Direct to market

Getting rid of mandis in Delhi is a good step

With prices of fruit and vegetables soaring, Congress vice-president Rahul Gandhi scored big when he promised to free farmers from the Agriculture Produce Market Committee (APMC) by January 15 in the Congress-ruled states. While farmers would have benefited from non-cartelised mandis free of high unofficial commissions, consumers would have benefited from lower differences between wholesale and retail prices. Since this would have meant large retail chains would also be able to source directly, the benefits to consumers would have been quite rapid. It is not certain if this step alone would have helped stem the voters ire, the Congress was best placed to make the change since it controlled both Delhi and Mumbai where India’s biggest fruits and vegetable mandis are. As it happened, the Congress made no headway. With the capital under the effective control of the Central government, however, the APMC mandis are now history—while there was some delay in getting the Azadpur and other mandis to relinquish their monopoly, the government simply came out with a fresh law circumventing the earlier one. As a result, the Small Farmers Agribusiness Consortium (SFAC), an offshoot of the agriculture ministry, will be able to set up its first kisan mandi next month, giving it a 5-7% share of the market in another year or so.

This is the template other governments need to follow—given that this can result in prices falling by 15-20%, it is almost certain one of the NDA’s poll manifestos in Maharashtra will be making the Vashi mandi redundant. Setting up of alternate mandis is not easy since it requires creation of cold storage and other facilities—which is why the SFAC is looking at just a 5-7% market share after a year. But given how this will increase farmer margins, farmers will be that much more responsive to price signals —that means more output and a natural ceiling to price inflation. The central government has done well to quicken the process, and it is to be hoped states across the country will try and facilitate such direct-to-market initiatives.