Arguments against Privatisation of Agri-markets – UPSC GS3

 Arguments against the Privatisation of Agri-markets
  • Why farmers sell to private buyers now?
    • They are forced to sell outside Mandis.
    • About 49% of paddy and 36% of wheat is already being sold to the private traders.
    • Farmers are thus forced to sell outside Agricultural Produce Marketing Committees (APMC) because:
      • Very few Mandis:
        • While the National Commission on Agriculture (NCA) had recommended one mandi per 80kms2; currently, the average area served is 463kms2.
        • There are only 6,630 mandis (required 41,000).
        • A government committee in 2017 had recommended at least 10,130 mandis.
      • High transport costs: Small and marginal farmers find it costly to transport produce to mandis, and hence they sell it to local traders.
  • No significant private investment despite freedom to sell outside mandis:
    • 18 States have allowed the establishment of private markets outside the APMC, but with no major private investments.
  • Lack of commitment to Minimum Support Price (MSP):
    • If mandis weaken and private markets with no commitment to MSPs expand, farmers fear a gradual erosion of their entitlement to a remunerative price.
    • Weakening of MSP is also signalled though government measures :
      • Slow rise of MSP over the past 5-6 years.
      • The Commission for Agricultural Costs and Prices (CACP) has been recommending to the government that open-­ended procurement of food grains should end.
Way Forward
  • Increase number of mandis: expansion of investment in mandi infrastructure and a spread of the MSP system to more regions and crops; simultaneous universalisation of the Public Distribution System.
  • Reform APMCs to ease the entry of new players: and reduce trader collusion and link them up with national e-trading platforms.
  • Introduce unified national licences for traders: and a single point levy of market fees.
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