(Book Excerpts from The Fadnavis Years By Aashish Chandorkar)
Fadnavis spent the first eighteen months of his tenure on cleaning up the mess in the water management part of the agricultural value chain. He then set his sight on improving the market access for the farmers. Ceteris paribus, farmers in India continue to remain poor because they hardly ever get the right price for their crops.
In the 1960s, at the height of the green revolution and commanding heights of socialism, the Agriculture Produce Marketing Committee (APMC) structure was introduced in most states, ostensibly to get farmers the right price for their produce. The farmers were mandated to sell their produce only in APMC-authorized centres or to the government when it stocked for its own use. The farmers were required to transport their produce, pay taxes on entry in APMC areas, pay for certifying the quality and quantity of their crop, and pay a marketplace fee before they could sell at all. The selling was permitted only to the registered agents in these mandis. The farmers had no or little access to cold storage chains or weather-controlled vehicles even for transportation. Consequently, the farmer had to sell everything at the time the crop was cut. The buyers, however, had access to storage facilities and could sell at a higher price later. This structure transferred the entire economic surplus to the buying intermediaries, while the farmers were left with next to nothing for their efforts. Additionally, the rules placed severe restrictions on selling farm produce directly to food processing firms, retail chains, or to bulk buyers like hotels.
Noted economist Ramesh Chand has pointed out that after the 1991 reforms, the growth rates in the industrial sector and the agriculture sector have been diverging widely. The agriculture sector has not been able to beat the long-term growth rate of three per cent, while the rest of the economy has been growing close to a long-term average of six per cent.
Because of this situation, farming has never been a lucrative profession in India. Owing to reduced real incomes, a large number of farmers have been committing suicide in the country every year. Between 1995 and 2014, almost three lakh people committed suicide across the country, of which almost sixty thousand or twenty per cent of the total was from Maharashtra. Most of the suicides were from the rural areas in the state. In a bad monsoon year, more than a thousand farmers commit suicide routinely in Maharashtra.
The APMCs as well as other cooperatives like the ones dealing in milk production had traditionally been controlled by the Nationalist Congress Party in the state. These were big sources for political funding and control over a captive set of voters. So while deregulating market access was desperately required, the decision assumed a political dimension.
In July 2016, the Fadnavis government removed fruits and vegetables from the purview of the APMCs. Farmers were now allowed to sell these perishable items anywhere, without being restricted by the location of mandis or specific markets. To make sure that the farmers did not lose out, the Fadnavis government also provided the initial push in setting up municipal markets across all large cities in the state.
Perishable items form almost eleven per cent of the gross merchandise value in the APMCs. Predictably, the middlemen were not happy. Strikes were called around the state, but the Fadnavis government did not budge. Vashi — one of the two largest mandis in India along with the Azadpur mandi in Delhi — saw some operational disruption. But things regularized quickly and free sale of fruits and vegetables became the new normal straightaway. The farmers, especially those who can afford to drive to a large city in the vicinity of their villages, have since been getting more reasonable rates for their farm produce.
The move from mandis to farmer markets led to three distinct changes. Firstly, the farmers could now sell directly to consumers. So the entire economic surplus was theirs to pocket, reduced only by their expenses to reach the market. Secondly, there were no middlemen in the process – the traditional adatiya system used to cost ten to twenty per cent of farmers’ sale proceeds. That was now a straight saving and hence addition to the margin for the farmers. Finally, because of no intermediaries, the consumers also started getting the fruits and vegetables at cheaper prices. The cherry on the cake was the freshness of produce – the farm to kitchen cycle was reduced to six to eight hours with many farmers living in close vicinity of large cities.
Maharashtra was not the first state to delist fruits and vegetables from the APMCs. Delhi, Madhya Pradesh, and Karnataka also had such provisions in place. Nonetheless, breaking the control of the middlemen in the supply chain was a big victory for Fadnavis. The biggest endorsement of the move came from the rival camp. Ex-Chief Minister Prithviraj Chavan welcomed the move, “I am glad Fadnavis is taking forward some of the reforms we initiated. I had also drawn up a list of reforms including deregulating fruits and vegetables from the APMC Act and the Congress party had the intent to carry them out. But I faced severe opposition from the NCP, which has a nexus with APMC traders and labour unions. Since it was an alliance government, we could not go ahead.” Chavan, like Fadnavis, had indeed pushed for these reforms. Unfortunately for Chavan, the coalition dharma blocked his way.
Fadnavis took the fight to the Congress and the Nationalist Congress Party yet again in his quest for freeing APMC from their political control. In August 2017, the Maharashtra assembly passed a bill allowing farmers to vote in the elections of these committees. Thus far, the committee management bodies were elected by voting rights granted to only a few members, a form of oligarchy at a cooperative level. Allowing all members to vote in these elections will in the longer term change how these bodies interact with the small and marginal farmers. The bill was opposed tooth and nail by the Congress and the Nationalist Congress Party. But the government had the required numbers with Shiv Sena supporting the move. The APMC reforms by the Fadnavis lead BJP government have clearly paved the way for other states. These reforms, just go on to prove that, no problem is bigger than our resolve.