Seminar on Role of Private Sector in Agricultural Marketing
September 3, 2001 New Delhi

Welcome Speech of Mr Chirayu R Amin, President, FICCI at the Seminar on Role of Private Sector in Agriculture Marketing

Shri Ajit Singh-ji, Hon' ble Union Minister for Agriculture,
Shri J N L Srivastava,
Shri D P Tripathi,
Shri Y C Deveshwar,
Shri P M Sinha,
Distinguished Speakers,
Senior Government Officials and Friends,

It gives me great pleasure to welcome you this morning. We are indeed privileged to have Shri Ajit Singh-ji, Hon'ble Union Minister for Agriculture with us. Sir, You have honoured FICCI with your first Address to the world of business after assuming the Cabinet position. We have not forgotten your bold efforts to liberalise India's economy - precursor to July 24th, 1991. I would also like to welcome Shri J N L Srivastava, Secretary, Deptt. of Agriculture & Cooperation, Shri D P Tripathi, Secretary, Deptt. of Food Processing, Shri Y C Deveshwar, Chairman, ITC, Shri P M Sinha, Chairman, Pepsico India Holdings Ltd and the distinguished panel speakers for being with us.

As you are aware, our economy cannot sustain high rates of growth without enhancing the competitiveness of the Indian farmer and effectively linking him to remunerative opportunities in domestic and world markets. Market is a powerful tool for promoting production. As lack of proper marketing infrastructure leads to huge waste of agricultural produce, the efficiency of the agricultural sector can be improved through an effective marketing system. Improved marketing of agricultural commodities and processed products gives farmers right signal and would lead to higher value addition and thereby higher incomes for cultivators and producers.

The present agricultural marketing system is highly restrictive and regulated owing to a large number of legislations enforced by States and the Centre. Though Indian agriculture has gone through some major transformations, reforms in the agricultural marketing are still in the nascent stage. The system of regulated markets, which was meant for ensuring smooth and orderly development of agrimarketing, has failed to serve the very purpose.

One of the remedies which needs prime attention, is to consider the whole country as a common market for agricultural products and it is essential to remove internal controls and restrictions, which inhibit free production, storage and movement of agricultural produce. We should encourage direct marketing between farmers and Non-Government Organisations, Cooperatives, Private Companies, etc. Direct marketing enables farmers and buyers to economise on transportation costs and to improve price realisation considerably. Future markets are to be introduced in all agricultural commodities being traded in bulk, especially wheat and rice in the grain segment. The operation of future markets will help in containing the wide fluctuations in commodity prices as also cut down their costs of marketing by hedging their risk.

It is very important for India to build a sound agricultural marketing system and help Indian farmers access to it. This is imperative in the context of the liberalised trade regime with the QRs removed. Today Indian farmers and producers are exposed to not only competition in international markets but also in the domestic market. Besides, in view of the surplus foodgrain production, all measures have to be taken for improving the marketing system in the country.

To achieve this objective, we have to strengthen the minimum facilities and services that an agricultural market needs, like grading, standardization, storage with pledge finance, grain banks and most importantly, market intelligence. In addition, the markets need to have sound infrastructure facilities like modern storing facilities, covered auction sheds, all-weather link roads, viable banking institutions and proper extension services.

Sir, one of the main reasons for the inefficient marketing system in India is the inadequacy of matching allocations in the Five-Year Plans for Agricultural Marketing. This needs to be corrected. Marketing is as important as production. Both agricultural production and marketing should be given equal importance in the Central and State plan allocations.

As pointed out in the Report of Expert Committee on "Strengthening and Developing of Agricultural Marketing", the investment requirement for strengthening agricultural marketing infrastructure comes to Rs 2,68,742 crores. Since such a huge investment may not be possible from plan allocations, the report welcomed investment from private/ corporate sector.

FICCI feels that several restrictions on marketing and processing of agricultural produce designed to combat shortages, have barred the private sector from investing in such ventures. Private investment for large-scale storage facilities and marketing is virtually non-existent due to various provisions of Essential Commodities Act. We urge to repeal the use of Essential Commodities Act, except in times of war or natural calamity, and remove all the control orders issued under the Act to encourage large-scale investments in marketing, handling and storage. The other marketing related legislations which require immediate review are the State Agriculture Produce Marketing Regulation Act (APMC), the Prevention of Food Adulteration Act (PFA) and the Warehousing Act.

Besides this, different Ministries in the Government need to harmonise their programmes to support marketing activities and examine existing policies, rules and regulations to develop a sound partnership between the Government and private sector in order to bring about a rapid development in the agricultural marketing sector.

Today's Seminar is significant, as we would be examining the legal, policy and institutional reforms in agricultural marketing, the infrastructure, warehousing, future market, marketing credit and extension services, needed for promoting speedy development of agricultural marketing and measures required to be adopted for active participation of Private Sector.

Sir, we are happy that your Ministry has been in the forefront of exploring the viability of innovative strategies for promoting private sector participation in agricultural marketing. In Order to harness the opportunities, the industry and government need to work together to ensure the adoption of a developmental strategy which could effectively address the needs of each stakeholder in the sector. We are confident that under your able guidance and leadership, agriculture and allied activities will make significant advance and would flourish in the years ahead.

Thank you.