Home / Industry / Agriculture /  Narendra Modi calls for swift APMC reforms to benefit farmers

New Delhi: A free and open market is “a must" for better price realization by farmers and states must, therefore, “unshackle" the existing market ecosystem at the earliest in the interest of farmers, Prime Minister Narendra Modi has told states amid farmer protests sparked by low crop prices.

In a letter to chief ministers sent on 9 March, the Prime Minister said that “it is imperative to swiftly undertake market reforms of our decades old and restricted agriculture produce and marketing committee (APMC) architecture."

He added that the model Agriculture Produce and Livestock Marketing (APLM) Act circulated by the centre to states last year “encompasses the desired changes to unshackle the existing market ecosystem."

“Many states have already made good progress in this regard. I request you to complete the desired set of reforms at the earliest in the interest of the farmers of the country," the letter said. Mint has reviewed a copy of the letter.

The letter said that the centre’s “emphasis is to help farmers produce more at a lesser cost and simultaneously get higher price...this will help our ambitious goal of doubling farmer’s income by 2022."

The model APLM Act was put out by the government in April last year in an attempt to revamp agricultural markets. It proposes to replace existing fragmented and over-regulated markets where local trader cartels limit the wholesale prices received by the farmer, to a pan-India market where farm produce can move freely and farmers have a wider choice of avenues and buyers to sell their produce.

States are free to adopt the model APLM Act or parts of it. The centre can only propose a blueprint to states as agriculture marketing is a state subject.

Among the reforms proposed under the model APLM Act are: allowing the setting up of private markets; direct sale of produce by farmers to bulk buyers; and capping market fees and commission charges payable by farmers. Further, to join the electronic national agriculture market or eNAM platform launched by the centre in April 2016, states have to allow a single statewide licence for traders, a single point of levy of market fees, and allow online trading.

However, despite the centre’s efforts, states have moved slowly, hindering the creation of a unified national agriculture market.

“It’s a very timely intervention because most states have not shown the necessary urgency in this area. I have long argued that only an effort from the national leadership like the one made for GST (goods and services tax) can bring about meaningful reform of agriculture markets, without which it is difficult to move towards the goal of doubling farmers’ incomes," said Pravesh Sharma, a former civil servant and visiting fellow at the Indian Council for Research on International Economic Relations..

In addition to urging states to undertake reforms, the Prime Minister also requested states to work with the centre to ensure that farmers benefit from minimum support price announcements. “It is critical to ensure farmers benefit from our resolution (announced in the budget to fix support prices at 50% more than production costs)," Modi wrote in his letter, requesting states’ participation in designing of a proposed price support scheme under the guidance of NITI Aayog.

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