Dwindling arrivals, revenues: Is this the end for APMCs?

Chowda Reddy, a farmer in Chokkampalli village in Bagepalli taluk of Chikkaballapur district, had no strong feelings about Karnataka government’s amendment to the APMC Act in 2020. He grows a variety of vegetables and sells them at either the Bagepalli Agricultural Produce Market Committee (APMC) yard or the farm gate to aggregators.

“I thought it won’t make any difference to me until October last year when I experienced the downside,” he says.

A private aggregator failed to pay the amount after purchasing the harvest of coriander leaves worth Rs 2.9 lakh. He had agreed to pay Rs 2,000 for each bag of produce before transporting the crop from the land.

The harvest took place over three days. On the first two days, the aggregator paid Rs 50,000 and Rs 20,000 for a lot of 45 to 50 bags. On the third day, Chowda Reddy stopped the truck in the farm.

Later, he involved the police when the aggregator sent his men to release the truck by force. After two months of negotiations, Chowda Reddy was able to recover just Rs two lakh. “I was alerted by my fellow farmers. Some of them are yet to get the money,” he says.

In the past, it didn’t really matter to Reddy where he sold his produce — he chose based on the crop and the price.

Marketing at the farm gate had its advantages. He didn’t have to transport the crop, and he would get a slightly higher amount.

There were instances when he got Rs 5,000 to Rs 10,000 less than what was promised but then, he had made peace with it. In case of any issue, he knew that the APMC would come to his rescue.

Also Read: Decline in Budget allocation for agriculture disappointing, says H D Deve Gowda

Not anymore. The Karnataka Agricultural Produce Marketing (Regulation and Development) (Amendment) Bill 2020 restricts the regulatory control of the APMCs over trading activities to the market yard. However, the director or the officers authorised by the director are allowed to regulate trade in licensed direct-purchase centres and private markets.

In 2020, Gujarat, Uttarakhand, Himachal Pradesh, Karnataka, Madhya Pradesh and Tamil Nadu amended their APMC Act along the lines of the Centre’s farm laws, which intended to open up the market for private traders. It also restricted the jurisdiction of the APMCs.

While the Centre repealed the three farm laws in November last year after nationwide protests, the APMC Amendment Act continues to be in force in the states.

Karnataka’s amendment lacks the dispute resolution mechanism outside the market yard provided for in the repealed Central law.

The new law here has created two parallel markets for agricultural produce. There are the APMCs, where traders take a licence, pay a fee (.6 per cent) and are monitored. And there are those trading outside the yard, without any supervision, regulation or fee.

This has led to many licensed traders — both commission agents and merchants — operating outside the yard.

In Bagepalli alone, for instance, all the food grain traders have moved out of the APMC yard over the past year.

This has led to farmers missing essential services when trading outside the market yard: price discovery mechanism, dispute settlement, the guaranteed sale of their produce and immediate payment.

Earlier, the APMC’s jurisdiction extended to the entire market area which is not less than a taluk. It regulated the sale of 112 notified commodities and addressed the issues that hampered fair trade.

In the absence of those safeguards, farmers, traders and APMC officials across the state share stories of traders defaulting on payments.

To put this in perspective, an APMC in Kolar district used to receive 20 to 30 complaints from its market area in a year. Now, the Department of Agricultural Marketing has no clue about what is taking place outside the market yards.

Experimental ground

“Karnataka has become an experimental ground for corporate takeover of the agricultural market,” says Prakash Kammaradi, former chairman, Karnataka Agricultural Price Commission.

And just a year after the amendment, there are early signs of trouble. The quantity of arrivals has dropped by over 70 per cent — from 49 crore quintals in 2019-2020 to 14 crore quintals in 2021-2022 (Till January end). Even though arrivals to the yards have decreased after the amendment, the huge difference is because the transaction taking place outside the yards is not reported and there is no mechanism to record the same.

Consequently, the revenue of APMCs is down by half, even though the user fee collected from the sale of fruits and vegetables hasn’t changed much.

In each of the 20 APMCs across Karnataka that DH spoke to, 50 per cent of the contractual staff has been laid off.

In contrast, four of the five licensed private markets currently operating in Karnataka were set up over the past two years. The first one went live in 2013.

There are also 62 direct purchase centres regulated by the Department of Agricultural Marketing.

“There might be more now. The amendment allows for individuals and companies to set up markets and direct purchase centres without any registration procedure,” a Department of Agricultural Marketing official says.

The auction process in the APMCs helped farmers know the benchmark price for a crop, helping them if they chose to sell their harvest in the local markets.

“In the new setup, farmers should be well aware of the market dynamics and price fluctuations. But not many have that kind of exposure and there is no effort in this direction,” says Shrenikaraju, a farmer in Chinnikatte, Haveri district.

Manju Reddy in Chikkaballapur has a different experience. He has been selling exotic vegetables — broccoli, red cabbage, English cucumber, coloured capsicum — to a direct purchase centre.

“They also have agents. There is actually no direct marketing happening there,” he says.

What annoys him more is the huge difference in the money he receives and the price the customers pay.

“Sometimes, the difference is up to 70 per cent,” he says. “We started growing these crops with enthusiasm as the agents said they would purchase the product. But it is not sustainable,” he says.

Many had an entire lot of cucumbers rejected because they were less than the prescribed size.

“How can we control nature?” Manju asks. He compares this arrangement with that of the APMCs. “In APMCs, we have the guarantee that our products will be sold,” he says.

It isn’t just farmers who feel they have lost a safety net. The traders in Ranebennur say the sale now happens on uneven ground. “We appreciate the checks and balances within the market yard. But in the changed scenario, it’s good if the market fee is removed,” says G G Hottigoudar and Sudhir Kuruvatti.

They say many traders have two outlets now, one within the yard and one outside. And it is the traders who are driving the farmers outside the yards.

Prithvi, a third-generation trader in the APMC yard in Yeshwanthpur, has observed large supply chains dealing directly with aggregators and trying to establish links with farmers. “If the situation continues like this, APMCs will have to close in 5-6 years, making way for big companies,” he says.

Agricultural economist Devinder Sharma provides a global perspective, giving the example of America where just four companies control over 85 per cent of the livestock market. While the prices for farmers have come down, consumer prices have risen. The same has happened earlier with agricultural commodities and dairy products.

“It is wrong to think that when the APMCs go away, private companies will come to the rescue of farmers. It hasn’t happened anywhere in the world. Markets have failed to prop up farm incomes. There is not a single commodity in which the farmer’s share of price has gone up. So what is the use of replacing APMC with private trade?” he asks.

But are APMCs serving the farmers as intended?

Access and transportation have been a persistent issue. Yet, 40 to 50 per cent of farmers in Karnataka still go to APMCs, according to officials.

An agricultural marketing expert, who wished to remain anonymous, shared his perspective. “None of the objectives of the APMC Act has been achieved over the past five decades. From competitive prices to immediate payment and weighing, farmers are exploited at every level. They also have to pay a ‘commission’ to the agents. The law is good in its spirit and intent but the implementation is poor. This, despite each Agricultural Produce Market Committee having 11 elected farmers’ representatives as members. So every stakeholder is to be blamed for the dismal condition of the APMC model,” he says.

The way forward

While this might hold good for several APMCs, some like Kolar’s tomato market, Byadagi’s chilli market, Chintamani’s tomato market, Tipaturu’s copra market have stood out in their performance.

“This is possible when there is a vibrant ecosystem and transparency in the market yards. A bit of assurance and support to farmers, who are at the bottom in terms of power dynamics, from local farmers’ groups or civil society organisations goes a long way in fighting against malpractices and making the APMC model work,” says social activist V Gayathri, from her team’s experience in Kottur in Vijayanagara.

Social activist Kavitha Kuruganti echoes this sentiment. “APMCs have a lot of scope for improvement. But destroying them and creating unregulated markets is definitely not the solution. The government can come up with many more APMCs to begin with, in addition to ensuring that more traders participate in the regulated markets. For instance, licensing procedures can be simplified to attract more participation,” she says.

Watch the latest DH Videos here: