Major agricultural produce market committees (APMCs) in Saurashtra are flooded with the fresh arrivals of the oilseed as usual as there has been no major shift in marketing chain of this important crop of Saurashtra despite the state government abolishing levies on traders procuring at farmgates this year.
Gondal APMC in Rajkot, the biggest market of groundnut in the state, has recorded arrivals of 60,608 quintals of groundnut in the first eight days of this month. Rajkot APMC, the second biggest wholesale market of the oilseed, has logged arrivals of around 46,100 quintals of groundnut in the first 10 days of this month. The rush from farmers to cart their harvested oilseed crop is so high that Gondal APMC is forced to allow arrivals once in four days. Same is the situation in Rajkot as commission agents and traders are unable to auction off the entire arrivals in a day and there are space constraints on APMC yards.
“We are forced to regulate the arrivals as farmers are in a hurry to transport their groundnut to market soon after harvesting it but our trading system at the APMC is taking up to three to four days to handle the quantity which is arriving in a single day,” Kirit Somaiya, secretary of Gondal APMC, told The Indian Express on Monday.
APMCs in Gujarat had powers to charge marketing cess on every transaction taking place within its jurisdiction, which usually would be a taluka or two, till early this year. However, on May 6 this year, the state government promulgated an ordinance amending the Gujarat Agricu-ltural Produce Market Act 1963 to limit the regulatory jurisdiction of APMCs in the state to the physical boundaries of their respective yards. Thus a trader procuring directly from farmers at farmgate is no longer liable to pay marketing cess to an APMC and universal licence allows him to procure from any farmer from anywhere in the state.
The government has been pushing the move as a reform which will eliminate commission agents or the middlemen, promote competition among traders, which in turn, would help farmers get remunerative price of their produce. It also allows setting up private yards and sub-yards for trading of agricultural produce. Last month, the Gujarat Assembly also passed a Bill to amend the Gujarat Agricultural Produce Market Act. The Central government too has enacted a similar law in addition to providing a legal framework for contract farming.
“We still have faith in the APMC system. To be honest, we are struggling to gather what the new law means. In any case, paying 60 paisa marketing cess on a transaction with Rs 100 is not a big deal for us. Farmers also prefer to bring their produce to APMC as they generally get prices higher than ones offered at his farmgate since a trader going to a farmer’s farm also has to factor in the transportation cost,” said Paresh Vadodariya, a groundnut trader who operates on the Gondal APMC yard.
Atul Kamani, former president of Rajkot APMC Commission Agents Association, said the amendments have had little impact on their business so far. “The arrivals of groundnut are quite normal despite an estimate of lower yield this year. This suggests, there isn’t any great uptick in procurement at farmgates,” said Kamani.
Despite the markets having been flooded, groundnut prices have held firm. The oilseed is fetching bids up to Rs 5,350, higher than the minimum support price (MSP) of Rs 5275 declared by the Central government. “The overall quality of the crop this year is comparatively low as crop was affected by heavy rain in August. But groundnut of fair average quality is getting sold in the range of Rs 4,500 to Rs 5,000 per quintal,” said Mukehs Satasiya, president of Gondal APMC commission agents association.
The rush at APMC comes at a time when the government is in the process of registering those farmers who want to sell their groundnut at MSP. Around three lakh farmers have got themselves registered for selling their groundnut to the Central government even as the registration window is scheduled to remain open till October 20. The government procurement of the oilseed is to start from October 21 onward.
Agricultural Marketing Reforms
In order to revive the Indian economy, the Centre government has announced the Atma Nirbhar Bharat Abhiyan. As a part of it, the plan also focuses on bringing farm sector reforms.
It includes the announcement of Rs 1-lakh crore fund to finance agriculture infrastructure projects at the farm gate and produce aggregation points. Also, Rs 500 crore has been allocated to extended Operation Greens which comprises Tomatoes, Onion and Potatoes (TOP) to ALL fruits and vegetables (TOTAL).
Apart from it, the government has also shown the intention to usher in agricultural marketing reforms. These reforms relate to amending the Essential Commodities Act (ECA), 1955, bringing a Central legislation to allow farmers to sell their products to anyone, outside the APMC mandi yard and creating a legal framework for contract farming.
These reforms are long overdue and if implemented, can go a long way in building efficient value chains and ensuring better returns for farmers.
Issues in Agricultural Marketing
Despite significant progress in food security, the farmers’ income remains subdued owing to the infrastructure deficit in agricultural supply chains. This combined with the nature of agricultural marketing laws in India, farmers suffer more in marketing their products than during the production process.
Essential Commodities Act (ECA), 1955
The ECA has been used by the Government to regulate the production, supply and distribution of a whole host of commodities it declares ‘essential in order to make them available to consumers at fair prices.
The ECA gives consumers protection against irrational spikes in prices of essential commodities. However, it has acted against the interest of the farmers.
This has thwarted the creation of integrated value chains across the country.
ECA has its roots in the Defence of India Rules of 1943, when India was ravaged by famine and was facing the effects of World War II.
It was scarcity-era legislation.
By the mid-1960s, hit by back-to-back droughts, India had to depend upon wheat imports from the US and the country was labelled as a “ship to mouth” economy.
However, today, India is the largest exporter of rice in the world and the second-largest producer of both wheat and rice, after China.
Due to these factors, the Economic Survey 2020, has recommended repealing this “anachronistic” Act.
Working of ECA
If the Centre finds that a certain commodity is in short supply and its price is spiking, it can notify stock-holding limits on it for a specified period.
The States act on this notification to specify limits and take steps to ensure that these are adhered to.
Anybody trading or dealing in a commodity, be it wholesalers, retailers or even importers are prevented from stockpiling it beyond a certain quantity.
Also, the traders have to immediately sell into the market any stocks held beyond the mandated quantity.
Thus, the Government has invoked the Act umpteen times to ensure adequate supplies and cracked down on hoarders and black-marketeers of such commodities.
Given that almost all crops are seasonal, ensuring round-the-clock supply requires an adequate build-up of stocks during the season.
As, it may not always be possible to differentiate between genuine stock build-up and speculative hoarding.
Further, with too-frequent stock limits, traders also may have no reason to invest in better storage infrastructure.
Also, food processing industries need to maintain large stocks to run their operations smoothly. Stock limits curtail their operations.
In such a situation, large scale private investments are unlikely to flow into food processing and cold storage facilities.
Due to lack of storage facilities, when farmers bring their produce to the market after the harvest, there is often a glut, and prices plummet.
All this hurts the farmer.
In the lean season, prices start flaring up for the consumers.
So, both farmer and consumer lose out because of the lack of storage facilities.
In the majority of the states, under the APMC acts, farmers are required to sell a large number of commodities in a local mandi where intermediaries often manipulate the price.
Thus, APMC markets have become monopsonistic (too many sellers and one buyer) with high intermediation costs.
Working of APMC
In most APMCs, buyers have to route all purchases through licenced arhatiyas (middlemen).
These middlemen charge a commission for their “services” — many times, both from the buyer and seller.
The arhatiyas are often a moneylender, supplying seeds, fertilisers and pesticides to farmers on credit. They, then, are forced to sell through him and settle their dues in perpetuity.
Also, mandi fees range from 0.5% to 5% on the value of the sale, while varying across states and commodities.
Further mandi fees on inter-state trade amount to double taxation, besides violating the idea of a single national market.
Distress sale due to lack of storage infrastructure.
At mandis the lowest prices are during the 3-4 post-harvest months and highest in the immediate pre-harvest period.
Farmers undertake maximum sales just after harvest, as they need to purchase inputs for the next sowing season.
Effects of These Reforms
The dismantling of such controls under ECA would expand India’s agri-exports and enable private investment in supply chains.
This could facilitate private investment in the food processing industries, strengthening the farm-to-fork chain, and benefiting both producers and consumers.
Dismantling APMC Monopoly
The proposed Central law to allow farmers to sell to anyone outside the APMC yard, may bring greater competition amongst buyers, lower the mandi fee and the commission for arhatiyas (commission agents) and reduce other cesses that many state governments impose on APMC markets.
Further, by removing barriers in inter-state trade will help farmers in the regions with surplus produce to get better prices and consumers in regions with shortages will have availability of agri-products at lower prices.
Thus, India will have one common market for agri-produce, enabling efficient supply chain.
Legal Environment for Contract Farming
Contract Farming will provide an assurance of a price to the farmers at the time of sowing.
- This may help them take cropping decisions based on forwarding prices.
- Also, the new system will minimise their market risks and may solve the issue of food shortages.
History of Groundnut:
- The peanut (Arachis hypogea Linn.) is a native of South America, now generally cultivated throughout India. This was not known in the Old World before the discovery of America. According to Dymock this plant reached India through China. It does not appear to have been cultivated for more than 150 years. This was brought to western India from Africa.
- It is native of Brazil. It is widely grown in South India, Maharashtra and Uttar Pradesh. North Gujarat is famous for peanut cultivation. The plant is a bushy or creeping annual with the peculiar habit of ripening its fruit underground. A sandy soil is best for its cultivation. The soil must be friable so that the ripening fruit can be buried, and it must be well fertilized.
Uses of Groundnut:
- The peanuts (seeds) are used for roasting or salting and for the preparation of peanut butter. Peanuts are a very nutritious food. One lb. of peanuts yields 2700 cal.
- The filtered refined oil is used for cooking and in making margarine. Peanut oil is important food oil. The oilcake is used as fodder. The protein in peanuts is used in the manufacture of ardil, a synthetic fibre. The vegetable ghee is made from the peanut oil after hydrogenation.
- The kernels are also used in various foods and confectionery. They are ground and made into peanut butter. Peanut flour is prepared by grinding the finest grades of peanut cake; it is used for supplementing the white flour. Cake is used as feed for cattle and other farm animals; also used as manure. Cake has high nutritive value. Seed-coats are mixed with groundnut husk and the product is called groundnut bran.
- Some commercial products are groundnut milk, peanut ice-cream and peanut massage oil for infantile paralysis. Hulls are used as filler for fertilizers, or ground into meal for insulation blocks, floor sweeping compounds, bedding the stables, etc. Peanut oil also finds some use as a lubricant, and blends with mineral oil have been developed.
- Peanut or groundnut (Arachis hypogaea), is a species in the legume or “bean” family. The peanut was probably first domesticated and cultivated in the valleys of Paraguay. It is an annual herbaceous plant growing 30 to 50 cm (1.0 to 1.6 ft) tall. The leaves are opposite, pinnate with four leaflets (two opposite pairs; no terminal leaflet), each leaflet 1 to 7 cm (? to 2 inch) long and 1 to 3 cm (? to 1 inch) broad.
- Peanuts are known by many other local names such as earthnuts, ground nuts, goober peas, monkey nuts, pygmy nuts and pig nuts. Despite its name and appearance, the peanut is not a nut, but rather a legume.
- India is the second largest producer of groundnuts in the world. Indian groundnuts are available in different varieties: Bold or Runner, Java or Spanish and Red Natal. The main Groundnut varieties produced in India are Kadiri-2, Kadiri-3, BG-1, BG-2, Kuber , GAUG-1, GAUG-10, PG-1 , T-28, T-64, Chandra, Chitra, Kaushal, Parkash, Amber etc.
- They have a rich nutty flavour, sweet taste, crunchy texture and over and above a relatively longer shelf life. Soil conditions in some producing regions are ideally suited for dry, clean and spotless Groundnuts in Shell.
- Groundnut is the major oil seed crop in India and it plays a major role in bridging the vegetable oil deficit in the country. Groundnuts in India are available throughout the year due to a two-crop cycle harvested in March and October. Ground Nuts are important protein crops in India grown mostly under rain-fed conditions.
- The awareness and concern for quality amongst the Indian groundnut shellers and processors are growing steadily. Multiple sorting and grading are fast becoming a norm. Indian manufacturer have the capability to prepare and supply edible peanuts conforming to highest standards.
- Processed Peanuts: Apart from raw edible peanuts, India is also in a position to supply Blanched Peanuts, Roasted Salted Peanuts and Dry Roasted Peanuts and a variety of peanut based products.
Major Growing States:
- Gujarat, Andhra Pradesh, Tamil Nadu, Karnataka, Maharashtra ,Rajasthan, Madhya Pradesh, Orissa, and Uttar Pradesh
India Facts and Figures :
- The country has exported 6,64,442.93 MT of groundnuts to the world for the worth of Rs. 5,096.34 crores/ 711.38 USD Millions during the year 2019-20.