Free inter-state trade of agricultural products: Maharashtra APMCs see loss of 30-40% income

By: |
June 10, 2020 8:21 AM

The APMC and the new systems are expected to run in parallel offering the farmer a choice. Officials said that a price discovery mechanism through open auctions help farmers get a better choice while outside the farmer may have to sell at a fixed price to the trader and he may not have any means to find out the best prevailing prices, officials said.

MSAMB officials said that delisting of fruits and vegetables has not made any significant difference as farmers continue to prefer to sell within the ambit of the mandis.

Agriculture Produce Market Committees (APMCs) in Maharashtra are likely to see a 30-40% drop in their income from cess following the ordinance introduced by the Centre, permitting farmers and buyers to trade freely in agricultural produce across the nation, senior officials of the Maharashtra State Agriculture Marketing Board (MSAMB) said.

With this ordinance, APMCs may face loss in income to the tune of Rs 120-Rs 150 crore, senior officials who did not wish to be named revealed. Maharashtra has 305 APMC mandis with an annual turnover at Rs 50,000 crore, of this fruits and vegetables alone accounts for Rs 20,000 crore. Foodgrains, pulses and oilseeds account for another Rs 20,000 crore while spices, raisins, bamboo and other local produce account for the remaining Rs 10,000 crore. APMC draws its income from the cess which ranges from 0.5% to 1% of the trade value of the commodities. APMC income comes upto Rs 350 crore on an average, officials said.

MSAMB officials said that delisting of fruits and vegetables has not made any significant difference as farmers continue to prefer to sell within the ambit of the mandis. However, since food grains, pulses and oilseeds are non-perishable, there could be a difference in revenues as farmers will have more time to bargain and sell their produce, the officials said.

Officials pointed out that two sets of laws will now come into implementation for the same agricultural produce and farmers will have multiple choices. A farmer can now opt to sell in the APMC or mandi and be prepared to pay the market cess and commission, porting and weighing charges.

The APMCs are also expected to ensure payments to farmers on the same day their produce is auctioned and regulate the commission fees charged by the mandi intermediaries who facilitate trades. The farmer can also opt to sell outside the mandi, and although he will not be charged any cess, there is a lot more risk involved since there is no controlling agency, the officials said.

Balasaheb Patil, minister for cooperation and marketing, said that the state government will have to study the ‘One Nation One Market’ concept in detail and see how it needs to be implemented so that it can co-exist with APMCs.
At a review meeting in Pune on Tuesday, he said that APMCs came into existence to prevent farmers from getting duped by traders and the state government will have to study all aspects to see how it can be implemented. Fruits and vegetables were delisted four years ago and they would study how much of a difference it has made to farmers, he said.

Sunil Pawar, MD, MSAMB, said that they would have to wait and watch to see how the markets develop after the ordinance is implemented. Meanwhile the government has now decided to relax the direct marketing licences for fruits and vegetables for a period of six months. This means traders can directly purchase fruits and vegetables from the farmer without any licences, Pawar said.

The APMC and the new systems are expected to run in parallel offering the farmer a choice. Officials said that a price discovery mechanism through open auctions help farmers get a better choice while outside the farmer may have to sell at a fixed price to the trader and he may not have any means to find out the best prevailing prices, officials said.
Farmers and buyers will be allowed to trade freely across the nation and will not have to pay market fee or cess or levy charged by states through the Agricultural Produce Marketing Committee (APMC) Act.

APMC markets charge a cess of 1% of the trade value. The Vashi APMC, the largest mandi in Maharashtra, collects about Rs 60 crore in cess in a year. In addition to this, the farmers are also charged 2.5% on foodgrains and upto a maximum of 6% on fruits as commission to the purchaser. They are forced to sell their produce at the price quoted by the commission agents in the APMC in their area.

Get live Stock Prices from BSE, NSE, US Market and latest NAV, portfolio of Mutual Funds, calculate your tax by Income Tax Calculator, know market’s Top Gainers, Top Losers & Best Equity Funds. Like us on Facebook and follow us on Twitter.

Financial Express is now on Telegram. Click here to join our channel and stay updated with the latest Biz news and updates.

Next Stories
1Onion prices drop by up to Rs 10/kg in consuming markets on govt action against hoarding
2Onions to cost Rs 35 per kg in bazaars of Hyderabad
3Cotton prices may remain under pressure on huge carryover stocks