Tuesday, 11 August 2020

The Devil Lies In The Detail!

Updated: January 5, 2013 2:23 pm

Recuperating from a recurrent fever over the last few days was a blessing in disguise! As I mulled over the Delhi Agricultural Produce Marketing (Regulation) Act, and the proposed changes as per the Model Act of Government of India, I realised that the devil was in the fine print. While the intent of the rechristened Act, Delhi Agriculture Produce Marketing (Regulation) (Development ) Act was stated ‘to provide for the better regulation of marketing of agricultural produce, and the establishment of markets for agricultural produce in the National Capital Territory of Delhi, and for matters therewith, or incidental thereto’, the context, the definitions and the Rules framed, or authorised under the Act diffuse the intent of the legislation. Even though the proposed amendment makes a distinction between Regulation and Development, it does not separate the regulatory regime from the development role: more importantly, it allows the existing players to keep out potential competition by recourse to ‘Rules’, which are never debated in the Assembly.

The problem starts with an understanding of the agricultural markets of Delhi. Delhi is not a ‘market’ where ‘agriculturists’ of Delhi bring their primary produce for sale. It is a market of the traders, by the traders and for the traders. While the Act classifies them as brokers, buyers and commission agents, in essence, they perform the function of aggregating agricultural produce from wherever they can, and selling to wholesalers and retailers in Delhi and the surrounding areas. Most agricultural produce sold in the markets of Delhi comes from a very extensive hinterland (J&K, HP, Uttarakhand, Punjab, Haryana, UP, Rajasthan, Gujarat and Maharashtra), but not limited to these states. Many of the leading fruit traders in Azadpur Mandi are now importing fruits from Afghanistan, Pakistan, China, US, Australia. New Zealand and Thailand. By Delhi government’s own admission, by the end of this decade, all of Delhi’s area will be classified as urban. Except for the boutique farmhouses of the rich and famous, there will be no real ‘farmers’ in Delhi!

As such, Delhi’s agricultural markets have to protect the interest of the 18 million consumers, and the large number of institutional buyers—from hotels, hostels and hospitals and organisations like railways and defence. Thus while the volume and value of agricultural produce has increased manifold, the number of intermediaries has been frozen because of Rule 17 (f) which stipulates that permission for grant of new license can be refused if “the person applying for license has no premises to carry on business or marketing of agricultural produce”. The premises in the existing markets/sub-markets /market yards of Delhi have already been allotted, and there is no realistic possibility of additional premises being built in these markets thereby sealing the monopoly of the existing licensees. In effect, if an RWA, or JNU or Big Bazaar, or even the Kendriya Bhandar (central government employees co-operative society) wishes to engage directly with the apple growers co-operatives of HP or J&K for purchase of their produce for their own members, they are not entitled to do so legally. They will have to do so through an intermediary in the Azadpur market. Now that the horticulture train has started moving bananas from Raver in Maharashtra to Azadpur rail terminal the issue is that business can be transacted only by the licensed traders, thereby distorting the price discovery mechanism in a manner which is unfavourabe to the primary producer.

What can be done? First the roles of the government, the Board and the market committees constituted under the Board must be clearly defined. Government has to provide an enabling policy environment and look at the eco-system in which the Act has to operate. It is for the government to identify the new stakeholders (RWAs, institutional buyers, organised retailers) and engage in discussions with them on the broad contours of the proposed legislation. The Board has to regulate and register (and in the interim, grant license), and the markets constituted under the Board,viz Azadpur, Okhla, Mehrauli, Ghazipur Tikri etc. have to ensure that the actual trade is carried out in a transparent manner, and provide the necessary infrastructure: electronic auction platforms, logistics, warehousing, CA storage, financial services and support services for the large number of people engaged in the transactions drivers, weigh men, loaders, packers, traders, agriculturists, officials, market analysts and all those engaged in the ecosystem. Second, the licensing function has to be taken out of the ambit of the market committees and replaced with provisions of registration by the Board.

This would also render the extant classification of traders into buyers, brokers and commission agents redundant. Anyone who wants to trade in agricultural commodities should be encouraged to do so on the payment of a fixed (nominal) registration fee (to be paid to the Board) and a transaction fee based on the value of the trade (to the market committee). This will also ensure the financial viability of the market committees, besides ensuring continuous improvement and upgrading of infrastructure mentioned in the preceding paragraph.

Third, the physical architecture of the market with individual shops and auction platforms should be replaced with trading platforms with e-auction facilities. Existing traders, as well as commodity and spot exchanges could also be encouraged to establish such platforms where agricultural goods could be displayed. All new markets that come up in Delhi should take the precaution of designing the market in a manner which encourages price discovery through greater participation, rather than retain the monopoly of the existing players.

 By Sanjeev Chopra

(An IAS Officer, the author is Joint Secretary & Mission Director, National Horticulture Mission, Government of India. The views expressed are personal.)

Leave a Reply

Your email address will not be published. Required fields are marked *

Archives

Categories