INVESTMENT IN AGRICULTURAL MARKETING AND MARKET RELATED INFRASTRUCTURE IN THE ABSENCE OF

1. INVESTMENT IN AGRICULTURAL MARKETING AND MARKET RELATED INFRASTRUCTURE IN THE ABSENCE OF APMC ACT – A CASE STUDY OF KERALA

2. BACK GROUND OF THE STUDY • Agricultural and Agricultural Marketing is a state subject; it is the responsibility of respective State Governments to take requisite steps for reforming agricultural marketing structure to move away from controlled markets to regulation , creating competition and promoting investment in markets as per the model act. • Now, many states have introduced various aspects of agricultural marketing reforms and some states are in the process of amending their APMC act . • The model Act has been implemented since 2004 and the era of its first phase reforms is going to be over soon. But, there is no APMC act in Kerala. • Keeping the lack of APMC act , the Kerala state has been suggested by Ministry of agriculture vide letter no D.O.NO.1-14018/4/201-MPDC dated 16th May, 2011.

3. The suggested state lack well developed agricultural market infrastructure on post harvest handling, assembling, sorting, grading, packing, transportation, quality certification, palletization, labelling, pre-cooling, cold-store, ripening chambers and exports. • In addition to that scenario of overcrowding, chaos and in-sanitary condition is apparently reflected in the markets. • There is no sanitary and phyto-sanitary measures being adopted for the quality control of the produce. • Development of Indian agricultural markets would require huge investment resources. • There is an apprehension that due to lack of APMC act in Kerala, agricultural market related investments are not coming up in these states.

4. OBJECTIVES 1. To analyze the investment made in agricultural marketing and market related infrastructure in Kerala after implementation of model APMC act. 2. To find out the factors responsible for lack of investment in agricultural marketing and market related infrastructure in Kerala . 3. To study the perception of different stakeholders about agricultural marketing investment in agricultural marketing infrastructure. 4. To suggest potential investment in agricultural marketing and market related infrastructure in Kerala .

5. METHODOLOGY • The study was conducted in Kerala as suggested by Ministry of Agriculture. • For assessing the existing situation of Kerala, data was collected through primary as well as secondary source of information. • The agricultural marketing and market related infrastructure and investment made in Kerala was collected from secondary data. • The stakeholders meet was conducted to study the perception of different stakeholders about marketing infrastructure and the selected agricultural marketing stakeholders was interviewed through schedules developed for this purpose.

6. KERALA • Selection of District: • Idukki, Cochin, Kozhikode and Wayanad Selection of Stakeholders: • Marketing Department Officials, Market Officials, Traders, Farmers, Bankers, Entrepreneurs, SHGs, Cooperatives, Processing Units, Exporters and Vegetable Fruit Promotion Council Keralam (VFPCK) • Sample Size: • 120 Respondents Stakeholders covering four Districts of Kerala

7. Lack of APMC Act • Kerala does not have APMC act . • No statutory regulations prevail . • There are no controls what so ever for agricultural market. • Government and LSG institutions provide marketing infrastructure. • Complete liberal market scenario prevail in Kerala market.

8. KERALA AGRICULTURAL MARKETING SYSTEM Total number of markets in the state :1290 • Under Directorate of Agriculture - Six whole sale agricultural markets are functioning ( Three urban and Three rural markets ) Local self govt. controlled markets : • Total rural primary markets (Panchayat markets ) : 1076 Urban Whole sale markets : 214 • Municipal corporation markets : 85 • Municipality markets : 129

9. Organizations associated with agricultural marketing in Kerala • Vegetable fruit promotion council Keralam –VFPCK • Kerala State Horticultural Products Development Corporation (HORTICORP) • Kerala Kerakarshaka Sahakarana Federation (KERAFED ) • Kerala State Co-Operative Rubber Marketing Federation Limited • Kerala State Co-Operative Marketing Federation – (MARKFED ) • Kerala Agro Industries Corporation Ltd. • Oil palm India ltd . • Plantation corporation of Kerala • State Warehousing corporation

10. CENTRAL GOVT. ORGANIZATIONS : Spices Board , Tea Board , Coffee Board , Coconut Development Board Rubber Board Involved in marketing of specific commodities .

11. RESULTS

25. Suggested/Recommended agricultural market infrastructure and market related investment by various stakeholders • Directorate of Agriculture - Six whole sale agricultural markets –Major renovation of existing infrastructure like Buildings and market roads should be carried out . • Cool rooms /controlled atomosphere storage with supporting reefer trucks should be set up. • Integrated pack houses should be set up. • Ripening chamber • Retail markets – to promote Direct marketing • E- auction facility in Urban markets

26. Shops-Mall concept – may be established in three urban markets considering the proximity to Metros . • Construction of training hall and staying facilities including dormitories . • Establishment of Theme park with food courts . • Scientific waste management . • Auction platforms for grain market • Staff quarters • Resting space for animals. • Processing unit • Additional man power required – One agricultural officer and one agricultural assistant /market may be posted .

27. Electricity problem • Drinking water problem . • Farmers / traders rest house facility is not there . • Canteen is not functional . • Electronic Weigh Bridge –not there . • Food safety and hygienic practices not followed in the market. • Procurement of Agricultural commodities : Paddy marketing is major problem . It is procured from only 5 major paddy growing districts by Civil supplies corporation . Civil supplies corporation may extend paddy Procurement to all other districts also. Procurement centres should be set up in other districts. • Credit to paddy farmers also major problem and Credit institutions should provide loans to paddy farmers based on the storage receipts (warehouse receipts ) of quantity of paddy stored with Civil supplies corporation .

28. Copra procurement : Procurement of Green nut (Coconut ) should be promoted . • Kerafed , Market fed and Consumer fed should procure green nuts through their member societies and drying facilities should be provided . • Farm level primary processing for coconut is essential . • Selected large scale private copra dealers can also be promoted for the same under registration with the Govt. agencies . • Market intervention fund : For 12th plan period – Price stabilization and market intervention fund @Rs 10 crores for 5 years – market intervention can be carried out in times of effective price fall .

29. Market Information : • Prices board –Prices data – more staff has to be provided for analysis of price data. • Under agmarknet more markets should be brought under for ensuring the periodicity and accuracy of data. (Kerala 91 markets reporting data ) • Market intelligence : available for 3 major crops like coconut , cardamom and pepper –through KAU under ICAR- NAIP project and other crops also should brought under market intelligence program and commodity boards should be involved in this and KAU should provide training for the same. • VFPCK : Infrastructure like cold storage and cool chamber etc. • HORTICORP : • 500 retail outlets should be opened . • Staff and transportation facility should be provided . • Horticorp should purchase agricultural produce from EEC and VFPCK markets for which working capital should be provided .

30. Cool season vegetables – Cool room and cool chamber facilities should be created for Kanthaloor and Vattavada of Idukki district farmers to avoid distress sales. (selling to Coimbatore and Madurai traders of Tamil nadu ). • Horticorp should be strengthened to start wholesaling activity at RAWM , Muattupuzha. • State warehousing corporation should be provided with more warehousing facility . • Infrastructure requirement : • Local markets like Panchayat markets, Munipality markets and municipal Corporation markets are operating without sufficient and poor infrastructure and renovation and modernization of all these markets is essential . • DMI, MoA may provide assistance under MIS scheme @ 25 % of total investment . • State government should provide matching share for renovation and modernization of these local markets and VFPCK markets and Horticorp stalls etc.

31. COMMODITY SPECIFIC RECOMMENDATIONS • Pine apple processing plant may be set up. • Mango processing plant - modernization • Coconut Chips making unit –small scale level should be set up . • Banana ripening chamber • Commodity specific market yards should be created . • Cardamom processing unit is necessary (Because production in Kerala and processing and market yard at Bodinaickayanur (Kumily border ) , TN)

32. Exporters - Toll processing –steam sterilization facilities should be created for export oriented spices . - Export testing labs should be set up at meet out EU standards and US standards to avoid export consignment rejection - Pesticide residue is major problem for spice exporters of Kerala for Spices crops like Pepper , Ginger and Nutmeg. (Endosulfan , Monocrotophos and Ethion banned in developed countries ) - Focus group subsidy should be given to exporters of Pepper and Chilli by APEDA . -DEPB –Duty entitlement pass book scheme stopped and it should be started again . - VAT problem (lack of uniformity ) - Tax structure is not proper (50-60 % tax payment ).

33. Spice Crops • Primary level processing should be created for cleaning of Pepper, Washing of Ginger and Turmeric at filed level . • Industrial units should be set up for Oleoresin and oil extraction for Ginger and turmeric . • Drying yard for Ginger , Turmeric and Nutmeg is essential . • Pepper threshing units may be set up (Because farmers doing leg threshing ) • Primary level processing i.e powdering of Ginger and Pepper –possible by farmers . • Cardamom grading machine is essential . • Polythene sheets and bamboo mats ,drying yards essential . • Cardamom curing device –necessary • Nut meg artificial drying chamber essential . • Quality control labs should be set up essential for spices .

34. Black pepper ,Dried ginger and Turmeric – Storage godowns essential . • Govt . Organic certification units should be strengthened for Organic Pepper and Coffee (Indocert ) – 4000 ha . • Coffee dehusking ,dehulling machine and drier necessary Pepper • Cleaning ,Grading , pulping and drier machine essential . • Threshing machine for Pepper should be provided at farm level . • Bamboo mats should be provided for threshing . • Pepper – Steam sterilization units for export purpose . Banana –Fibre extraction unit .

35. Paddy – Scented variety Processing unit - Drying yards for paddy - Combined harvester with less paddy loss - Storage godown

36. Conclusions • This study concluded that Kerala is attracting less investment ( only 4.31 per cent ) under AMIGS scheme since inception . • Under Rural Godowns scheme (only 0.32 % ) of investment is attracted by Kerala. • Investment in agricultural marketing infrastructure in Kerala is influenced by so many factors . • APMC act or lack of market regulation is one of the important factor(more than 90 % respondents)

37. Recommendations • Public Private parternership should be promoted • Kerala government should enact Market regulation act like APMC act or regulatory mechanism for market control should be created. Because more number of markets controlled by Local self government . • Less market development activities and Poor management of local self govt. markets by owners of the markets except market cess collection. • Favorable investment climate should be created by Government • Financial Institutions should fix less Interest rates for market and market infrastructure related projects . • Tax concessions /Tax incentives should be given for market related investment . • Tax structure should be rationalized . • Awareness creation - Training should be given about Market infrastructure scheme and Rural godown scheme to avail subsidy under this schemes.

38. Thank you

39. Annexure

40. Market stakeholders • Marketing department official (Director level ) • Market official • Farmer • Trader • Entrepreneur/Private investor • Banker • Self help groups • Growers’ societies • Co-operatives/Sangams • Pre-harvest contractors • Village merchants • Commission agents • Wholesale merchants (urban & rural) • Exporters • Others (if any )

41. Retail traders or hawkers • Processing units • Contract Farming Sponsors • Grading Sorting Provider • Cold Storage Facility Provider • VFPCK -Farmer Markets (Swasraya Karshaka Samithi)- Self help groups • Public Sector Organizations –KHDP, HORTICORP, Maveli (Civil supplies Corporation) etc . • Commodity boards- Rubber , Spices , Cashew , Coconut ,Pepper • State govt. departments • Central govt. Organizations

42. Progress of Reforms in Agricultural Markets (APMC Act) as on 30.11.2011 . *APMC Act is repealed w.e.f. 1.9.2006.

43. Status of APMC Rules Only the State of Andhra Pradesh, Rajasthan, Maharashtra, Orissa, Himachal Pradesh, Karnataka, Madhya Pradesh (only for special license for more than one market) Mizoram (only for single point levy of market fee) and Haryana (only for contract farming) have notified such amended Rules so far.

44. Progress of Market Reforms as per major areas identified in Model APMC ACT

47. *Changed the nomenclature as market oriented farming agreement.

48. *Changed the nomenclature as market oriented farming agreement.