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Food and Agricultural Marketing Sector Dr. Anusree Paul Symbiosis School of Economics Pune National Competition Policy and Economic Growth of India PAC Meeting - ComPEG CIRC, 7 th February 2013
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Structure of Presentation Background Aim of the Study Agricultural Marketing Chain Institutional Framework Legal and Regulatory Framework Policy Framework Competition Distortions in the Marketing Chain Constraints Identified Survey Objective Sampling Note Pilot Survey Challenges and Issues to Ponder
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Background Agriculture is one of the major driving forces of economic growth Market-mediated linkages of agricultural sector In India, the agricultural sector is the most diverse sector and supports majority of its population for livelihood.
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Aim of the Study Aim of the Study To promote effective implementation of National Competition Policy by advocating for legislative changes identified in the select sector Scope of the Study Scope of the Study: Review of existing Laws/ Acts. Identification of the competition distortion issues Suggest new reforms to make the agricultural marketing sector competitive.
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Agricultural Marketing Chain Source: Author’s Compilation
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Institutional Framework 1.Institutions regulate market conduct, structure, performance (efficiency): Regulation of primary agricultural produce markets Legal and regulatory provisions relating to storage, transportation, packaging, processing, buying/selling, quality specifications, e.g. DMI, SAMBs, APMCs etc
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Institutional Framework 2. Institutions provide and maintaining marketing infrastructure (physical and institutional): SAMBs, APMCs etc. 3. Institutions involved in administered prices, e.g. NAFED, FCI, CACP etc. 4. Institutions influence foreign trade: APEDA
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Legal and Regulatory Framework Laws and Orders: Laws and Orders: Agricultural Produce Marketing (Grading & Marking) Act, 1937. Amended in 1986. The Essential Commodities Act, 1955 National Cooperative Development Act,1962 Food Corporation of India Act, 1964 Prevention of Black Marketing & Maintenance of Supply of Essential Commodities Act, 1980 The Bureau of Indian Standards Act, 1986 Agricultural Produce Marketing Committee (APMC) Model Act 2003 Forward Contracts (Regulation) Amendment Act, 2006 Act, 1952. The (Warehousing Development and Regulation) Act, 2007
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Policy Framework National Agricultural Policy Price Support Policy Credit Policy Trade Policy
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Competition Distortions in the Marketing Chain Agricultural marketing: poorly organised, over regulated- leading to low price to producers, high marketing cost and large physical losses. Marketing monopoly – due to restrictive provisions of the APMC act Model APMC has failed to establish a competitive structure in the system Overtime the balance of power in transactions has moved back in favour of middlemen and the trading class. Traders, commission agents, and other functionaries organised themselves into associations, created entry deterrence for new players and hindered the competitive functioning of markets
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Constraints Identified Undue emphasis on fee collection Under-performance of regulated markets: Grading Market Intelligence Method of sales Payments of sales proceed
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Survey Objective institutional and stakeholder analysis To conduct an institutional and stakeholder analysis by studying the pattern supply chain of the product/sector understanding the political and social interest of the stakeholders towards reform identifying the institutional (political, economic and social) constraints that is hindering the institutional efficiency understanding the cost structure of the supply chain ( this cost related information will help us to do the economic analysis)
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Sampling Note Selected States Representative Product* Selection Criterion Sampling Technique Stakeholders* Sample Size Questionnaire
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Pilot Survey Bethua market in Nadia district, West Bengal Established in 2010 No APMC Cold storage and arats/sheds are present but yet not have started functioning. No License required for buying/selling No separate sorting grading facility though labourers are available and traders pay these labourers
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FARMERS Aratdars/ Auction Agents PRODUCE TRADERS Retailers/Wholes alers in the vicinity of the Regulated markets Aratdars in other states / cities/ wholesale markets Consumers in the vicinity of the Regulated markets RETAILERS Consumers in other states/cities Rs.5/Kg Rs.8-10/Kg Rs.20-25/Kg No clarity on how the first auction-price was determining Aratdars lend money to the farmers Traders have clear information about the price of similar product in Arats/wholesale market in other states 15
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Challenges and Issues to Ponder Stakeholders are reluctant to share information Time of visit to the market yard Total time span of the survey and the study
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Thank You
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