Policy Initiatives In Agricultural Marketing Division

POLICY INITIATIVES IN AGRICULTURAL MARKETING DIVISION 1. Marketing Research and Information Network (MRIN ) With a view to disseminate price and market related information in respect of agricultural commodities to farmers, this Department has implemented a Scheme of Agricultural Marketing Research and Information Network. Under the scheme, so far 735 agricultural markets have been interconnected on AGMARKNET portal wherein daily prices of more than 300 commodities and about 2000 varieties are being reported. During 10th Plan 2000 more agricultural markets are planned to be connected to the portal with a central outlay of Rs. 35 crores thereby providing on-line connectivity to 37 per cent of total number of wholesale markets in the country. So far an amount of Rs.11.48 crores has been released for providing internet connectivity to 950 markets; for developing 8 state level portals and for market led extension activities in 16 states. The commodities covered include cereals, pulses, oilseeds, fruits and vegetables, spices, fibre crops, livestock, poultry, etc. IFFCO, a cooperative fertilizer company, has been involved in disseminating the price information to a large net work of farmers’ cooperatives spread all over the country. National Multi Commodity Exchange of India Ltd, Ahmedabad has been interlinked with the portal to provide on-line information in respect of future prices of selected commodities. Linkages have also been established with websites of Food & Agriculture Organisation (FAO) and Asian & Pacific Coconut Commodity (APCC) for accessing international commodity price trends. Further details can be viewed on the website www.agmarknet.nic.in. 2. Construction of Rural Godowns The main objectives of the scheme include creation of scientific storage capacity with allied facilities in rural areas to meet the requirements of farmers for storing farm produce, processed farm produce, consumer articles and agricultural inputs; promotion of grading, standardization and quality control of agricultural produce to improve their marketability; prevention of distress sale immediately after harvest by providing the facility of pledge financing and marketing credit; to strengthen agricultural marketing infrastructure in the country by paving way for the introduction of national system of warehousing receipts in respect of agricultural commodities stored in such godowns and to reverse the declining trend of investment in agriculture sector by encouraging private and co-operative sectors to invest in the creation of storage infrastructure in the country. Under this scheme, 25 percent of the capital cost is to be provided as credit-linked, back-ended subsidy .For the north east and other hilly areas in the country and entrepreneurs belonging to SC/ST, the subsidy would be 33.33 percent. The eligible promoters for construction of rural godowns can be individual farmers, group of farmers/ growers, partnership/ proprietary firms, NGOs, companies, corporations, co-operatives, Agricultural

Produce Marketing Committees, Marketing Boards and Agro Processing Corporations. The scheme is being implemented since March,2001 and so far 6974 storage projects have been sanctioned by NCDC and NABARD to create 115 lakh tonnes of rural storage capacity in the country. During the years 2004-07, this scheme is continued with certain modifications with a central outlay of of Rs.115 crores for creation of 36 lakh tones capacity. Under the revised scheme, 15% subsidy will be provided to individuals, companies and corporates and 25% subsidy will be provided to all categories of farmers, agricultural graduates, co-operatives and CWC/ SWC. The scheme has helped the farmers in storing their commodities near their fields, obtain pledge loan and marketing credit from the banks, thereby avoiding distress sale at the time of harvest. Capital subsidy to the entrepreneurs is credit linked and back ended and is adjusted in the entrepreneurs’ account after the repayment of loan which is usually of 7 to 9 years duration. This arrangement ensures utilization of godown project for agricultural purposes. Participation of multiple agencies in the implementation of the scheme has in addition to benefiting the farming community, generated huge investment in creating storage infrastructure in rural areas of the country. Further details can be viewed on the website www.agmarknet.nic.in. 3. Development/ Strengthening of Agricultural Marketing Infrastructure, Grading and Standardisation: A new Central Sector Scheme ‘Development/Strengthening of Agricultural Marketing Infrastructure, Grading and Standardization’ has recently been approved (on 20.10.2004) with a view to induce large investments from private and Co-operative sectors in the development of marketing infrastructure for agricultural and allied commodities in the country by providing credit linked backended subsidy on capital investment for setting up/strengthening of agricultural markets, marketing infrastructure and support services such as grading, standardization and quality certification. Assistance will be available to individuals, group of farmers, NGOs, SHGs, companies, corporations, cooperatives, local bodies, agricultural produce market committees etc. The Central outlay for the scheme is Rs. 190 crores during 2004-07. This scheme will be implemented through NABARD and NCDC in those States which amend their APMC Acts, wherever required, to allow direct marketing and contract farming and to permit setting up of markets in private and cooperative sectors. The scheme would provide increased access to small and marginal farmers to agricultural marketing infrastructure for better price realization and to open greater market opportunities to growth, employment and poverty reduction. Further details can be viewed on the website www.agmarknet.nic.in. 4. Marketing Reforms:

To make the agricultural marketing system more vibrant and competitive, Government of India had taken the initiative in this regard by setting up of an Inter Ministerial Task Force on Agricultural Marketing Reforms which recommended amendment to the State APMC Act for promotion of direct marketing and contract farming, development of agricultural markets in private and cooperative sectors, stepping up of pledge financing, expansion of future trading to cover all agricultural markets, introduction of negotiable warehouse receipt system and use of information technology to provide market led extension services to the farmers. In order to guide the States in the implementation of suggested reforms, Central Government had now drafted a Model Act on Agricultural Marketing which inter-alia provided for the establishment of direct purchase centers and farmers’ markets for direct sale to consumers, complete transparency in the pricing system, and payment to farmers on the same day, public private partnership for professional management of existing markets and setting up of Market Standards Bureau for promotion of standardization, grading and quality certification of produce. The Model Act and the suggested reforms were discussed at the national conference of State Agriculture Ministers held on 7th January 2004 at New Delhi and on 19th November, 2004 at Bangalore. The States were requested to complete the process of amendment to the APMC Act within 2-3 months time Further details can be viewed on the website www.agmarknet.nic.in. 5. Small Farmers Agribusiness Consortium (SFAC) With a view to aggressively promote agri-business in the country, the SFAC is in the process of formulating a new scheme to provide Venture Capital Assistance to agri-business projects and a Project Development Facility to assist producer groups/organizations in formulation of economically viable agri-business projects. Venture capital assistance will be provided to the projects that link producers to assured markets. The scheme envisages a single window operation for the disbursement and disinvestment of venture capital to be operated through the participating banks and would involve a close partnership between the SFAC and the lending banks. The amount of Venture Capital that SFAC will ordinarily provide to Qualifying Projects shall be the lowest of i) 10% of the total project cost assessed by Lending Banks; ii) 26% of the project equity; and iii) Rs.75.00 lakhs. Higher Venture Capital Assistance can be provided to deserving projects on merit and/or to projects that are located in remote and backward areas, North-eastern and hilly States and projects promoted by State SFACs. SFAC will defray the cost of preparation of bankable DPRs up to a ceiling of Rs.5.00 lakhs normally depending on the size, location and linkage issues on a case to case basis. Intending projects must be over Rs.50.00 lakhs in size. Projects recommended by State SFACs can be considered for higher assistance under the PDF.

6. Ch. Charan Singh National Institute of Agricultural Marketing(NIAM) NIAM has taken the initiative in establishing collaborative arrangements with FAO/AFMA. At the instance of FAO/AFMA, the Institute is undertaking a countrywide study on ‘Role of Associations of Trade, Millers and Service Providers’. This would be a pioneer study and first of its kind on such a large scale. The Institute has also taken up the task of preparation of a website for AFMA, Bangkok. It was requested by FAO that NIAM should lead in organising some training programmes for Traders Associations which would be unique in nature and the Institute has initiated action on the same.