Government Allows Direct Sale Of Agri Produce By Growers To Tackle Coronavirus But Some Issues Need To Be Sorted Out

The Union Ministry of Agriculture and Farmers Welfare in a letter to the chief secretaries in states across the country has asked them to allow farmers to directly sell the produce “nearer their farm gate”.

In a letter to the secretaries, Ministry Secretary Sanjay Agarwal urged the states to amend their Agricultural Produce Marketing Committee (APMC) Acts so that direct sale of farmers’ agricultural products can take place.

The move to allow farmers to directly sell their produce instead of taking it to the nearest mandi (market) is a measure to tackle the spread of coronavirus (Covid-19) in the country.

The mandis function as per the APMC Act framed by the respective state governments. The APMC-run mandis are supervised by the state governments, in turn.

Industry players see some hurdles in getting farmers to either sell near their farm gates or even directly deliver to an industrial user.

“The Centre has only requested the state governments to allow the direct sale. How many state governments will agree to forego the taxes and levies they collect from the APMC-run mandis?” wondered Pramod Kumar, director of Bengaluru-based Sunil Agro Mills.

State governments impose sales tax besides charging levies such as rural development cess or infrastructure cess, which add to the buyers’ procurement costs.

“Bharatiya Janata Party (BJP)-ruled governments will fall in line. But what about other states such as Punjab or Rajasthan?” Kumar asked. Punjab and Rajasthan are run by the Indian National Congress.

Industrial players are unanimous that farmers stand to benefit immensely from the Agriculture Ministry’s request.

“The primary aspect is that social distancing will be maintained. This will really help farmers from avoiding crowds,” said B V Mehta, director, Solvent Extractors Association — the apex body of oilseeds crushing units.

If farmers were to go to the mandis, they could face the risk of getting infected as many will flock either to sell or buy. In addition, there are labourers for loading and unloading, besides commission agents (arhtiyas), said Mehta.

“It is a good move to allow the direct sale of farm produce by growers. But there is a lot of confusion that needs to be cleared,” said Raj Narayan Gupta, a north India flour mill owner.

For example, on 8 April some farmers wanted to deliver wheat to Gupta’s flour mill near Moradabad in Uttar Pradesh. Police did not allow them. It was after 6 pm that the confusion was cleared but farmers did not want to get to his mill at that hour, fearing further delay in getting back home.

“This is just one of the many problems. What’s the point in having raw material when I don’t have workers to run the mill? They also need to come to work, at least after 15 April,” Gupta said.

The nation-wide lockdown announced by the Narendra Modi government ends on 15 April but there are no clear indications if it will be extended or lifted or restrictions would be done away with only in a staggered way.

There are farmers who are not clear when their state governments will begin procurement. “In Madhya Pradesh, the government has said it will open the mandis after 15 April,” said Sunil Mukhati, a farmer at a village 50 km from Indore.

Mukhati said he would not have any problems selling his wheat to private traders or industrial users provided he gets the minimum support price (MSP) fixed by the government.

For the current rabi marketing season, which began on 1 April, the Cente has fixed an MSP of Rs 1,925 a quintal (100 kg).

Direct sale will also help farmers since in states such as Madhya Pradesh, cities such as Indore could be locked down for a longer period in view of a higher number of people testing positive for coronavirus there.

Indore city accounts for about 80 per cent of the total Covid-19 cases in Madhya Pradesh. "There are other markets but we have to see which will function," Mukhati said.

Solvent Extractors Association’s Mehta says the oilseed crushing units have agreed to pay state governments their sales taxes and other levies charged at the mandis.

“We have told the governments that we will account for every kg of oilseed we buy and pay the due taxes every week,” Mehta said.

Farmers will also not waste time for their produce to be auctioned or sold off at the mandis. They spend an entire day at mandis from taking their produce to getting it auctioned before getting the payment.

In case, a farmer gets an industrial user at his farm gate then he/she will be saved from travelling all the way to the mandis.

Gupta says clear instructions are yet to be given on these sales by farmers. Thus, there are quite a few hurdles before the produce can reach industrial users’ premises.

In addition, industrial users are worried about the Centre imposing the Essential Commodities Act. Under the act, the government fixes the maximum quantity of an agricultural produce a vendor, a wholesale merchant, a trader or a manufacturing unit can store.

“We are worried because it can be used to harass industries,” says Kumar.

Mehta adds: “we are clear that the Essential Commodities Act cannot trouble our units procuring raw materials.”

Industrialists say that though the Centre has been taking all steps to curb the spread of coronavirus, it would need to pass clear-cut orders that would stand to benefit all.