BANGALORE: The Karnataka State Cabinet is expected to consider later this week a controversial draft legislation to amend the Agricultural Produce Marketing Committee (APMC) Act.

The amended Act would pave the way for contract and free marketing, organised retailing, smooth flow of raw materials to agro-processing industries, competitive trading and adoption of innovative marketing systems and technologies.

"The draft legislation will be placed before the Cabinet by Thursday or Friday,'' a senior Agriculture Department official told The Hindu.

The Act is being amended despite strong opposition from various stakeholders. The previous Dharam Singh Government had soft-pedalled the move to amend the Act in the face of objections from farmers and trade bodies.

The Federation of Karnataka Chambers of Commerce and Industry (FKCCI) said the proposed Act, which would allow multinationals to operate in the country and encourage corporate farming, was likely to be detrimental to all the stakeholders. It was not favourable to the existing APMC network and would result in breaking the cordial relationship prevailing among traders, farmers and consumers.

A top FKCCI official said it would be highly undesirable to allow multinationals to enter the sector without providing a level playing field for the domestic traders.

The Bangalore Grain Merchants Association has said that the proposed Act would be detrimental to the interests of the domestic trading community which cannot match multinational companies in terms of capital, infrastructure and technology. If the multinationals were allowed to operate in the country, farmers would be forced to raise crops tailor-made for the Western market, thus threatening the food security of the nation.

Food processors

The Food Processing Industries Association has, however, urged the State Government to allow them to buy raw materials directly from the farmers and exclude the industry from the purview of the proposed Act.

Representatives of the Food and Vegetable Merchants Association and Wood and Timber Association have also pleaded with the Government to drop the move to amend Act.

However, Agriculture Department officials said that these concerns had been taken care of while drafting amendments to the Act. The proposed amendment would help link all the mandis electronically, thereby enabling farmers to get the latest price for their produce. "The proposed amendment is beneficial to the farmers,'' the officials said.

The Chief Minister, H. D. Kumaraswamy, would now have to take a final call on amending the Act.

Addressing a meeting of the full Planning Commission in New Delhi on September 27, 2005, Prime Minister Manmohan Singh had exhorted the States to "accelerate and urgently complete'' agricultural marketing reforms to ensure that farmers got a legitimate share in the final value of their produce.

Several States have already amended the APMC Act to facilitate free movement of agricultural produce between States.

According to Dr Singh, the time has come to have a common, single market for agricultural produce in the country, removing all the internal restrictions and barriers.

"We should enable direct marketing between farmers, NGOs, cooperatives and private companies,'' he had said.

The amended Act would enable investments in market infrastructure and open up contract farming, he said, adding that both these areas would create avenues for the private sector. Multinationals, keen on setting up distribution centres, said they were not being allowed to deal in agriculture produce owing to restrictions imposed by the APMC Act, which required them to carry out business only in designated markets.

These companies had requested the Karnataka Government and other State governments to allow them to purchase produce directly from the farmers and sell from their distribution centres after paying the mandi tax.

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