Understanding Price Variation

in Agricultural Commodities
in India: MSP, Government
Procurement, and
Agriculture Markets
Shoumitro Chatterjee
Princeton University

Devesh Kapur
University of Pennsylvania

India Policy Forum

July 1213, 2016

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Understanding Price Variation

in Agricultural Commodities
in India: MSP, Government
Procurement, and
Agriculture Markets*
Shoumitro Chatterjee
Princeton University

Devesh Kapur
University of Pennsylvania

India Policy Forum

July 1213, 2016

Abstract
Spatial variations in real prices of agricultural commodities in India are
large. The paper first describes the evolution of agricultural commodity markets in
India and provides some descriptive statistics. Next it documents the spatial
variation in wholesale prices of the principal cereal crops (rice and wheat) in all
APMC mandis across India and within each state. It further shows persistence in
this variation over time. Using a Shapley-Shorrocks decomposition, the paper
analyzes the relative contributions of different factors in explaining this price
variation. It then examines the effects of two key government interventions in
agriculture markets, the Minimum Support Price (MSP) program and
procurement by government agencies, and the effects of the monopsony power of
mandis on price formation in agriculture output markets. The paper concludes
with some thoughts on future research directions.
JEL Classification: D43, D45, O1, Q11, Q12, Q13, Q18
Keywords: Agriculture, Market Imperfection, Economic Development
*Preliminary draft. Please do not circulate beyond the discussion at NCAER India Policy Forum
2016, for which this paper has been prepared.
Chatterjee: sc20@princeton.edu Kapur: dkapur@sas.upenn.edu .
The authors would like to thank Amarsingh Gawande and Beeban Rai for excellent research
assistance.

Shoumitro Chatterjee and Devesh Kapur 1

Understanding Price Variation in Agricultural

Commodities in India: MSP, Government
Procurement, and Agriculture Markets
Shoumitro Chatterjee and Devesh Kapur

1. Introduction
A quarter century after Indias historic shift to a more market oriented economy,
with industrial delicensing, trade liberalization, and (more limited) reforms in factor
markets, one sector continues to be plagued by a curious combination of severely
intrusive government regulations in both factor and product markets, an arbitrary
policy and regulatory environment and low public investments where needed.
Unfortunately, that sector agriculture not only accounts for the livelihoods of the
majority of Indias population, but is also critical to multiple long-term challenges facing
the country from food security to natural resource sustainability, especially soil and
water.
The challenges facing Indian agriculture and its tens of millions of farmers have
been well recognized, whether the media attention and hand wringing on farmer
suicides, the reports of the National Commission on Farmers (led by M. S. Swaminathan)
or official government documents, such as the Economic Survey, 2016. While there has
been much attention to subsidies in factor markets in agriculture (especially water,
electricity and fertilizers) because of their high fiscal costs, with the exception of the
public distribution system, there has been relatively less attention on how government
actions shape product markets in Indian agriculture.
In this paper we focus on how (a) government interventions in support prices
and procurement and (b) regulation and physical location of wholesale agriculture
commodity markets affects price variation across space. We focus on rice and wheat
which together account for about three-fourths of foodgrain output in India (coarse
grains and pulses account for the remainder). We find large variances in prices of
agricultural commodities across the country. Real wholesale prices across wholesale
markets have an average standard deviation of 0.18, much higher than the US and also
many developing countries like Philippines. Moreover, it has been high each year of the
last decade. This is especially puzzling in light of the huge increases in cellphone
penetration and a massive expansion of the rural road network during this period.1
Information frictions can impede trade in a manner distinct from trade costs (Jensen
2007) and greater connectivity should (in principle) reduce spatial price differences as
was the case between regions connected by railroads following railroad construction in
colonial India (Donaldson 2015).
The large variance in prices is important to understand because it implies not
only that consumers pay different prices at different locations for the same product
(unless subsidized by schemes such as the PDS) but producers get different prices
Cellphone penetration in India increased from 78 million in 2005 to more than 900 million in
2014. Between 2005-06 and 2013-14 under the Pradhan Mantri Gram Sadak Yojana (PMGSY)
the government released nearly Rs, 100,000 crores for rural roads construction. In this period
332,835 km of rural roads connecting around 80,000 rural habitations were constructed.
Source: Ministry of Rural Development Annual Report 2013-14: 49-50.
1

2 India Policy Forum 2016

depending on where they are physically situated. This issue has been largely neglected
in the contentious debates on agriculture policy which have largely focused on subsidies
in agriculture input markets and price support for agriculture outputs (with some
notable exceptions). There have also been public discussions on large price wedges
between farm-gate and retail prices (a discussion we get to later).
These discussions have largely ignored agriculture output markets, which as we
demonstrate is evident in the severe underinvestment in the physical infrastructure of
mandis, the regulatory framework and their internal governance. A rural road does
only so much for a farmer if there is no well-functioning market in reasonable
proximity. Despite attempts at regulatory reform there is a great degree of hysteresis
and path dependence in how agriculture markets function in India today. For instance,
agriculture market liberalization in Bihar and Andhra Pradesh has not lead to much
private investment in output markets. In order to gauge the potential impact of reforms
we must first understand the underlying mechanisms. This paper is a modest beginning
and focuses on two aspects: (a) Government interventions in the output market, namely
procurement and support prices. Given that the government does not uniformly
procure across space and commodities what are the implications for output prices of
the principal cereals, rice and wheat and (b) what is the source and implications on
market prices of the market power enjoyed by the agricultural mandis? A key strength
of this paper is its all-India scope (spanning the 16 largest states) which to our
knowledge is the first such attempt.
The remainder of the paper is organized as follows. Section 2 describes the
evolution of agricultural output markets and their regulation in India. Section 3,
discusses the data. The subsequent analytical section of the paper begins with some
descriptive statistics of agricultural market infrastructure in India (section 4(i))
followed by an analysis of price variation in the principal cereal crops, rice and wheat
(section 4(ii)). Section 4(iii), examines the effects of two key government interventions
in agriculture markets, the Minimum Support Price (MSP) program and procurement by
government agencies. Section 4(iv) has a discussion of price formation in agriculture
output markets where mandis enjoy market power locally and section 5 concludes with
some thoughts on future research directions.

2. History of Agriculture Markets in India

The roots of the regulatory regime in agriculture markets in India go back to the
Royal Commission on Agriculture (1928) which recommended enactment of market
legislation to create common standards to measure the quality of produce and curb
rampant malpractices by private market operators (especially on weights and
measures) and help farmers realize better returns.
As with other aspects of economic life in post-independent India, agriculture
markets were also subject to a more onerous regulatory regime. These regulations,
many of which derive from the Essential Commodities Act 1955, include controls on
private storage, transport, processing, exports, imports, credit access, and market
infrastructure development. The rationale for these regulations was ensuring a
reasonable income for farmers and access to food commodities by consumers at
affordable prices.

Shoumitro Chatterjee and Devesh Kapur 3

Since agriculture is a state subject, the regulation of wholesale agriculture
markets has been governed by various state specific Agricultural Produce Marketing
Acts which date back to the 1960s. These Acts empowered state governments to notify
the commodities and designate market areas where the regulated trade could take
place. The Acts also provided for the formation of agricultural produce market
committees (APMC) tasked with operating these markets. Prices are discovered through
what in principle is an open auction. Critically, once an area was declared a market area
and falls under the jurisdiction of a Market Committee, no person or agency was
allowed freely to carry on wholesale marketing activities elsewhere. Not only did the
government issue licenses to trade in these markets but also the licenses were state and
mandi specific. As the GOIs own website puts it: "Once a particular area is declared as a
market area and falls under the jurisdiction of a Market Committee, no person or agency
is allowed to freely carry on wholesale marketing activities. APMC Acts provide that
first sale in the notified agricultural commodities produced in the region such as cereals,
pulses, edible oilseed, fruits and vegetables and even chicken, goat, sheep, sugar, fish
etc., can be conducted only under the aegis of the APMC, through its licensed
commission agents, and subject to payment of various taxes and fee. The producers of
agricultural products are thus forced to do their first sale in these markets."2
The APMC Acts were just one among a plethora of laws promulgated by the
Centre and State governments, all aimed at regulating the conduct of market
functionaries and processing units.3 The result was to put up multiple barriers
restricting competition among agriculture commodity buyers as well as increase the
transaction cost for marketing operations. The Task force on Employment
Opportunities of the Planning Commission in its report in 2001 had observed, The
Essential Commodities Act is a central legislation which provides an umbrella under
which the States are enabled to impose all kinds of restrictions on the storage; transport
and processing of agricultural produce. These controls were traditionally justified on
the ground that they were necessary to control hoarding and other type of speculative
activity, but the fact is that they do not work in times of genuine scarcity and they are
not needed in normal times. Besides, they are typically misused by lower level of
administration and become an instrument of harassment and corruption.
The APMC Acts were co-joined with another intervention, namely the Minimum
Support Price (MSP) for foodgrains. These are a sub-set of numerous price support
schemes (PSS) for multiple agriculture commodities (for 23 crops in 2015) and in
principle function as options for farmers.4 The floor prices that MSPs are supposed to
set have little impact unless the state backs it by being prepared to purchase substantial

2http://www.arthapedia.in/index.php?title=Agricultural_Produce_Market_Committee_(APMC).
3These

include the Prevention of Food Adulteration Act, 1954, Essential Commodities Act, 1955,
Standards of Weights & Measurement Act, 1976, Prevention of Black Marketing & Maintenance
of Supply of Essential Commodities Act, 1980, Consumer Protection Act, 1986, Bureau of Indian
Standards Act, 1986, Agriculture Produce (Grading & Marketing) Act, 1986.
4 Each year before the harvest (rarely before planting), the GOI announces the minimum
support prices (MSP) for procurement on the basis of the recommendation of the Commission
of Agricultural Costs and Prices (CACP), which is supposed to take into consideration the cost of
various agricultural inputs and then add a reasonable margin for the farmers to come up with a
MSP. In practice the final figure is also shaped by political and fiscal considerations.

4 India Policy Forum 2016

amounts at the MSP.5 To facilitate procurement of food grains, the FCI and various state
governments agencies have established a large number of purchase centers at various
mandis and key points, whose numbers and locations are decided by the State
Governments. The establishment of a large network of markets has contributed to a
doubling of the marketed surplus to output ratio since independence (from one-third to
two-thirds). For instance, during 2015-16 more than 20,000 procurement centers were
operated for wheat procurement and 44,000 for paddy across India. However, there is
substantial geographic variation in procurement of produce, which has implication on
market prices. The reason for this variation in procurement is unclear to us at present
and remains a puzzle. However, we are trying to interview officials at the FCI to
understand the reason and is part of the research question.
Yet despite the seemingly large number of rural markets, post-harvest distress
sales, absence of grading and packaging at the farm level and inter-locking credit and
commodity markets continue to be common place. The severe underinvestment in
market infrastructure has been well recognized (Chand 2012). A study on paddy sales
by the Karnataka State Agriculture Prices Commission in 2002 found that only 29% of
the sample farmers sold their produce through the regulated markets. The vast majority
(71%) did not because of distance (31%), no knowledge of regulated market (8%),
payment delays (8 %), no provision for paddy sale (5 %), harassment by hamals/coolies
(3 %), good price at the local market (18 %), small quantity (13%), and advance taken
(9 %). The latter indicates that while interlocked credit and commodity markets might
lead farmers to sell at lower prices to money lenders, it is not the dominant factor.6
However, another study in Punjab (Singh and Bhogal 2015) finds widespread presence
of commission agents in the states agricultural markets and interlinked credit, input
and output markets which take place due to the credit linkage these agents provide to
farmers.
We analyzed data from the NSS-SAS (2012) and found that the lion's share of
sales at mandis is made by large farmers while small farmers sell mostly to local
intermediaries (Table 1). This is likely both because of higher fixed transport costs for
small farmers as well as less bargaining power within the mandi setting.

Public procurement of grains occurs mainly by state government agencies (well over 90
percent) with the Food Corporation of India (FCI) a minor player. The PSS for procurement of
oilseeds and pulses, is carried out by the National Agricultural Cooperative Marketing
Federation of India Ltd. (NAFED), the Small Farmers Agri-business Consortium (SFAC), Central
Warehousing Corporation (CWC) and the National Consumer Cooperative Federation (NCCF).
Recently the FCI has been added to this list. NAFED is the central nodal agency for procurement
of cotton.
6 For certain crops (like cotton and tobacco), systems of private banker's credit operate in the
country-side with the objective of guaranteeing supplies. Hariss-White, 1999:204.
5

Shoumitro Chatterjee and Devesh Kapur 5

Table 1: Percentage of cereal output by farm size sold to various actors
Paddy
Farm Size
0-2ha
2-5ha
5-10ha
>10ha
Wheat
Farm Size
0-2ha
2-5ha
5-10ha
>10ha

Local Private
55.44
41.89
29.58
14.15

Mandi
20.19
28.92
34.77
50.43

Government
11.17
5.54
6.52
3.76

Input Dealers
8.72
19.44
27.46
15.38

Processors
1.62
2.44
0.51
0.65

Local Private
41.40
25.23
16.68
6.07

Mandi
38.71
49.97
45.68
40.45

Government
11.01
5.02
7.36
1.67

Input Dealers
8.1
19.42
29.8
51.77

Processors
0.14
0.24
0.3
0.08

Source: NSS Situation Assessment Survey of Agricultural Households (2012).

While the intention of the APMC Acts was to ensure that farmers were offered
fair prices in a transparent manner, it has led to the creation of local monopsonies by
restricting free entry in market creation, discouraged investments by the private sector
and generally discouraged free trade and competition. The result has been local
restrictive monoposonies with broad scope, multiple and often non-transparent levies
and charges. Mandi functionaries often do not allow new entrants in the market further
reducing competition. Their combined effects have ensured fragmented and inefficient
markets. (See Chand, 2012) for a very insightful and detailed discussion).
Therefore, despite (or perhaps because of) the intensely regulated markets
which were intended to cut the role of intermediaries, there are multiple intermediaries
between the farmer and the consumer, and as a result consumers pay high prices for
agricultural commodities while farmers get meager returns.
These regulatory problems have been amplified by severe governance challenges
within mandis and according to one estimate four of five of the APMCs have been
superseded.7 In principle the mandi is like a public utility, but when utilities are poorly
governed consumers suffer, as do Indian farmers. The mandis suffer from major
operational weaknesses ranging from poor transparency in auctions to high and
multiple market charges (often unauthorized), from rigged weighing and inefficient
operations to poor treatment meted to farmers by mandi employees at the market
yards. Few mandis have the infrastructural facilities mandated by regulation.
In 2003, recognizing that the role of the APMCs and the State Agriculture
Marketing Boards needed to change from market regulation to market development,
which required removing trade barriers and creating a common market, the central
government formulated a model APMC Act for adoption by the states. While in principle
the model APMC Act provides greater freedom to the farmers to sell their produce
directly to markets set up by private entities, the latter are still required to pay the
market fee to the notified APMCs, even if they provide no services, in addition to the
fees charged for providing trading platform and other services, like loading, unloading,

This para draws from findings of the National Commission on Farmers, Second Report,
Serving Farmers and Saving Farming - Crises to Confidence.
7

6 India Policy Forum 2016

grading, weighing and so on. The different provisions of the Act have been adopted by
states to different degrees (see Appendix Table 1).
The reality of the reforms carried out by the different states paint a different picture.
Maharashtra for example, went back on the reforms soon after they were announced.8
U.P. has not yet adopted any of the main features of model APMC act excepting giving
permission to some big players for direct procurement of food grains (primarily wheat),
on condition that total procurement in a season should exceed 50,000 tons. Crucially
this notification is issued year to year and no changes have been made in the legislation,
thereby ensuring little private investment (and possibly annual rents). In other states,
by putting in large up-front license fees to set up new markets or insisting that traders
outside the market still pay the market fees, the reforms have been effectively stymied.

3. Data
Our analysis of agriculture trade and commodity price formation in India is
based on a dataset put together specifically for this project form several sources. We
obtained price and quantity data of commodities sold in AMPC mandis from the
Agmarknet project of Government of India (http://agmarknet.dac.gov.in). From our
discussions with officials in the Ministry of Agriculture, we learnt that the Agmarknet
project achieved near full coverage since 2005. Hence, we chose 2005-2014 as the
period of our analysis. For each mandi, Agmarknet records the total quantity sold and
the modal price of each commodity traded in any week. We have aggregated the data up
to the month for our analysis. We also restrict our analysis to the 16 big states Andhra
Pradesh, Bihar, Chhattisgarh, Gujarat, Haryana, Jharkhand, Karnataka, Kerala, Madhya
Pradesh, Maharashtra, Odisha, Punjab, Rajasthan, Tamil Nadu, Uttar Pradesh, and West
Bengal. Since, Telangana was formed in June 2014 our analysis covers undivided
Andhra Pradesh.
The Agmarknet portal also provides us with the village, district and state of each
mandi. We used Google Maps API to geocode these villages, hence our mandi locations
are the geographic centroids of the villages where the mandis are located. We have
excluded fruit and vegetable mandis from this analysis unless we found at least one
instance of grain trade in these mandis in the 10-year period.
Geospatial data on district and state boundaries were obtained from the
Geospatial Information Systems library at Princeton University. We obtained gridded
monthly rainfall estimates from Willmott and Matsuura (2012) dataset at the Center for
Climatic Research, University of Delaware. To estimate district level average
precipitation in any given month we average precipitation over all latitude-longitude
coordinates that fall within a district boundary.
Monthly data (2005-2014) on district level government procurement of rice and
wheat was provided to us by the Food Corporation of India9. Data on minimum support
prices (henceforth MSP), area under crops, district and state-level production and yields
http://tinyurl.com/maharashtra-apmc-reform.
At present we have data from the following states Andhra Pradesh, Bihar (2009 onwards),
Chhattisgarh (2008 onwards), Gujarat, Haryana, Karnataka (2006 onwards), Madhya Pradesh,
Maharashtra (2008, 2012-2014), Odisha, Punjab, Uttar Pradesh, and West Bengal (2008
2014). We hope to update the analysis with the complete data before the final submission.
8
9

Shoumitro Chatterjee and Devesh Kapur 7

estimates were obtained from Ministry of Agriculture and Farmer Welfare, Government
of India.
We have also used the National Sample Survey Organizations survey on
Situation Assessment of Agricultural Households (NSS-SAS henceforth) 2012-13 to
compute district level estimates of awareness about minimum support prices amongst
farmers, price received by farmers, land under irrigation and other farmer
characteristics.

4. Analysis
4.1 Market Infrastructure
We begin with descriptive statistics on the physical presence of wholesale
agriculture markets across India. In figure 1, we plot a simple graph of the stock of total
number of mandis each year starting from 1950.
Figure 1: Fraction of total mandis constructed by year

Source: Agmarknet.

It is clear that the number of mandis grew commensurately as the Green

revolution took off but investments in market infrastructure slackened in more recent
decades even as output continue to grow. As a result, the number of mandis per million
tons of cereal output has declined (Figure 2).

8 India Policy Forum 2016

Figure 2: Number of Mandis per unit output

Source: Agmarknet and Ministry of Agriculture and Farmer Welfare.

As is the case of most infrastructure in India, there is large variation in

agriculture market infrastructure across Indian states. In the absence of data on
capacity of each mandi it is hard to make a definitive claim. However, suggestive
evidence can be seen in Table 2 which shows the number of villages served per mandi
across states in 2015 and number of mandis per million tons of cereal output across
states.

Shoumitro Chatterjee and Devesh Kapur 9

Table 2: State-Wise Spatial Distribution of Mandis
No. of Mandis
No. of
Villages
Served per
Mandi
(2015)

per million
ton cereal
production
(2012)

per million
hectare
NCA (2012)

86

18.20

30.46

Bihar

N/A

3.75

11.11

Chhattisgarh

208

24.10

39.39

Gujarat

90

37.50

25.72

Haryana

67

9.0

39.85

Jharkhand

668

6.0

19.20

Karnataka

198

17.50

19.40

Kerala

10

N/A

56.64

Madhya Pradesh

239

10.25

15.83

Maharashtra

138

32.35

20.47

Odisha

360

13.60

24.85

Punjab

89

8.0

47.95

Rajasthan

212

9.0

9.15

Tamil Nadu

101

36.0

45.13

Uttar Pradesh

229

5.35

16.42

West Bengal

52

5.0

15.56

State

Andhra Pradesh*

Mean no. of mandis within

r km of each mandi

r = 10

r = 20

r = 30

0.38
[0.72]
0.43
[0.85]
1.42
[2.83]
0.91
[1.65]
0.61
[0.88]
0.22
[0.64]
0.53
[1.19]
1.07
[1.11]
0.29
[0.87]
0.27
[0.58]
0.40
[0.75]
0.97
[1.20]
0.59
[1.22]
0.67
[1.46]
0.42
[0.72]
0.42
[0.79]

1.61
[1.58]
0.73
[1.07]
3.54
[3.77]
2.63
[2.38]
2.87
[1.67]
0.22
[0.64]
1.17
[1.46]
3.95
[2.25]
0.80
[1.24]
1.24
[1.20]
1.06
[1.22]
4.65
[2.43]
0.86
[1.27]
2.33
[2.33]
1.24
[1.09]
1.19
[1.53]

3.78
[2.72]
1.57
[1.35]
7.14
[5.36]
5.77
[3.96]
6.94
[2.96]
0.37
[0.69]
2.84
[2.31]
8.28
[3.63]
1.92
[1.80]
3.17
[1.79]
2.15
[1.70]
10.78
[4.30]
2.01
[2.05]
5.22
[3.55]
3.00
[1.81]
3.21
[2.82]

Notes: NCA: Net Cropped Area and Cereal Production for 2012-13 from Ministry of Agriculture &
Farmer Welfare. Mandi Data from http://agmarknet.dac.gov.in/. Fruit & Vegetable mandis
excluded. Standard Deviation in brackets. *Andhra Pradesh includes Telangana.

10 India Policy Forum 2016

Overall this basic data on agriculture market infrastructure shows that while
considerable investments were made in the heyday of the green revolution but fell
(sharply) from the 1990s onwards.10 This market infrastructure varies considerably
across states, both by volume of production and proximity to production sites (villages).
The second important observation is the geographical variation in the location of
markets. First, there is large variation in the number of markets farmers have access to
across states (see Table 2). Mandi density is considerably higher in states like Punjab
and Haryana as compared to other like Rajasthan and Madhya Pradesh. Second, even
within states the spatial distribution of mandis is far from uniform. This can be
observed in the last three columns reporting number of mandis near each mandi and
their standard deviations in Table 2 and in maps of Uttar Pradesh (figure 3), Madhya
Pradesh (figure 4) and Maharashtra (figure 5). There is of course the question of cause
and effect does more output create a larger demand for and supply of mandis? The
steady decline in the number of mandis per unit output over the past quarter century
does not appear to support this argument.
Figures 3: Mandi Locations in Uttar Pradesh

Source: Agmarknet.

The underinvestment in market infrastructure continues. Rashtriya Krishi Vikas Yojana

(RKVY) was launched in 2007-2008 to incentivize States to increase public investment in
agriculture and allied sectors. Of the score odd schemes under RKVY, just 2 percent of the more
than twenty thousand crores annual expenditures in 2013-14 and 2014-15 were on markets
and post-harvest management.
10

Shoumitro Chatterjee and Devesh Kapur 11

Figure 4: Mandi Locations in Madhya Pradesh

Source: Agmarknet.

Figure 5: Mandi Locations in Maharashtra

Source: Agmarknet.

4.2 Price Variation

We now focus on average monthly price data for wheat and rice sold in any
mandi in India between 20052014. It should be noted that the prices we analyze are
wholesale prices observed at APMC mandis. It is very likely that these are not prices
received by farmers, especially since it is large farmers who sell in mandis and small
farmer are more likely to sell to local village intermediaries (Table 1). However, our
price data has several advantages. They are actual prices recorded at a high frequency

12 India Policy Forum 2016

and at a crucial stage in the supply chain mandis are key points of aggregation. Other
sources of price data are usually recalled estimates of unit values, geographically
aggregated and very low frequency.
We use log real prices (with the CPIAL (Food) as the deflator) so that the
variance of log prices is unit independent and makes it compatible for across country
comparisons. The average standard deviation of log (real) prices across mandis in a
given month is 0.18. For comparative purposes this is higher than Philippines: where
for rice and corn (the main food commodities grown there), Allen (2014) found the
standard deviation to be 0.15 in Philippines, which a country formed by group of islands
and has high transport and information costs.
Our variance estimate is robust to including all cereals. The variance in prices
has been high since 2005 and hence the results are not capturing the effect of an outlier
year. Moreover, we do not observe any trend in time-series of the standard deviation
which implies that an increase in cellphone penetration during this period does not
appear to have had a causal effect on price variation in grains across India (see Figure
6).
Figure 6: Average Variation in Log real price across
APMC markets for Paddy and Wheat

Source: Agmarknet.

The average standard deviation of log (real) prices across mandis within states is
also high. To the extent that high average standard deviation of log (real) prices across
mandis in the country might be due to different varieties of wheat and rice grown in
different agro-ecological zones prevailing in different states, this finding attenuates this
concern. High within-state variation suggests that the variation is not entirely due to
quality. We present the results for 2014 in Table 3. The results for previous years are
similar.

Shoumitro Chatterjee and Devesh Kapur 13

Table 3: Variation in Real Prices within States
State
Andhra Pradesh
Chhattisgarh
Gujarat
Haryana
Jharkhand
Karnataka
Kerala
Madhya Pradesh
Maharashtra
Odisha
Punjab
Rajasthan
Tamil Nadu
Uttar Pradesh
West Bengal

Standard Deviation
0.15
0.13
0.14
0.13
0.14
0.18
0.17
0.21
0.16
0.70
0.26
0.14
0.21
0.11
0.07

Source: Price data from Agmarknet http://agmarknet.dac.gov.in/.

What is the relative weight of different factors in the variation in prices? To get
at this we performed a Shapley-Shorrocks decomposition. This procedure considers the
various factors which together determine an indicator (such as the overall variation in
prices), and assigns to each factor the average marginal contribution of each factor. The
technique ensures that the decomposition is always exact and that the factors are
treated symmetrically. The results from the Shapley-Shorrocks decomposition found
that 37% of the variation in log (real) prices is due to time-invariant district fixedeffects (which in this case could be soil quality), 20% is due to location-invariant
aggregate time shocks (like global demand), 4% is due to differences in monthly rainfall
across districts, and 39% remain unexplained.
One important time invariant location fixed factor that well explicitly consider in
this paper is the spatial location of mandis. As already discussed there has been
insignificant mandi construction in our period of study. We look at how this might affect
prices later in the paper. The unexplained variation could be due to location and time
varying factors like rural road construction, or procurement of grains by state agencies.
We analyze the latters role as well.

4.3 Government Interventions in agriculture markets: MSP and Procurement

Two key government interventions that affect agriculture markets and
commodity prices in India are the MSP and procurement by government agencies. The
rationale of the MSP is to ensure that farmers are not compelled to sell their produce
below support price either due to exploitation by large market players or due to a
bumper harvest. The MSP is effective mainly for four crops: wheat, paddy, cotton
(modestly) and sugarcane (for which mills are legally obligated to buy cane from
farmers at prices fixed by government).

14 India Policy Forum 2016

Even for these crops, there is large variation among states in the degree to which
efforts are made by public agencies to procure and within states the efforts are
restricted to a subset of farmers. We first consider an indirect measure that illustrates
this issue: farmers awareness about MSP. The reason to choose this measure over
actual procurement is that the quantum of procurement is a choice of the farmer. If
market prices are good, then even in the presence of efforts by public agencies farmers
may choose not to sell to them since the MSP acts like an option. However, the farmers
awareness about MSP is more likely to reflect the presence of government agencies in
his neighborhood.
Figure 7 shows that most farmers are not even aware of the existence of MSPs
and there is considerable variation in this across states. Whereas most farmers in
Punjab and Haryana are aware of the minimum support price program, very few are
aware about it in other states like Gujarat, Maharashtra, Jharkhand or West Bengal. This
is indicative of the absence of government procurement agencies in many parts of the
country.
Figure 7: Farmer Awareness about minimum support prices 2012

Source: NSS-SAS.

It follows, therefore, that there are large disparities across states in actual
procurement. In Tables 4 and 5, not surprisingly one observes that the states where
awareness of MSP is high are also the states where there is heavy procurement of grains
both in absolute terms and relative to total production. Therefore, awareness is highly
correlated to the intensity of procurement in a state (Figure 8). Notice also that as
paddy is more intensely procured than wheat (as a % of total production), the overall
level of awareness is higher for paddy than for wheat.

Shoumitro Chatterjee and Devesh Kapur 15

Table 4: Production and Procurement of Rice
State

A.P.
Bihar
Chhattisgarh
Gujarat
Haryana
Jharkhand
Karnataka
Kerala
M.P.
Maharashtra
Odisha
Punjab
Rajasthan
Tamil Nadu
Telangana
U.P.
West Bengal

Production
(in million tonnes)
2013-14
6.97
5.51
6.72
1.64
4.00
2.81
3.57
0.51
2.84
3.12
7.61
11.27
0.31
5.35
5.75
14.64
15.37

2014-15
7.23
6.36
6.32
1.83
4.01
3.36
3.54
0.56
3.63
2.95
8.30
11.11
0.37
5.73
4.44
12.17
14.68

Procurement by FCI
% of all
and State Agencies
India
(in million tonnes) procurement
2013-14
2014-15
3.737
3.596
11.65
0.942
1.614
4.06
4.29
3.423
12.26
0
0
0.00
2.406
2.015
7.03
0
0.006
0.01
0
0.088
0.14
0.359
0.374
1.16
1.045
0.807
2.94
0.161
0.1988
0.57
2.801
3.357
9.79
8.106
7.786
25.26
0
0
0.00
0.684
1.051
2.76
4.353
3.504
12.49
1.127
1.698
4.49
1.359
2.032
5.39

Procurement
as a % of total
production
51.63
21.55
59.16
0.00
55.23
0.10
1.24
68.42
28.62
5.93
38.70
71.03
0.00
15.66
77.06
10.54
11.29

Source: Ministry of Agriculture and Farmer Welfare, Government of India.

Table 5: Production and Procurement of Wheat

State

A.P
Bihar
Chhattisgarh
Gujarat
Haryana
Jharkhand
Karnataka
M.P
Maharashtra
Odisha
Punjab
Rajasthan
Telangana
Uttar Pradesh

Production
(in lakh tonnes)
2013-14
0.04
47.38
1.34
46.94
118.00
3.70
2.10
129.37
16.02
0.01
176.20
86.63
0
298.91

2014-15
0
39.87
1.35
30.59
103.54
3.30
2.61
171.04
13.08
0.006
150.50
98.24
0.07
224.17

Procurement by FCI
% of All
and State Agencies
India
(in lakh tonnes) Procurement
2013-14 2014-15
0
0
0.00
0
0
0.00
0
0
0.00
0
0
0.00
58.73
6.50
23.29
0
0
0.00
0
0
0.00
63.55
70.94
25.33
0
0
0.00
0
0
0.00
108.97
116.41
42.45
12.70
21.59
6.46
0
0
0.00
6.82
6.28
2.47

Source: Ministry of Agriculture and Farmer Welfare, Government of India.

Procurement as
a percentage of
Total Production
0.00
0.00
0.00
0.00
55.8
0.00
0.00
44.8
0.00
0.00
69.0
18.5
0.00
2.5

16 India Policy Forum 2016

Figure 8: MSP awareness vs Procurement

Source: NSS-SAS and Food Corporation of India.

While there has been considerable discussion on procurement of foodgrains by

public agencies for the PDS, the key point that is often missed is that government
procurement is a luxury for most farmers in the country. There are large differences not
only across states but within states as well. And this variation in procurement has
substantial consequences on the price farmers receive and the crops they choose to
produce.
The disparity in procurement within states can be seen in the maps in figures 9
and 10. For illustrative purposes we present the results for paddy. Whereas all districts
in Punjab see uniformly high procurement, this is not the case in UP or Maharashtra.
Conditional on production, some districts in Maharashtra and UP have very low or zero
procurement (see map 10 which plots procurement as a fraction of production).

Shoumitro Chatterjee and Devesh Kapur 17

Figure 9: Average Annual Paddy Procurement 2005-2014

Source: Food Corporation of India.

Figure 10: Average Fraction of Paddy Production procured 2005-2014

Source: Food Corporation of India and Ministry of Agriculture and Farmer Welfare.

18 India Policy Forum 2016

Intervention in any market by the government is bound to have consequences
for equilibrium prices. One would expect that the presence of MSP would at least
provide a soft floor on the actual prices observed in markets. The data however paints a
different picture. Figure 11 shows the cumulative distributions of the relative difference
of average monthly market prices at the district level from the prevailing MSP for a 10year period (2005-2014). A well-functioning procurement system would have ensured
that prices received by farmers would have been at or above the MSP and the graph
would have started at 0. However, it is glaring that about half of the market prices are
below the minimum support prices both in paddy and wheat.
Figure 11: Distribution of Average market prices is a district relative to MSP

Source: Agmarknet.
Note: Upper Panel is for Paddy and Lower Panel is for Wheat.

This raises several interesting questions, which we can only partially address in
this section owing to data limitations. As described earlier, there is disparity in
procurement of grains across districts and over time. These variations allow us to
implement a difference-in-difference identification strategy to compare districts where
there is procurement in certain months to districts where there is no procurement to
identify the impact on the market prices.
Our dependent variable is the relative difference of monthly average prices at the
district level from the prevailing MSP. Its distribution is plotted in figure 11. The key
regressor of interest will be an indicator which will take a value 1 if there was any
procurement in any district in any month and 0 otherwise. We chose this variable as the
regressor as opposed to the actual quantity procured since conditional on access to a
procurement center, the quantity sold to the government is a choice exercised by the
farmer and hence endogenous. Whether or not there is any procurement in a district is
more likely to be outside the farmers choice set when the market prices are falling
below MSP.

Shoumitro Chatterjee and Devesh Kapur 19

Our basic econometric specification will thus take the following form:
price MSP
(
) = + { > 0} + + +
MSP
Here, d denotes a district and t denotes a month-year. and are district and
time specific fixed effects. The coefficient of interest , captures the differential effect of
government procurement on market prices relative to MSP in districts where there is
procurement to districts where there is none. For inference, we are going to cluster
standard errors at the district level.
The identification assumption here is that the procurement indicator should not
be correlated with pre-existing district specific trends. Since procurement is likely to be
correlated with district specific production, for robustness we will further introduce
district specific year trends and control for district specific rainfall shocks and total
output.
Table 6: Regression Results for Paddy
(1)
1{Procure>0}
Observations
District FE
Time FE
District specific
Linear Trend
Other Controls

0.04
(0.01)***
18508

(2)

(3)
Relative Price
0.04
0.06
(0.01)***
(0.01)***
18508
12815

(4)
0.05
(0.01)***
12815

Notes: Robust standard errors, clustered at the district level in parentheses. *** p<0.01, ** p<0.05, *
p<0.1. Other controls include controls for district-year specific output and district-month specific
rainfall. Prices and procurement are at the district-month level.

Discussion of Results
From table 6, it is clear that in case of paddy, relative to districts with no
procurement, the average market price is at least 4% higher than MSP in districts where
there is procurement. This estimate is robust to different specifications including
unobservable district specific time trends and controls for district specific monthly
rainfall and annual output. Therefore, farmers are worse off in districts where they do
not have access to government procurement. The result also points to the possibility
that in the absence of government procurement, the bargaining power of the farmers
against intermediaries is likely to be attenuated.
We should be careful in that a positive coefficient on procurement implies that
the market price is higher and not necessarily above the MSP. Lets first take the case
when the market price is greater than MSP before and after procurement. This might
seem like a contradiction at first, because if the market price is greater than MSP then
no farmer has the incentive to sell to the government. Hence, procurement should be
zero. However, recall that we are averaging prices over time (for every month) and over
geography (over all mandis in a district). Therefore, if there is procurement in a district

20 India Policy Forum 2016

it might raise average prices at most mandis in that district. Given trade costs, some
farmers might still prefer to sell to the government. In general equilibrium however,
farmers selling to mandis get a better deal than in the counterfactual. Moreover, there
are likely dynamic effects, i.e. procurement occurs in some locations first, triggering a
rise in market prices in geographically adjacent areas leading to subsequent sale in
mandis. This would also be consistent with our results.
These forces are at play even when the market price is always below MSP or the
knife-edge case of procurement pushing the price above MSP. However, to better
analyze these cases we need access to high-frequency geocoded data on procurement
which unfortunately is not available.
The results for wheat however, are somewhat puzzling. Relative to districts with
no procurement, the average market price of wheat is 2% lower than MSP in districts
where there is procurement (Table 7). We need to do more work to understand them.
One caveat is that at present we do not have data on wheat procurement in two big
wheat producing states Maharashtra and Rajasthan and hence those states are not in
our sample.
Table 7: Regression Results for Wheat
(1)
1{Procure>0}
Observations
District FE
Time FE
District specific
Linear Trend
Other Controls

-0.02
(0.004)***
24253

(2)

(3)
Relative Price
-0.02
-0.02
(0.004)***
(0.004)***
24253
17426

(4)
-0.02
(0.004)***
17426

Notes: Robust standard errors, clustered at the district level in parentheses. *** p<0.01, ** p<0.05, *
p<0.1. Other controls include controls for district-year specific output and district-month specific
rainfall. Prices and procurement are at the district-month level.

One possible rationale for this counter-intuitive result could be that only bad
quality wheat is sold in mandis and most good quality wheat is procured directly by the
government. However, this seems unlikely and in any case without supporting data, we
leave this as an open question at this stage. A potential concern could be that all
procurement happens whenever market price is below MSP and almost nothing when
price is above MSP. In this case, we would expect the coefficients to be downward
biased and in line with the results for wheat. However, in that case the results for
paddy would strengthen even further.
The two biggest concerns are that: (a) the act and timing of procurement in
districts may be correlated with time varying unobservables and (b) that there may be
anticipatory responses by the market players based on their expectations. By
controlling for as many district characteristics as possible and putting in flexible fixed
effects we have tried to mitigate the former concern to some extent. In the absence of
high frequency and more disaggregate procurement data however, addressing the latter
does not seem possible.

Shoumitro Chatterjee and Devesh Kapur 21

The minimum support price program is also likely to generate externalities with
effects on crop choice, on the environment and for long term sustainable development
that we do not discuss here but is a part of our future research agenda. In this paper we
focus on the direct impacts of the minimum support price program.

4.4 Agricultural Markets as Local Monopsonies11

We started with a puzzle about price variation between Indian agricultural
markets and then we moved to discussing how selective intervention by the
government in procurement might be leading to differential prices across regions. In
this section, we bring together a more complete story by providing evidence for a
possible general theory of price formation in Indian agricultural markets which will
help us understand how local market power effects equilibrium prices. For reasons of
generality the results we provide here include all major food grains produced in India
but the results are robust to just including paddy and wheat. Here, we describe the main
intuition and results in brief.
The key idea is that by limiting freedom in creation of new agricultural markets,
over the years state governments have created virtual monopsonies. Having access to
greater number of market places increases the bargaining power of farmers vis--vis
intermediaries helping them get a better price for their produce. The bargaining power
of post-harvest liquidity strapped small farmer is going to be very limited.
It is possible, of course, that there is competition amongst intermediaries within
a market but the limited evidence we have on this points towards collusion within
mandis (Banerji and Meenakshi (2004, 2008)). In absence of data on number of traders
in each mandi this feature cannot be tested and hence we choose to focus on between
market competition. Further, there is some evidence of ex-post bargaining between
farmers and intermediaries (Visaria et al. 2015). In the Madhya Pradesh soyabean
market, entry by private players have increased prices that farmers received in mandis
because now the mandis faced competition from private players (Goyal 2010).
Consider a simple model where farmers live in space. They choose which mandi
to go and sell their produce where they Nash-bargain with the intermediaries. The
outside option of farmers at a particular location endogenously depends on how many
other markets the farmer has access to in his neighborhood. To illustrate this point,
suppose a farmer is being exploited at a mandi then he can choose to go to a different
mandi in search of a better price. However, he can do so only if there is a mandi in the
vicinity. If there is none then he would be forced to sell at whatever price the
intermediary offers. The model assumes that it is easier to sustain collusion within
mandis as traders can observe each other but is difficult to collude between mandis
separated in space.. This model is also general in that it does not matter whether the
farmer or a village intermediary comes to sell at the mandi because what matters is the
price observed at mandis.
In general equilibrium this model yields the prediction that regions which are
dense in number of markets will have higher prices as compared to regions which are
sparse in number of markets. Even when there are inter-linkages in other markets (like
credit) between farmers and intermediaries, the forces described above are likely to
11

This section draws heavily from Chatterjee (2016).

22 India Policy Forum 2016

determine the bargaining power of the farmers. However, it is very hard to credibly
isolate and identify this relationship since density of markets in a region would be
highly correlated with other local characteristics like production.
To investigate the presence of local market power and its relation with
equilibrium prices, Chatterjee (2016) presents two strategies. The first exploits
variation in mandi density in space within a state and the second across the state
border.
In the first strategy the, the paper examines the relationship between price in a
mandi and the number of markets in the neighborhood controlling for as many
observables like local crop production, local demand, local rainfall shocks as possible
and flexible fixed effects to account for unobserved heterogeneity. The preferred nonparametric specification is the following, where standard errors are clustered at district
and crop-season level for inference.
ln(price) =

1 (#mandi) + 2 Rain + +

=5,10,15

Here, c is crop, m is market, d is district and t is time. Therefore, we regress price

of crop c, in market m, in district d at time t on the number of mandis in the
neighborhood. We break the neighborhood into three bins 0 to 5 km, 5 to 10 km and
10 to 15 km and count the number of other mandis in each bin. For example,
(#mandi) for r=10 would mean number of other mandis at a distance of more than
5kms but less than 10km from mandi m. All distances are geodetic distances.
Crop-district specific rainfall shocks are denoted by Rain . We always include
crop and state specific effects because we want to focus on within state and within crop
variation. For robustness, we also include controls for local demand (measured by
population in the neighboring tehsil) and state specific time trends.
The second strategy exploits the restriction of the APMC acts, that crops grown
in a particular state cannot be sold in a mandi another state. This means that if we look
at two mandis close to each other but on either side of a state border then they must be
similar in all respects but the competition they face. One would expect that soil type,
crop choice, rainfall, demand etc. are continuous and hence similar very close to the
state border. However, since crops can only be sold in the state they are grown in,
means that any mandi faces competition only from mandis in its own state. Hence
competition is discontinuous as one crosses the state boundary. This lends itself very
naturally to a matching identification framework, where the relation between price
difference for the same crop in the same month in two geographically close mandis on
either side of the state border and the difference in their local competition can be
interpreted to be causal. Here, while counting the number of mandis in the
neighborhood of any mandi m, we weight each mandi by the inverse of the distance
from mandi m. Therefore, competition at each mandi m is:
comp =

(,)

where, is distance from mandi m to mandi j, and (, ) is the set of all

mandis in the r km neighborhood of mandi m. Then we can look at the relation between

Shoumitro Chatterjee and Devesh Kapur 23

price differences and competition differences between all mandi pairs, that are 20 km or
30 km apart from each other but on either side of a state border:
ln(price) ln(price) = ( ) +
For inference, we follow a simple rule that if two mandi pairs share at least one
district in common then they belong to the same cluster.
Both designs estimate the impact of one additional mandi in the neighborhood to
be an increase between 1% and 6% in price. There is some variation across crop types
and states and regression models. The preferred border regression estimates are on the
higher end of the spectrum. In our data, the minimum number of mandis in a 10 km
radius neighborhood is 0 and the maximum number is 12. So if we compare a
neighborhood which does not have any mandi close to it versus one which has 5 mandis
then the price variation between two such neighborhoods is likely to be between 5 and
30%.

5. Conclusion
Analyzing trade in agricultural markets in India is a complex and daunting task,
especially in absence of data on trade flows. It is important nevertheless for multiple
reasons. The literature has mostly taken a micro approach understanding forces and
mechanics in select mandis, crops and regions. In this paper we have approached the
problem from an all-India perspective. Based on a large, unique dataset we find large
overall variation in prices among mandis. About 37% of this variation is because of time
invariant location specific factors and another 39% is because of time and location
varying factors.
In trying to understand the mechanisms that might explain these results we
focus on key government interventions in agriculture output markets: geographically
selective intervention by the government in procurement of grains; and the market
power that the mandis enjoy because of restrictions in the APMC acts. We find that
selective intervention by the government creates a 2-4% variation in prices depending
on crop. We find that for paddy, government intervention improves terms of trade in
favor of the farmers as one would expect but in the case of wheat it goes the other way
round. This result is puzzling and we will address it in future work. One possible reason
could be that procurement results in lower-grade varieties (or distinct varieties) being
sold in mandis and thus government intervention might depress the market price.
We also find that farmers sell their produce at up to 5% lower prices in
geographically isolated mandis which enjoy market power because they face little
competition, compared to areas where mandis enjoy little market power.

Future work
This paper is an initial attempt in understanding the complexities of agriculture
output markets in India. Future research questions include modeling what might
happen if the APMC restrictions are done away with so that there are no fees for private
players to enter agricultural markets and farmers can freely trade across borders etc.

24 India Policy Forum 2016

Chatterjee (2016) has been developing a structural model that tackles this general
equilibrium problem.
Alongside price variation, analyzing the sources of wedges between farmgate to
mandi prices, mandi to retail prices and farmgate to retail prices is of crucial
importance as they tell us about costs and inefficiencies involved at each step in the
supply chain. Currently credible estimates12 of these wedges do not exist because it is
very hard to compare the varieties of commodities found in retail markets to varieties of
those commodities in mandis or at the farm. For example, wheat consumed in urban
homes is a mixture of different varieties grown at different places. Source and
destination data on trade flows of agricultural commodities is not available for India or
any developing country13. In such a scenario, large scale primary data collection
following supply chains is the only option, an approach adopted by Visaria et. al. (2015)
who follow the potato supply chain in West Bengal.
Not only is access to domestic markets important for farm incomes but also
international markets. The Economic Survey, 201614 discusses Indias highly volatile
agricultural export policies. Within a matter of days cotton farmers are abruptly denied
access to international markets. Quantification of the impact of such policies is a very
important policy research question.
Another area that needs better understanding is the political economy of
agriculture commodity markets. We have little systematic knowledge of the internal
governance of mandis, mandi elections and their relationships with local and state
politics. Traders are a powerful lobby and often have partisan political preferences.
States such as Madhya Pradesh undertook reforms as early as the 1980s without any
major protest and Bihar did so in the mid-2000s (Krishnamurthy 2014). Variegated
reforms in APMC acts, emerging new rural institutions (such as farmer producer
companies and primary agricultural credit societies), commodity future markers and
NAM, are all likely to alter the political economy of agriculture commodity markets. But
exactly how and with what effects? A related aspect that we have little knowledge on
but is important are the effects of use of muscle power to prevent farmers from getting
access to mandis and restricting entry in the intermediation and transportation sector.
The long-run consequences of MSP and procurement is another fruitful area for
research. While well intentioned, minimum support price policies could be counterproductive. As discussed in the Economic Survey, 2016, the MSP has incentivized
farmers to over-produce certain crops, especially wheat and paddy, crowding out other
less-water intensive crops like pulses. In absence of proper storage facilities not only is
there large wastage but these crops, along with sugarcane, are relatively waterintensive, with severe consequences for water tables in a water scarce country like
India. Furthermore, the incentive effects of MSP appear to favor specific varsities of
paddy and wheat, which might result in permanent loss of local varieties of these grains
(Krishnamurthy 2012).
The direction of future research should carefully examine general equilibrium
responses because as India changes its pattern of production, international prices and
Some estimates can be found in Chapter 4 on Agriculture in the Economic Survey of India,
2016.
13 The only exception is Allen (2014) for Philippines.
14 See Chapter 1, pp33 Volatile Trade Policy.
12

Shoumitro Chatterjee and Devesh Kapur 25

terms of trade will change since India is a large country and this will further effect
international production patterns. This is an important consideration for food security.
But careful analysis is handicapped if the government does not make public the location
details of procurement centers each year and high frequency data on the quantum of
procurement of grains at each of its procurement centers.

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26 India Policy Forum 2016

Appendix Table 1: State-wise progress of reforms as on 11/02/2016
Area of marketing reforms

States adopted the suggested area of

marketing reforms
1
Establishment of private market yards/
AP, Arunachal Pradesh, Assam, Chhattisgarh,
private markets managed by a person
Gujarat, Goa, HP, Jharkhand, Karnataka,
other than a market committee.
Maharashtra, Mizoram, Nagaland, Orissa
(excluding paddy / rice), Rajasthan, Sikkim,
Telangana ,Tripura, Punjab, Uttarakhand,
West Bengal & Chandigarh.
2
Establishment of farmer/consumer
Arunachal Pradesh, Assam, Chhattisgarh,
market by a person other than Market
Gujarat, Goa, HP, Jharkhand, Karnataka,
Committee (Direct sale in retail by the
Maharashtra, Mizoram, Nagaland, Rajasthan,
farmers to the consumers).
Sikkim, Tripura, Uttarakhand & West Bengal.
3
Direct wholesale purchase of agricultural
Andhra Pradesh, Arunachal Pradesh, Assam,
produce by processors/exporters/ bulk
Chhattisgarh, Gujarat, Goa, Haryana (with
buyers, etc at the farm gate.
collection centres for specified crops), HP,
Jharkhand, Karnataka, MP, Maharashtra,
Mizoram, Nagaland, Punjab, Rajasthan,
Sikkim, Telangana, Tripura, Uttarakhand,
West Bengal & Chandigarh.
4
Provision for Contract Farming.
AP, Arunachal Pradesh, Assam, Chhattisgarh,
Goa,
Gujarat , Haryana, Himachal Pradesh,
Jharkhand, Karnataka, Maharashtra, MP,
Mizoram, Nagaland, Orissa, Punjab (separate
Act) , Rajasthan, Sikkim, Telangana, Tripura &
Uttarakhand.
5
Unified single license/registration for
AP, Goa, Gujarat, Haryana, HP, Karnataka,
trade transaction in more than one
Rajasthan, Chhattisgarh, MP, Maharashtra,
market.
Mizoram, Nagaland, Sikkim & Telangana.
6
Provision for e-trading (provided in
AP, Chhattisgarh, Gujarat, Jharkhand, Haryana,
varied ways).
HP, Karnataka, Rajasthan, Sikkim, Goa,
Madhya Pradesh, Maharashtra (license to
Commodity Exchanges registered under FMC),
Mizoram, Telangana and Uttarakhand.
7
Single point levy of market fee across the
AP, Chhattisgarh, Gujarat, Goa, HP, Karnataka,
State.
Madhya Pradesh, Mizoram, Nagaland, Punjab,
Rajasthan, Sikkim, Telangana, Uttarakhand,
Uttar Pradesh, Jharkhand & Chandigarh.
Source: Ministry of Agriculture and Framers Welfare. Annual Report 2015-16, p. 105.