Free up veggie trade to fix crisis: Montek | business | Hindustan Times
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Free up veggie trade to fix crisis: Montek

business Updated: Jan 18, 2011 02:22 IST
Varghese K George

Horticulture items should all be removed from the ambit of the Agriculture Produce Marketing Committee (APMC) Act to check volatile prices of fruit and vegetable and ensure farmers get the best prices for their produce, Planning Commission Deputy chairperson Montek Singh Ahluwalia told Hindustan Times on Monday.

He was elaborating on the reasons for the recent spike in food prices and possible solutions to the crisis.

Ahluwalia admitted that the government had misread the food inflation situation “Last year’s inflation was due to increase in cereals’ prices. That had been stabilised. Then came a sudden burst in onion prices due to freaky weather,” he said.

The noted economist said in the long-term, the strategy to curb such volatility in prices lay in modernising agricultural production and marketing. “Improving productivity, storage and transport are necessary. Private participation is necessary for this. Farmers should be allowed to sell their produce to the best intermediary who will give them and the consumers the best price,” he said.

Ahluwalia was referring to the fact that the APMC laws in most states make it mandatory for farmers to sell their produce through local committees.

Licences for participating wholesale buyers — who are required to pay a transaction or mandi tax — are concentrated in a few hands. In the present scenario, these markets are not a free buyer-seller platform. But any change in the APMC law is sensitive as powerful people control these committees at the local level.

Ahluwalia said the APMC laws must be amended to free farmers from the markets controlled by a few people and provide them access to consumer markets directly. Ahluwalia said all horticulture products such as onions, apples and vegetables should be exempted from APMC laws and the state governments should help farmers in better marketing of their produce.

He said the need was more for the private sector to invest in infrastructure for perishable goods. “If our transport is efficient, you can move items from a surplus region in the country to an area facing shortage quickly to stabilise prices.” The eight-point action plan that the government announced last week to tame prices had called for increased private participation in the retail sector, another politically sensitive reform that is pending for long.

Ahluwalia said the prices of vegetable will come down, but prices of milk and meat could stay high, as its consumption, especially in rural areas, has increased without comparative rise its production. “Many people in rural India who used to produce milk for market are consuming more milk because of improvement in their incomes,” he said.