Review Marketing Of Agricultural Products

The Reserve Bank of India may have given it some relief by not hiking interest rates despite high inflation in its December monetary review policy, but the fact that India’s Wholesale Price Index jumped to a 14-month high of 7.52 per cent in November should be a cause for worry for the government. Its rise in November mirrors a similar spike in Consumer Price Index that hit 11.24 per cent during the month. The unchecked rise in food prices is the single major driver for this, pushing up food inflation to a 41-month high of 19.93 per cent. Given that food accounts for over 60 per cent of expenses in India’s poor households, it inflicts a “hidden tax” on them.



A significant feature of the current food inflation is its changing contours. While the prices of pulses, sugar and edible oils tended to moderate, those of staple cereals and perishables like fruits and vegetables are pushing it upwards. The blame for this lies with faulty agricultural marketing policies of the Centre and state governments. The Centre should review its open-ended procurement-based food management system that is constraining grain supplies in the market. As recommended by the Commission for Agricultural Costs and Prices, surplus stocks should be offloaded in domestic or export markets. This will bring down open market prices and save Rs 80,000 crore per year in excess storage cost.



Simultaneously, the states should reform their agricultural produce marketing committee (APMC) laws to cut down unduly high marketing costs. In India, the agriculture markets are regulated through the APMC Act in each state. Every APMC can collect market fees from the traders in the prescribed manner on the sale of notified agriculture produce. Although the Centre had come up with a model APMC Act to stimulate organised retail and contract farming in 2010, only 17 states have amended their laws to allow direct marketing, contract farming and markets in the private and co-operative sectors.



Source:- newindianexpress.com