The agricultural markets had earlier been characterized by unhealthy practices such as compulsion to sell only in regulated market yards, existence of monopoly practices, restricted competition amongst buyers, high transaction cost, considerable post-harvest losses and a host of other unacceptable practices, all loaded against the farmers’ interest. Primary agricultural markets are also characterized by low efficiency due to fragmented markets, opaque bidding process, information asymmetry, indifference to quality, low transparency in market operations, lack of use of information technology, poor dissemination of price information and limited competition. All these factors weigh against the farmers, leading to poor price realization.
35 million population of the Karnataka state dependent on agriculture and land holding size per farmer in the state is 1.55 ha. Majority of farmers lead their livelihood in oppressive poverty, compelling them to sell produce soon after harvest, at much lower prices than fair value. The farmer’s share in the consumers rupee was in the range between 45 & 68% in case of food grains, oil seeds and pulses whereas in respect of fruits and vegetables, it was 35 to 52%.
Technology has enabled many functions and capabilities that were simply inconceivable a few years ago in the developing agriculture sector of India. Moreover, increasing aspirations and expectations of stakeholders also have an overbearing influence on the way these markets are organised and managed. But, fresh thinking on the economic philosophy to be adopted by governments in the country made it necessary to re calibrate and adopt a policy for agricultural marketing in the state that is forward looking and that would provide an impetus for growth of the agrarian sector.
To address the concerns, it was contemplated to restructure the Agricultural marketing system in the state by leveraging technology for effective management of agricultural markets and to ensure better share to the farmer in the consumers’ rupee.
With this objective, Government of Karnataka constituted Agriculture Market Reforms Committee (AMRC) in 2013 under the Chairmanship of Additional Secretary, Co-operation Department to bring out a comprehensive road map for sustainable development of markets and to suggest interventions for making market operations simple, transparent and efficient. The Committee, after detailed study submitted recommendations to Government suggesting various reform measures such as technology up gradation, electronic auctioning system, unified trader license to trade in all markets, quality certification, effective information dissemination, transparent post-auction processes, market integration etc. that would improve the economic condition of the farmer. The Government accepted the recommendations and framed the Karnataka State Agricultural Marketing Policy- 2013 and its objectives are:
- The overall objective of this policy was to create a market structure that is transparent and equitable, distinguishes quality and variety, disseminates relevant market information to all market participants for a level playing field, provide easy access to all participants and ensure fair returns to all stakeholders, with the seller having the choice to decide the time, place and avenue of sale.
- Reduction in and/or elimination of barriers to participate in markets to foster competition and efficient determination of price, linking the primary market in the state to the national market for the benefit of all stake holders in the marketing chain.
- Address the risks associated with clearing and settlement that arise in course of marketing of produce by the farmer or by the subsequent buyer, through technology solutions or other appropriate means with linkages to financial institutions.
- Encourage and promote primary value addition through aggregation, grading and packaging at the village level through farmer self-help groups / societies / associations / producer companies to respond to increasing and changing market demand, in domestic, regional and international markets. Create awareness on adherence to quality standards for better price realization.
- Enhancing the skill levels of all stakeholders in the marketing system through well designed capacity building intervention efforts, for deriving benefits arising from primary value addition, modern practices adopted in storage, processing, market systems and the like, with the state playing an active role in stakeholder education effort.
- Improving access to finance to all market participants, scientific storage and preservation of commodities, encouraging investment in infrastructure for market access, and enabling primary value addition of the commodities.
- Encouraging setting up new institutions and strengthening of existing ones to provide state of the art facilities to all stakeholders, fostering self-help groups and cooperative ventures for improving the bargaining and holding capacity of farmers to handle the challenges in marketing.
- Establishment of a progressive regulatory environment distinct from the operational level that provides an environment for public and private initiatives to function in tandem for the benefit of all stakeholders, with the government playing an enabling policy making role.
- Adopting and leveraging technology at all levels for efficient operations of markets would be critical in realising the objectives of this policy.
- All Farmer friendly provisions of the Karnataka Agricultural Produce Marketing (Regulation and Development) Act, 1966 shall be implemented to safe guard the interests of the farmers.