Economics Prelims cum Mains

Punjab wants full state declared a mandi yard

In News

  • Punjab government is planning to amend its Agriculture Produce Market Committee (APMC) Act and declare the entire state as a Principal Mandi Yard.
  • It is doing so, to bypass the agricultural laws, recently passed by the Parliament.
  • In a similar move, last month, Rajasthan had notified all warehouses in the state under the Food Corporation of India (FCI), Central Warehousing Corporation (CWC) and Rajasthan State Warehousing Corporation (RSWC) as “procurement centres” under the state’s APMC Act.

About: “Trade Area” under the new agricultural laws

  • The Centre’s new laws has defined a ‘trade area’ as any area or location that does not include the physical boundaries of market yards managed and run by the market committees formed under each state APMC Act.
  • This provision enables farmers to sell their produce directly, without the need of going through the APMC mandis or middlemen.
  • However, the provision has also led to concerns among farmers in some states that if the mandi system comes to an end, the Minimum Support Price (MSP) mechanism would also be cancelled.
  • However, the government has stressed that it has no plans of abolishing the MSP mechanism and is committed to continue it.

News Summary:

  • The Centre’s recent farm law has defined a ‘trade area’ as any area or location that does not include the physical boundaries of market yards run by state APMCs, and thus farmers can sell their produce to anyone and anywhere outside the mandi yards also.
  • The union government claims that this will free the farmers from state mandis.
  • In a bid to bypass this law, the Punjab government is planning to amend its Agriculture Produce Market Committee (APMC) Act and declare the entire state as a Principal Mandi Yard.

Mandi yards:

  • Under the Punjab Mandi Board Act, 1961 the state can declare mandi yards for procurement.
  • The declaration of mandi yards ensures that any procurement outside it is considered illegal. It also ensures that farmers do not get a price less than the Minimum Support Price (MSP), and the state gets its mandi fee.
  • According to Punjab APMC Act, there are three types of yards under the Punjab Mandi Board (PMB) — Principal Market Yard, Sub Yard and Purchase centres.
  • These yards are notified by the PMB in a specific area in certain acres. As per APMC Act, the PMB has 151 principal market yards, 287 sub yards and over 1,400 small mandis or purchase centres.
  • Infrastructure is developed in these principal yards which include civic amenities, sheds, office buildings, electrification and even public health facilities.
  • The small mandis have temporary arrangements of minimum civic amenities during the procurement season.

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Implication of Punjab’s move:

  • For the state’s farmers:
    • If the entire state is declared a Principal Market Yard, the central law would not apply anywhere in the state.
    • It would mean the purchaser has to pay the same taxes outside the PMB yards even in a private trade area.
    • The trader who will be supposed to pay the taxes even outside the mandis may start paying even lesser to the farmers to keep their profit margin intact.
  • Isolation of Punjab
    • Further, there is a risk that such a step could lead to isolation of Punjab. The Centre, (which purchases the wheat and paddy of Punjab), may decide not to purchase wheat and paddy from the State.
    • If that happens, the Punjab government has neither the resources to purchase wheat and paddy from all its farmers, nor the storage capacity to store them (currently, the central agency FCI manages the entire storage of wheat and paddy in the state).

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