AGRICULTURAL COMMODITY TRADING IN STUDY AREA

Transcription

1 CHAPTER 4 AGRICULTURAL COMMODITY TRADING IN STUDY AREA INTRODUCTION: An agricultural produce market committee is a marketing board established by a state government in India, mainly to ensure farmers does not get exploited by the intermediaries like agents, dealers who generally pressurize farmers to sell their produce at the farm gate for throw away price, and also make farmers to sell their produce using auctioning method by bringing it to the APMC market. In September 1972, according to section 100 of the Karnataka Agricultural Produce Marketing (Regulation and Development) Act, 1966 and Rules 1968, the Karnataka State Agricultural Marketing Board was established. The Board acts as a communication agency between the Market Committees and Karnataka government for all the developments related agricultural marketing in the state. There are 156 main and 355 sub-markets. In total 92 agricultural commodities are notified for the purpose of regulation (food grains, oilseeds, fruits, vegetables, cotton, jaggery, areca nut, coconut, cashew nut, and livestock). Around Rs. 33,000 crores worth commodities transacted in APMCs annually. About 36,000 traders and commission agents are licensed to operate in the market yards and APMCs are managed by a Committee consisting of elected representatives of farmers (11), traders and commission agents (1), marketing co-op. (1), processing co-op (1), Govt. nominees (3) and official (1) ---Totally 18 As Karnataka is on the forefront of Agricultural Marketing Reforms, as per the Model Act 2003 of Government of India the state has amended the Act in 2007 and Rules in 2008, subsequently brought in the following reforms. Major amendments included 81

2 Establishment of Private Markets Establishment of Farmer-Consumer Markets Contract Farming Development of markets under Public Private Partnership Establishment of Grading and Standardization Bureau Establishment of Direct Purchase Centres E-Trading and Establishment of Spot Exchanges In Karnataka state, information regarding arrivals of various commodities across mandi along with grade wise list of all commodity rates (minimum, maximum, average rate, the latest minimum support price) etc, is provided by Karnataka State Agricultural Marketing Board (KSABM). It also provides commodity rates prevailing at other district markets, tender notices and other related information. Information on arrivals and commodity prices of a particular day are displayed on notice board at APMC's. Market functionaries like traders, exporters, processors, importers, hamals, crushers, retail traders, commission agents, etc also provide information on commodity prices. Most of the farmers get prevailing commodity price information mainly from commission agent and traders. Sometimes farmers also do get information through radio, news paper and television. In most of the places rates of the commodities are being widely publicized through public address systems. As part of market intelligence day to day market rates are being displayed on the notice board, publicized in daily news papers and broadcasted through All India Radio and also through Internet. Mostly agricultural markets are characterized by poor competitiveness, fragmentation, inefficiency, presence of excessive middlemen, and frequent price manipulations. An attempt has been made by the state to adopt electronic trading portal 82

3 for national agricultural markets using modern technology for transforming the system of agricultural marketing 100. PROFILE OF APMCs IN STUDY AREA: Below are the district-wise APMC profiles of the study area on available facilities, commodity arrivals to the markets, turnover, expenses, transportation modes and market charges applicable, etc. BRIEF PROFILE OF APMC KALABURAGI DISTRICT: The APMC Kalaburagi is one of the major market committee in the state of Karnataka. This market was established in the year 1940, notified area for the market is around hectare. This market serves the geographical area having around 502 villages with population served is 95,00,000. Map 4.1 Kalaburagi District The Market has many number of market functionaries namely, commission agent, traders, exporters, importers, processors, stockiest, weighmen, hamals, warehousemen, 100 Information accessed from market.html#sthash.coia8j2z.dpuf 83

4 crushers and retail traders, etc. The tendering system of the commodities has been computerized. There are around 160 commodity processing units for tur and for bengalgram 12. Two cold storages available with capacity of 1000 MT. Totally 92 commodities are notified under the regulation. The selling of produce is done using online tender system for tur, bengalgram and for other commodities it is by auction system. As for as market charges are concerned, commission of 2 percent is collected from the traders and 1.5 percent is collected as market fee from the trader and other charges as per rules. Transportation of the produce happens mostly by road using trucks, tractors and autos. The APMC has annual income has around Rs. 14,72,96,945 with expenses of Rs. 9,11,99,986 as per Some of the welfare schemes for the farmers are Ryata Sanjeevini Accidental Insurance Scheme and pledge loan scheme. Tamilnadu, Andhra pradesh and Maharashtra are the important markets to which produce is sent. Table 4.1 Year-wise arrivals of different commodities to APMC - Kalaburagi Commodity/Total Annual Arrivals Wheat Sunflower Tur Jowar Green Gram Black Gram Bengal Gram Jaggery Sajje Sesame Source: Compiled from Government of India, Directorate of Marketing and Inspection (DMI), Ministry of Agricultural and Formers Welfare. BRIEF PROFILE OF APMC VIJAYAPURA DISTRICT: 84

5 The Agricultural Produce Marketing Committee Vijayapura was established in the year Notified area of the market is around hectare. This market serves the geographical area having around 239 villages with population served is 8,71,000. The APMC Market has number of market functionaries like, commission agents, traders, exporters, importers, processors, stockiest, weighmen, hamals, warehousemen, crushers and retail traders, etc. The tender system of the commodities has been computerized. Map 4.2 Vijayapura District Commodity processing units exists in few areas of Vijayapura and Basavan Bagewadi. There are 7 cold storages available with capacity of 4000 MT and 9800 MT. There are 92 commodities notified under the regulation. The selling of produce is done using online tender system for Cotton, Bengalgram, Maize, Jowar, Bajra,Tur and for other commodities it is either by auction or mutual understanding. Weighing mechanism uses tripad weighing and electronic weighing machine. As for as market charges are concerned, commission of 2 percent is collected from the traders and 1.5 percent is collected as market fee from the trader and other charges are as per rules. Transportation of the produce happens mostly by road using lorry, tractors, bullock cart and small carriers. The APMC has annual income has around Rs. 5,79,97,372 with expenses of Rs. 85

6 4,40,91,773 as per Kolapur, Sangali, Miraj, Pune, Bombay, Bangalore, Solapur, Latur and other states are the important markets to which produce is sent. Table 4.2 Commodity wise Production and Arrivals - Vijayapura Commodity( ) Annual Production Arrivals Bajra B-Gram Jowar Maize Cotton Sunflower Groundnut Wheat Tur Safflower Source: Compiled from Government of India, Directorate of Marketing and Inspection (DMI), Ministry of Agricultural and Formers Welfare. Table 4.3 Year-wise arrivals of different commodities to APMC - Vijayapura Commodity/Total Annual Arrivals Bajra B-Gram Jowar Maize Cotton Sunflower

7 Commodity/Total Annual Arrivals Groundnut Wheat Tur Safflower Source: Compiled from Government of India, Directorate of Marketing and Inspection (DMI), Ministry of Agricultural and Formers Welfare. BRIEF PROFILE OF BIDAR APMC DISTRICT: The agricultural Produce Marketing Committee Bidar is one of the market committee in the state of Karnataka. This market was established in the year Notified area for the market is around 15 hectare. This market serves the geographical area having around 128 villages with population served is 3,31,452. Map 4.3 Bidar District This market has 113 commodities notified under the regulation. Few commodity processing units exist in the area, mainly 3 rice mills and 20 dal mills. There is no storage facility available with APMC. The selling of produce is done using Open Auction and 87

8 Tender System. As for as market charges are concerned, commission of 2 percent is collected from the traders and 1.5 percent is collected as market fee from the trader, for weighment and hamal charges Rs.1 is charged per bag. Transportation of the produce happens mostly by road using trucks and tractors. The market has many number of market functionaries namely, commission agents, traders, exporters, importers, processors, stockiest, weighmen, hamals, warehousemen, crushers and retail traders, etc. The APMC has annual income has around Rs. 2,45,88,798 with expenses of Rs. 1,69,79,527 as per One of the welfare schemes for the farmers is Raita Sanjeevini Accidental Insurance Scheme. Bangalore, Mysore, Tamilnadu, Andrapradesh, Delhi, Gujrat, Orrissa are the important markets to which that produce is sent. Table 4.4 Year-wise arrivals of different commodities to APMC - Bidar Name of Commodity Total Annual Arrivals Greengram Blackgram Tur Bengal Gram Jowar Hybrid Jowar White Sunflower Karad Wheat Soyabin Source: Compiled from Government of India, Directorate of Marketing and Inspection (DMI), Ministry of Agricultural and Formers Welfare. 88

9 BRIEF PROFILE OF BAGALKOT APMC DISTRICT: The agricultural Produce Marketing Committee Bagalkot is one of the market committee in the state of Karnataka. This market was established in the year Notified area for the market is around hectare. This market serves the geographical area having around 94 villages with population served is 1,11,933. Map 4.4 Bagalkot District This APMC Market has many number of market functionaries namely, commission agents, stockiest, importers, processors, exporters, traders, weighmen, hamals, warehousemen, crushers and retail traders, etc. The tender of the commodities has been computerized. There are around 7 commodity processing units. There are 112 commodities notified under the regulation. The selling of produce is done in Unified Market System except Onion in Open Auction. As for as market charges are concerned, commission of 2 percent is collected from the traders and 1.5 percent is collected as market fee from the trader. Transportation of the produce happens 80% by road and 20% by rail using trucks, tractors, tum-tum, and rail wagons. There are 9 Ripening Chambers available with the capacity of 4200MT. The APMC has annual income has around Rs. 2,95,33,106 with expenses of Rs. 2,17,20,204 as per One of the welfare scheme available for the farmers is Ryata Sanjeevini Accidental Insurance Scheme and pledge 89

10 loan scheme. Bijapur, Solapur, Kolapur, Sangli, Challikeri, Gadag, Chitradurga, Delhi, Pune, Ahmadabad are the important markets to which produce is sent. Table 4.5 Commodity wise Arrivals Bagalkot Commodity( ) Annual Production Arrivals Wheat Ground nut Sunflower Tur Jowar white Bajar Maize Moong Gram Onion Source: Compiled from Government of India, Directorate of Marketing and Inspection (DMI), Ministry of Agricultural and Formers Welfare. 90

11 BRIEF PROFILE OF YADGIR APMC DISTRICT: The agricultural Produce Marketing Committee Yadgir is one of the Market Committee in the state of Karnataka. This market was established in the year 1969, with APMC YADGIR legislation name. Notified area for the market is around hectare. This market serves the geographical area having around 164 villages with population served is 5,28,800. Map 4.5 Yadgir District There are few commodity processing units for Tur Moong Bengal Gram Cotton Groundnut. There are storage facilities available at APMC but cold storage does not exist. The selling of produce is done using tender system for tur, bengalgram and for other commodities it is by auction system. As for as market charges are concerned, commission of 2 percent is collected from the traders and 1.5 percent is collected as market fee from the buyer and other charges are as per rules. Transportation of the produce happens mostly by road using trucks and tractors. This APMC Market has many number of market functionaries namely, commission agents, traders, exporters, importers, processors, stockiest, weighmen, hamals, warehousemen, crushers and retail traders, etc. The APMC has annual income has around Rs. 4,61,51,598 with expenses of Rs. 2,64,98,672 as per Some of the welfare schemes for the farmers are Ryata 91

12 Sanjeevini Accidental Insurance Scheme. Maharastra, Tamilnadu, Gujarath, Hubli, Gadag, Kalaburgi, Challekere, Sindanur, Bellary, Uttar Pradesh are the important markets to which produce is sent. Table 4.6 Year-wise arrivals of different commodities to APMC - Yadgir Commodity/Total Annual Arrivals Black Gram Tur Sunflower Groundnut Rice Loba Moong Gram Cotton Safflower Source: Compiled from Government of India, Directorate of Marketing and Inspection (DMI), Ministry of Agricultural and Formers Welfare. Though the APMC s are functioning to give provision for farmers to sell their produce at best price and generate better revenue, many efforts are being put in the similar direction by providing better platform for selling their produce. Krishi Marata Vahini in Karnataka is making efforts in the direction of organized collection of prices information and their display through their medium, but the system does not address the problems related to supply prediction and thus limits itself in providing the probable market direction to the farmers. Due to inaccessibility of data being transmitted through web and the media, farmers are not able get the benefit of the same. Many of the markets needs to be provided with better storage facilities and grading standards along with 92

13 unique platform to sell at higher prices by connecting different markets of the states and countries. Required support is also needed in terms of transportation. Also in current scenario of open economy, farmers need to be guided or trained to utilize the facilities like Unified Marketing Platforms, Direct marketing, etc to get better price. ONLINE AGRICULTURAL MARKETING MODEL IN KARNATAKA The state of Karnataka has been always in top list in implementing innovative ideas and reforms in sector to bring in competitiveness and improve agricultural marketing. Model APMC Act was first implemented in the state compared to other states and also consistently bringing in new changes to it on its own for the sector improvement. In with the help of National Commodity and Derivatives Exchange, a new initiative was taken to implement automated auction process with modern technologies for selling and buying of the produce in mandis. The idea behind this process was to provide better remunerative prices to the producers by integrating all APMC's with major consumption markets, which also would help in having better transparency and grading standardization to allow smooth trading across APMCs. MCX in association with NAFED floated an independent spot exchange known National Spot Exchange Limited (NSEL) in NCDEX also took a similar initiative in Exchanges exploited the scope of electronic spot trading in agricultural commodities by obtaining the license from the respective states APMCs/SAMBs. So NCDEX e-markets Limited (formerly known as NCDEX Spot Exchange Ltd) (NeML) has been a single spot exchange facilitating trading in agricultural commodities (Dey 2015a). NSEL failed to emerge successful due to faulty contract design and fragile settlement system. Similarly, a wholly owned subsidiary of NDDB, named Mother Dairy Fruits and Vegetables Limited ventured with MCX, promoted Safal National Exchange (SNX) in 2008, but failed due to techno-economic problems. Karnataka government with joint venture of NCDEX spot exchange started Rashtriya e-market Services Private Limited Company (ReMS). This offers automated process of auction along with post auction facilities like invoicing, accounting, market 93

14 fees collection, etc. It also allows warehouse-based sale of produce, grading facilities, price dissemination facilities, etc. Another initiative named Unified Market Platform was launched in 2014 by NCDEX and state government that would connect all mandis of the state to unified single trading. Around 105 markets from different districts were planned to bring under the roof of UMP. The process involves providing identification number to the produce brought by the farmers to the APMC market. The former has a choice of selecting online trading platform or commission agent platform for the auction. Then the quality and quantity of the produce information is shared on the ReMS for selling. Buyers who are registered and have license for online trading would keep an online bid request for a particular produce with quality and quantity using their username and password. A trader can revise the bid upward any number of times before closure of the bidding time. After closure of auction period, the bids are flashed on television screens put up in the mandis and on the portal of ReMS. Thereafter, the producer/seller is required to give his acceptance for the bid. A seller has the right to reject the bid, in which case a second round of bidding takes place on the same day and in the same way. A bidder is required to keep a pre-bid margin of 5% of value of the lot marked for sale with ReMS before opening of the tender. ReMS charges 0.2% of the value of the transacted produce for providing various online services 101. ONLINE SELLING PROCESS OF THE PRODUCE AT KARNATAKA APMC MARKETS: Farmers have to bring cleaned produce to the market yards and grade them according to the quality of the produce. They have to register their name with their mobile and bank account number in the market yards or at the time of registration campaign organized by the APMC s. Before the agricultural produce is offered for sale, a professional assaying service provider will assay the produce against the standardized quality parameters, which will be displayed on the on-line market platform. The name of 101 Ramesh Chand, Economic & Political Weekly, july 9, 2016 vol 51, No 28, page no

15 the commodity, quantity, lot number, assayed quality parameters values will be displayed on the platform. Based on the information displayed according to his requirement the buyer (trader) will determine the price to be offered for such produce. In the process, when the price discovery takes place, farmers and commission agents will be given the information through SMS. If the price offered is not acceptable to the farmer they have to inform the concerned commission agent within the prescribed time. In turn the commission agent will upload the same to the UMP and will drop the sale of such produce. The same will be offered for sale on the next day. If there is no information from the farmers regarding their acceptance, it is considered that they have accepted and the produce will be sold through the platform. The service provider of on-line market system will collect the sale proceeds from the buyer of the agricultural produce and in turn he will remit it to his account. Once the sale proceeds are through, he will transfer the sale proceeds to the bank account which was given by the farmer at the time of registration. Farmers can get their sale proceeds from their bank account. Certain pre-selling measures needs to be taken by the seller like weighment and grading of the produce before sale is required under the on-line market system; the farmers have to bear such charges fixed by the market committees in this regard. Relating to the payment of commission when the farmers produce is sold through the commission agents in the on-line market system, the service provider of on-line market system will collect the commission charges from the buyer of such produce and remit the same to the bank accounts of commission agents. Disputes arising in respect of grading, assaying, weighment, payment etc., in the on-line market system would be resolved by disputes committee constituted under Rule 91-P of KAPM (R&D) Rules 1968 will examine and resolve the disputes. In case of Warehouse based sales, which is a method of keeping the agricultural produces in scientific warehouses and selling from there only, without transporting it to the markets is called the warehouse based sales. 95

16 In this process the commodity that is kept in the warehouse needs to be sold, the assayers will examine the quality specification and display the same through unified market platform. The intending licensed traders located in different places and markets could quote the rate through online in the UMP. The highest bidder will be eligible to purchase the commodities, if the seller agrees for the rate quoted the same will be communicated to the trader. The trader makes the payment within the prescribed time, preferably on the same day to the UMP and takes delivery of the commodity. The farmer s money will be transferred by the UMP. If, desires the purchaser can store the commodity in the warehouse at its cost. Generally Director of Agriculture Marketing will decide and notify the warehouse that fit for online trading. Then, all the activity in these warehouses will take place according to KAPM (R&D) Act 1966 & Rules Below block diagram is a simple representation of the process involved in selling the produce. 96

17 ONLINE SELLING OF THE PRODUCE AT THE APMC IN GENERAL: Bring produce to APMC Allotment of Unique number to the produce Produce is brought on to the platform FARMER Bidding/Selling Finalization of the Bid Delivery/E-Permit Intimation to farmer/sms Post selling/bidding Finalization Generate Sale Bill/Payment 97

18 Table 4.7 Total Value of the Produce sold using Unified Market Platform in Karnataka since implementation UMP Model Implementation Total Quantity Traded (Quintals) Total Value (Rs- Crores) Feb Mar Apr May Jun Jul Aug Sep Oct Nov Dec Jan Feb Mar Apr May Jun Total Source: Information accessed from 98

19 Unified Market Platform can be utilized by other states also and is not restricted to Karnataka. Many bigger players like institutional buyers such as Cargill, ITC, Reliance and Metro Cash & Carry are also registered with ReMS. This system would help in restricting those traders within the market who try to dominate and manipulate the prices by providing open unified platform for auction and sale of farm produce, thus eliminating the possibility of tacit understanding to suppress prices received by producers. It helps in inducing transparent and efficient competitive price discovery mechanism. To conclude, as per Model Act 2003 of Government of India, Karnataka government has brought in reforms by amending the Act in 2007 and Rules in Major reforms are brought in terms of establishment of Private Markets, Farmer- Consumer Markets, Grading and Standardization Bureau, Direct Purchase Centres, E- Trading and Spot Exchanges, additionally initiation have been taken to encourage Contract Farming and development of markets under Public Private Partnership. The improvements are needed in terms of transparency in all activities taking place in market operations, better efficiency in technology usage, information dissemination, competiveness, simplification in Process flow in operations, financial aspects, additionally investments and efforts are needed to Integrating Markets, Secondary Market Linkages, creation of required infrastructure and Capacity Building for Stakeholders. E-NAM National Agriculture Market, e-nam is one of the e-trading platforms for agricultural products to bring transparency in buying and selling of agriculture produce across the country. e-nam is Internet based marketplace for farmers and buyers. This platform aims at integrating mandis to help farmers and buyers by providing them current data of agriculture commodity available, its quality and the price being offered at the bidding markets. This will provide more options to farmers to sell their produce. These way farmers would be benefited maximum along with improvement of agriculture sector. Initially, eight states have been included in this and selected 21 mandis are linked 99

20 to the enam with 23 commodities. The government plans to link 200 mandis to the portal within five months and 585 by March The major benefits of such platform help farmers To showcase their produce online from their nearest market Buyers can quote price from anywhere across the country Helps in open price discovery across the states due to increased number of traders thus encouraging greater competition. At present, farmers are restricted to selling produce at mandis that charge various taxes. The online agri-market is expected to give choice to farmers to sell their produce both in physical mandis or online platform. The easy access to sell online trade is likely to boost their incomes and improve availability, moderating price rise. As per Economic Survey, our agricultural markets are one of the most un-integrated and distortions-ridden. So country like India needs a common national market for agricultural commodities by making the Agricultural Produce Market Committees (APMCs) just one among many options available for the farmers to sell their produce. Many of the APMCs levy multiple fees that are not very transparent and restrictions are imposed on farmers freedom to sell their produce at their will and indirectly forced to sell through commission agents and other functionaries licensed by the APMCs. The challenges of setting up such platform would be, states amending their APMC Acts to create a single agriculture market. Only three states Karnataka, Andhra Pradesh and Madhya Pradesh have amended their APMC Acts. The government will have to take all the state governments on board and persuade them to amend APMC Acts and also devise laws to facilitate online trading of farm produce; this initiative would help enam to succeed. 100

21 To adopt such e-platform, the states/union territories will need to undertake mainly three reforms, namely: (i) a single licence to be valid across the state, (ii) single point levy of market fee, and (iii) provision for electronic auction as a model for price discovery. Given the political power the APMCs enjoy, it is likely to be a long fight. The NAM initiative with electronic trading platform, linking major national markets, will take India s agricultural marketing system to a higher level. This enam would operate in the same way as ReMS is operating in Karnataka. This initiative would prove to be a beneficial act for India s farmers and the sector, if it is implemented in true spirit. Major direct benefits would be: (i) improvement in competitiveness and efficiency in agricultural markets, (ii) elimination of traders cartels and price manipulations by local trading groups, and (iii) lower price spread between producers and consumers as well as surplus and deficit states. With this producers will get better price realization, while consumers can expect benefit from the lower price spread. The better price realization would serve farmers with an important incentive for raising productivity and production indirectly, and in turn that would lead to higher growth of output. Many farmers face the problems of harvest prices prevailing below the MSP in the harvest period and increases subsequently. With e-nam platform such variations and market imperfections can be checked. To make e-nam a success and increase the competition in agriculture markets, e- NAM adopting markets would require assaying facilities created in various markets to ascertain quality traits as quality variations are quite large in agricultural commodities. Each mandi would require forwarding agents to handle the produce for buyers from outside the mandi. 101