New Delhi: In a move to liberalize trade in farm produce and aid better price realization for farmers, the centre has proposed a model law on agricultural marketing which would introduce features such as a single market within a state, private wholesale markets, direct sale by farmers to bulk buyers, and promotion of electronic trading.

The draft law, which proposes to overhaul existing laws, was released by the agriculture ministry on Monday following a meeting of state agriculture marketing ministers.

The draft law proposes to cap market fees and commission charges payable by a farmer after bringing produce to a wholesale market, and help create a national market with provisions for an inter-state trading licence.

Under the new model law, traders will be able to transact in all markets within a state by paying a single fee and sell perishables such as fruits and vegetables outside existing mandis (wholesale markets).

The states will be free to adopt portions or the entire model act as agricultural marketing is a state subject and the centre can only advise states to free up agricultural trade. Currently, agricultural marketing in states is governed by their respective Agricultural Produce Market Committee (APMC) Acts.

In most states the existing acts do not allow unrestricted trade of farm produce, curtailing farmers’ freedom to sell.

The new model act replaces an earlier model act proposed by the centre in 2003 which the states were reluctant to adopt.

“In today’s meeting, most states (except Bihar) showed their willingness to adopt the model law," agriculture minister Radha Mohan Singh said. “Once states adopt the act, farmers will have a wider choice to sell their produce and get better prices," he added.

“Currently a regulated market is available per 462 sq km while ideally there should be one every 5 sq km. Our goal is to increase the avenues where a farmer can sell the produce and so we are also allowing warehouses and cold storages to act as regulated markets," Singh said.

Further, under the model law, while existing market committees will help develop marketing facilities, all regulatory powers will lie with the office of the director of agricultural marketing in the state, who will also issue licenses to traders and new private players.

“Our goal is to promote competitiveness by breaking existing monopolies (of traders and middlemen)," said Ashok Dalwai, additional secretary at the agriculture ministry who headed the committee which drafted the model law.

“We have also proposed a cap on levy of market fees at 2% (of sale price) for fruits and vegetables and 1% for foodgrains," he said.

The new model law comes on the back of other initiatives by the centre to reform India’s farm sector.

Last year, the centre launched an electronic national agriculture market (eNAM) platform for trading of farm produce. It also circulated a model land leasing law which seeks to record tenant farmers and help them receive benefits such as insurance and credit.

So far, Rs16,163 crore of trade has been carried under the electronic national agriculture market (e-NAM) platform, while states such as Madhya Pradesh, Uttar Pradesh and Odisha have freed up leasing of agricultural land.

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