Missing Opportunity To Generate Revenue From Market Fee, TN Agriculture Department Looks To State Government For Funds

On the service road that takes a person heading to Chennai from Bengaluru on National Highway 44 at Krishnagiri, an arch stands out brightly on the left side. The arch announces that it is a complex in Krishnagiri that houses the town’s agricultural marketing, agriculture business, and a regulated market. But beyond that arch, there is little activity.

When you enter the complex’s administrative building and ask for the person in charge, the staff shoot back: “Do you want to go to the agricultural marketing or agri business section?” What is the difference? The agri business wing helps farmers sell their produce and marketing helps in storage of produce, says a staff member at the complex.

The two wings came up sometime in 2001 after the then chief minister M Karunanidhi, who died in August this year, decided to set up farmers’ shandy or uzhavar sandhais. This changed the marketing of agricultural produce in the state. Fruits and vegetables began to be traded separately and directly by farmers under the supervision of the agri business wing at the shandies. Trading in grains, pulses, and oilseeds are done separately under the agri marketing wing through regulated markets.

The agri business wing’s main objective is to facilitate the direct marketing of produce between farmers and consumers. Farmers who grow fruits and vegetables can directly sell their produce at these shandies to customers with no middlemen involved. A Tamil Nadu Agriculture Department policy note says 179 such shandies are in operation today. Last fiscal, the daily average sale of vegetables and fruits was 2016 tonnes, valued at Rs 6.36 crore. While 7,818 farmers gained from the shandies, over 4.05 lakh consumers also benefitted.

Is the Tamil Nadu government missing an opportunity to just collect a small free from those using the farmer shandies? “Maybe! But the objective of running the shandies is to help farmers directly sell their produce. No fee is collected from farmers or consumers who use the shandies,” said an agri business staff at Krishnagiri. Tamil Nadu Agriculture Department says facilities such as shops to farmers, electronic balances, and other facilities like drinking water are provided free of cost at these shandies.

Tamil Nadu’s Agricultural Department policy note for the current fiscal is silent about any revenue being generated from these shandies.

The agri marketing wing, on the other hand, takes care of storage infrastructure for mainly foodgrain crops like rice, coarse cereals, and pulses. The wing collects a cess or market fee of 1 per cent for commodities that are transported privately from one district to another. This wing manages 281 regulated markets through 23 market committees. It is this wing under which e-trading takes place, while it also has a role in the functioning of electronic National Agricultural Market (eNAM) centres.

Farmers who bring their produce to these regulated markets are charged a market fee of 1 per cent of the total value of their produce sold. What is happening is that the state government’s focus on the farmer shandies, to help growers get a better deal, has resulted in the state letting go of an opportunity to earn an income from market fee, which is now confined only to grains, pulses, oilseeds, and cotton.

For example, the agri marketing division at Krishnagiri has little source of income since the regulated market is not functioning. “In Krishnagiri, it is mono-cropping – just rice. Traders approach farmers directly at their farm gates and pick up the produce. They then transport paddy directly to rice mills,” says a marketing staff. The agri marketing division is constructing godowns and cold storages, and these are expected to be utilised soon.

Concurs Venkatesan, a Krishnagiri native. “All grains trading here has shifted to Mandi street. I myself buy directly from farmers and sell it to traders here. All is done on cash basis on the spot,” he says.

When asked on revenue generation, the Krishnagiri agri marketing staff said: “We depend on the fee we get for transporting paddy from our district to other places.” How is that being monitored? The staff says they go by what traders report to them, not denying that there could be more misses than hits.

At the Vellore regulated market, the revenue in 2017-18 fiscal was a record Rs 53 lakh. But this isn’t enough to meet its needs, like constructing facilities for farmers or warehouses. Officials agree that they often have to wait for the state government to allocate money. A farmer who had to wait for a few hours for collecting his payment lamented that no toilet facilities were available at the regulated market. However, a market official said construction works were on to provide farmers facilities to take rest while they awaited payment.

At nearby Ammoor, where eNAM functions, the revenue last fiscal was Rs 63 lakh, which wouldn’t be adequate to meet expenses if it were to be fully functional with facilities for assaying and grading in place. “Staff need to be recruited for these functions. No one has been recruited,” said a staff member at Ammoor.

In addition, regulated markets that take up e-trading or eNAM centres are now having to recruit data entry operators. “The data entry operators are paid by the marketing committees. They are employees of the committee and not state government,” said an agri marketing official at Vellore. The data operators are paid Rs 371 for each day they work. The Vellore regulated market has hired two such operators, while the Ammoor eNAM centre has recruited three.

The agri marketing wing has some additional means of income like traders fee, but these revenues do little to bridge the huge gap between expenditure and income. All these have only helped the state earn a revenue of Rs 128.86 crore from the sale of 27.94 lakh tonnes of agricultural produce during 2017-18 against a target of Rs 148.77 crore. In 2016-17, the state government earned Rs 119 crore, selling 31.74 lakh tonnes of produce. But compared to its neighbouring state Karnataka, Tamil Nadu’s revenue from sales of agricultural produce seems low.

In Karnataka, the state government levies 1 per cent market fee for vegetables, but for grains, pulses, and oilseeds the market fee is 1.5 per cent. In comparison, Tamil Nadu doesn’t collect a market fee for the sale of fruits and vegetables, but charges 1 per cent for grains, pulses, and oilseeds. Both governments collect the levies from traders.

Karnataka sees trading of all farm produce – be it fruits, vegetables, or grains – in one regulated market. For example, a market like the Yeshwantpur Agricultural Produce Marketing Committee (APMC) yard witnesses trading in 94 commodities, as a result of which it fetches over Rs 50 crore as annual revenue. Of this, 30 per cent is relayed back to the state consolidated fund to help pay staff salaries. Six per cent of the income goes to the State Agricultural Marketing Board, including 1 per cent to agricultural universities for undertaking research. The remaining 64 per cent is utilised by the yard for its development, maintenance, and service loans that it had taken earlier from banks for its developmental works – something that doesn’t seem to be happening in Tamil Nadu.

Overall, Karnataka’s revenue from agricultural market fee was Rs 511 crore during 2016-17, over 400 per cent higher than what Tamil Nadu earned. In Karnataka, Yeshwantpur APMC yard alone earns 40 per cent of what Tamil Nadu agricultural marketing generates totally in a year.

The Tamil Nadu Directorate of Agricultural Marketing and Agri Business has sought an allocation of Rs 496.96 crore for the current fiscal to meet various expenses. One reason for Tamil Nadu’s revenue from market fee not picking up could be traders approaching farmers directly or the consuming industry trying other forms of meeting its raw material needs.

“The agricultural marketing scenario is undergoing changes. There are now farmers who are trying to value-add and sell. Mango growers, for example, are encouraged to go in for value-addition, as also tomato growers. Such developments are seeing farmers move away from regulated markets,” said an agricultural official involved in helping mango growers at Krishnagiri.

However, Tamil Nadu officials expect better days ahead, especially once eNAM gathers momentum. “It will bring in more traders and in turn more revenue,” said an agri marketing official at Vellore. E-trading, which is at the pilot stage, is also expected to bring in additional revenue with its acceptance among farmers rising. “For now, we are looking more at improving the quality of farmers’ lives,” said the official.