24 Feb 2014

Steps to Reduce Price Escalation in Supply Chain of Farm Products

Dr. Saumitra Chaudhuri
A Committee set up by the Planning Commission under the Chairmanship of Dr. Saumitra Chaudhuri, had submitted its report in May, 2012 on “Encouraging Investments in Supply Chains including Provision for Cold Storages for more Efficient Distribution of Farm Produce”. 

The Committee has observed that for fruits and vegetables, the price at the first point of sale in large mandis, as a proportion to the final retail price, may be in the range of 25 to 40 per cent. 

These inefficiencies are due to 
(i) physical inadequacies such as multiple handling of produce and inadequate cold chains, 

(ii) Institutional shortcomings on account of Agriculture Produce Marketing Committee (APMC) legislation and method of operations of mandis, and 

(iii) lack of adequate processing facilities. 

In order to strengthen the agricultural supply chain, the Committee has made recommendations, inter alia, establishment of producer companies/cooperatives, providing freedom to farmers to directly market their produce to aggregators/processors in addition to selling in mandis, removing perishable farm produce from the purview of APMC Acts, simplification of registration/licensing system of APMCs, etc.

The States/UTs have been advised to amend their respective State APMC Acts on the lines of Model Act, 2003. The Model Act which provides for direct marketing, contract farming, farmers/consumer markets, setting up of markets in private and cooperative sectors, e-trading etc. 

Further, in order to encourage investment in marketing infrastructure development Government is implementing capital investment subsidy schemes of Development/Strengtheneing of Agricultural Marketing Infrastructure, Grading and Standardisation (AMIGS) and Gramin Bhandaran Yojana (GBY). 

Government is also implementing “Marketing Research and Information Network (MRIN)” with the objective, interalia, to collect and disseminate prices and arrival data for the benefit of farmers and other stakeholders to facilitate the farmers in taking better production and marketing decisions to get more remunerative prices for their produce.

This information was given today by Minister of State for Agriculture and Food Processing Industries, Dr. Charan Das Mahant in a written reply to Lok Sabha questions. 

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