Reinventing the Mandi
A Vision for Market Yards in a Globalised World
The Context
WTO AoA integrates markets and impacts local prices (e.g. edible oil) Ag growth stagnant in otherwise roaring economy; net returns on major crops negative Rural economy can only be boosted by agriculture growth in short to medium term Institutional, not technology, constraints main barrier to revive agriculture Reforming agricultural marketing key to boosting agri growth
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The Setting of the Mandi
DNA coded during era of food shortages Control over food prices through fragmentation of market, curbs on competitive practices; physical controls Facilitated monopoly purchases by parastatals for food buffer In sync with overall license-permit raj framework
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The Mandi in Practice
No national market in agri goods Opaque price discovery Cartelisation Poor contract enforcement Poor quality infrastructure & services Governance problems Long chain of intermediaries Quality loss Lack of value chain integration Client dissatisfaction Higher consumer prices of agri goods
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A framework for mandi reform
Ag marketing most critical of institutional reforms in agriculture Creating a national market in agri produce vital to withstand WTO impact, promote value chain integration and boost investments National legislation urgently required to break down controls in agri marketing; APMC Act amendments inadequate
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Mandi reform framework (contd)
Separate sovereign and participatory roles Sovereign role must include regulation, provision of infrastructure, service fee collection, enforcement of contracts, oversight and monitoring Space for democratic participation in feedback and advice, grievance redressal etc. Eradicate crossover functions completely; State to reclaim “abdicated” regulatory role
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Mandi reform framework (contd)
Enable mandis to be local and national concurrently Abolish all movement controls within the country Replicate NSE in agriculture marketing Multiple market yards (real and virtual) critical to ensure competition, price discovery, value chain integration Regulatory performance vital to success (e.g. telecom, power, ports) 7
Value added services
Credit Savings Insurance Futures trading Investment advice Consumer and housing finance Agri inputs Technical advice Value addition Health and education Consumer goods Entertainment Farmer institution building
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In conclusion
Bringing agri marketing arrangements at par with other commodity markets vital to revive agriculture and boost the rural economy Integration with agro processing and consumer markets Technology absorption and marketing Leverage XI Plan Rs. 25,000 crore central assistance to incentivise reform in States
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