Three States allow free trade of agriculture produce outside mandis, without any levy – The Hindu BusinessLine

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This was one of the aims of now-repealed farm laws, which faced severe opposition

New Delhi, March 8Rajasthan, Gujarat and Karnataka are now allowing free trade of farm commodities outside mandis , without charging any fee for such deals.

In most big States, the farm trade is regulated with Uttar Pradesh and Madhya Pradesh issuing licences and charging mandi fees even for direct buying from farmers. In the Union Territory of Chandigarh, direct buying from farmers is not allowed at all.

When the Centre brought in the controversial farm laws, one of the key arguments was to allow farmers the “freedom to sell” anywhere and it was also claimed that the opposition to this was from Punjab, Haryana and western Uttar Pradesh. However, a study of current agricultural trade shows that a few States have taken the cue from the now-abandoned farm laws and started to reform the farm produce trade.

“It is good that States continue to decide on this issue and are not divided on political lines. But any reform in agricultural marketing at the all-India level will depend on the results of the current Assembly elections in five States. However, what is more important is to enact a Central law on inter-State movement of ‘food stuff’ which falls under Concurrent List as that will facilitate trading,” said former Union Agriculture Secretary Siraj Hussain.

Mandi charges

Most States charge a cess or a user-fee and it is uniform except in Gujarat and Maharashtra where the local Agricultural Produce Market Committees fix the rates, which vary by crop and range from 0.5 per cent to 6 per cent. For de-regulated commodities, mostly fruits and vegetables, traders and companies are allowed to buy outside mandis without paying any charge. But most States collect 1 per cent user-fee, from buyers, if fruits and vegetables are sold in mandis .

“It (the mandi fee) is a revenue source for the States they will never want to forego, though they know that it adds to the overall costs of food items. Besides, the location of mandis is such that traders who buy there also sell there as retailers flock there. That is why many States levy a user-fee for de-regulated items as the mandi fees cannot be collected for them,” said Anil Dwivedi, a trader in Delhi’s Azadpur mandi .

Chandigarh received 86,082.10 tonnes of commodities in its two mandis during April-February of the current fiscal, which is higher than the whole of 2020-21. The local administration charges 2 per cent mandi tax. On the other hand, Punjab charges 6 per cent mandi tax (including a development cess) on wheat and paddy (non-Basmati) and 1-3 per cent for Basmati, maize, cotton, fruits and vegetables. Haryana charges 4 per cent on wheat, paddy, arhar, sesame and green fodder, and 1-3 per cent on other commodities. Uttar Pradesh levies 1-1.5 per cent mandi fee/user charges (including cess) on all commodities.

Hussain said while direct purchases from farmers should continue, States should also collect data on how the extent of trade and at what prices to frame their policies as the main objective is to help farmers realise better prices for their crops.

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