Agri supply chains get a reform boost in lockdown times

The government has, in the past, made attempts to reform agricultural “marketing” (the market, or mandi, system that controls buying and selling of farm produce). But not many came through.

From a taxi aggregator-like app to book trucks, to an expansion of market points, the ongoing lockdown to fight the coronavirus disease (Covid-19) appears to have given a fillip to some agricultural reforms that had been long considered but never implemented.

Since the lockdown has disrupted traditional farm-to-fork supply chains, the void created has enabled the government to quickly move in with reforms to keep supplies going.(Bharat Bhushan / Hindustan Times)

The government has, in the past, made attempts to reform agricultural “marketing” (the market, or mandi, system that controls buying and selling of farm produce). But not many came through. One reason for this, a government official said requesting anonymity, is that supply agents in bulk markets exert outsize influence over farmers.

But, a second official said, since the lockdown has disrupted traditional farm-to-fork supply chains, the void created has enabled the government to quickly move in with reforms to keep supplies going.

The government has taken initiatives to boost direct selling, the first official cited above said.

Usually, farmers have to go through smaller crop aggregators to access bulk buyers. Over time, this has spawned layers of intermediaries spanning the farm-to-fork supply chain. This results in a large “price spread”, or the fragmentation of profit shares due to the presence of several middlemen. Farmers often get the lowest shares.

Amid the lockdown, the Union government has recommended states to sidestep the mandi system by suspending some archaic provisions of the agricultural produce marketing committees (APMCs) Acts. According to the PMO, in one of a series of meeting with state chief ministers he held this earlier month, Prime Minister Narendra Modi stressed direct marketing of crops.

Agricultural marketing in India is a complex system, with a mix of organised and unorganised markets. Farmers mainly sell in mandis, which are state-run market yards known as APMCs. There are about 585 such highly regulated APMCs in 16 states and two Union Territories.

But the government had last month allowed agri-businesses, known as farmer producer organisations (FPOs), to buy directly from farmers.

Ushered in during the 1960s, APMC regulations require farmers to only sell to licensed middlemen in notified markets, usually in the same area as the farmer, rather than directly to buyers elsewhere. Now farmers are virtually free to sell to any buyer.

“To hold these lockdown-induced reforms over the long term, some change in laws would be required. Many of the provisions are now being tested on an emergency basis,” said R Mani, an economist with the Tamil Nadu Agricultural University.

Another key reform, ushered in on March 26, is the granting of warehouses the status of legal selling points. Since buying and selling can now happen at warehouses, farmers need not incur costs in transporting grains to mandis.

FPOs have now been incorporated into the National Agricultural Markets system, which is an online platform.

The government has also explored the app ecosystem to push reforms. It has launched the cab aggregator-style app-based hiring of trucks through Kisan Rath, an android application.

Tech teams, with help from the private sector, will also be pressed to digitise neighbourhood kirana or general provisions stores in 25 cities, the second official soon.