006, it was down to less than one quarter of the increase in crop production in 2006. After 2006 there was no further increase. This exacerbated the issues of Indian farmers since markets could not keep pace with the increasing production, while regulations prohibited farmers from being able to sell their produce outside of in APMC market.
In the end, farmers were forced with no option but to seek help from middlemen. Because of the poor infrastructure for markets there is more food sold outside of markets than APMC mandis. The result is an interlocked system which rob farmers of their decision-making power to choose who and to what extent to sell their products which exposes them to being exploited by middlemen. As time passes, the role and idea behind APMC markets has changed from infrastructure services into the generation of revenue for middlemen.
Indian agriculture marketing reforms must draw inspiration from Barbara Harriss White who was a scholar of India’s markets for agriculture who once said “deregulated imperfect markets may become more, not less, imperfect than regulated imperfect markets”.