Illegal for private traders in state to buy farm produce below MSP: Maharashtra govt

The Maharashtra government yesterday amended the Agricultural Produce Market Committee (APMC) Act making it illegal for private traders to purchase farm commodities below the official Minimum Support Price (MSP).

This development means that private traders who purchase below this price will attract a one-year jail term or a fine of Rs 50,000, depending on the severity of the offence.

With this move, the Maharashtra Agricultural Produce Marketing (Development & Regulation) Act will conform to the Centre’s Model Agricultural Produce and Livestock Marketing (Promotion & Facilitation) Act.

The Devendra Fadnavis-led government in the state has done away with fragmentation of markets within the state through “market areas” where sale/purchase of farm commodities can occur. Consequently, this has eliminated the requirement for separate licenses, considering the entire state as a single market.

Now, farmers and traders can buy and sell at any mandi without the mandatory license and can thus realise better prices from more buyers. This makes Maharashtra the first state to give a legal backing to the MSP.

However, private traders will have to purchase at the MSP even if it isn’t a viable proposition, owing to shifting supply-and-demand conditions.

Pravin Dongre, Chairman, Indian Pulses and Grains Association, told Business Standard, “Price discovery based on demand and supply is best done in the mandis and if government tries to artificially set a floor price for private traders, they would simply pull off, leaving the government with the sole responsibility to purchase at MSP as is the case in wheat and rice.”

Making the purchase of a farm commodities below the MSP a punishable offence has attracted objections from traders and industry players. The new MSP policy, seeking to provide farmers at least a 50% return over their production costs, could interference in normal demand-supply mechanisms and make the government the biggest buyer of commodities.