CHAPTER I INTRODUCTION In India agriculture forms the backbone of the economy. Marketing of agricultural produce is as crucial to better performance in agriculture as farming itself, There are serious concerns about efficient functioning of this sector both in terms of its output and productivity. Therefore, market reform and marketing system improvement ought to be an integral part of policy and strategy for agricultural development. Agricultural marketing was, till recently, not fully accepted as an essential element in agricultural development in the countries of Asia and the Far East”, Although options differ as to the extent and precedence, there was general agreement till 1970 that the question of markets for agricultural commodities had been neglected. Agricultural marketing occupies a fairly low place in agricultural development policies of developing countries. The National Commission on Agriculture (1976) had emphasised that it is not enough to produce a crop or an animal product; it must be satisfactorily marketed’. Farmers want the marketing system to purchase their produce without loss of time and provide remunerative price for their products. They want the maximum possible price for their surplus produce from the system, Similarly, they want the system to supply them the inputs at the lowest possible price. However, market middlemen and traders are interested in a marketing system. which provides them a steady and increasing income from the purchase and sale of agricultural commodities. The objective of market middlemen may be achieved by R Chadha, Facilitaring Agriculture Marketing in India S$. Acharya and NL. Agarwal, Agricultural Market in India, (New Delhi: Oxford and IBH Publish Co. PutLid, hup:/www.tn.gov.in/spelapp_studies/app%20.paf,p.245 Ibid,purchasing the agricultural products from the farmers at low prices and selling them to consumers at high prices. The objectives and expectations of all the three-groups of society- producers, consumers and, market middlemen — conflict with one another. All the three groups are indispensable to society. The government has to act as a watch -dog to safeguard the interests of all the groups associated in marketing. It tries to provide the maximum share to the producer in the consumer’ s rupee; food and other farm products of the required quality to consumers at the lowest possible price; and enough margin to market middle men so that they may remain in the trade and not think of going out of trade and jeopardise the whole marketing mechanism*. Thus, the government wants that the marketing system should be such as may bring about the overall welfare to all the segments of society. The overall objective of agricultural marketing system in a developing country like India should be to help the primary producers viz., the farmers getting remunerative prices for their produce on the one hand and to provide right type of goods at the right place, in the right quantity and quality at a right time and at right prices to the processors and/or ultimate consumers on the other. Agricultural marketing scenario in the country has undergone a sea-change over the last five decades owing to the increases in the output of agricultural commodities and consequently in their marketed surpluses; increase in urbanization and income levels and thereby changes in the patter of demand for farm products and their derivatives; slow and steady increase in the link-ages with the overseas markets; and changes in the form and degree of government intervention in agricultural markets. Therefore, the framework under which agricultural produce markets function and factors which influence the prices received by the farmers now need to be understood in a different perspective compared to * Ibid. p.246that in the past. The role of marketing now starts right from the time of decision relating to what to produce, which variety to produce and how to prepare the product for marketing rather than limiting it to when, where and to whom to Sell, Agricultural marketing plays a crucial role not only in stimulating production and consumption, but in accelerating the pace of economic development. Its dynamic functions are of primary importance in promoting economic development. For this reason, it has been described as the most important multiplier of agricultural development. The agricultural marketing system plays a dual role in economic development in countries whose resources are primarily agricultural. Increasing demands for money with which to purchase other goods leads to increasing sensitivity to relative prices in the part of producers, and specialization the cultivation of those crops on which the returns are the greatest, subject to socio-cultural, ecological and economic constraints. It is the marketing system that transmits the crucial price signals. On the other Hand, and in order to sustain the growth of the non agricultural sector, resources have to be extracted from the agricultural sector- physical resources to guarantee supplies of food and raw materials for the agro-industry and financial resources for investment in non-farm economy as well as for reinvestment in agriculture. Development in the field of agriculture, popularly known as the green/ white/yellow/blue revolutions, has given rise to these revolutions. ‘The farmer-producers should be assured of a fair price for their produce, failing which they may lose the incentive to increase agricultural production, A fair price for the produce may be assured when there is an orderly marketing system in the country which is free from the exploitation of middlemen, But an orderly marketing system can be created only whenthe problems, which have emerged with the advent of the green revolution, are effectively tackled. There is an urgent need in the present context for tackling the emerging problems of agricultural marketing more resolutely and efficiently than ever before. The improvement in the domestic marketing system has assumed special significance with the launch of new economic policy in 1991 and opening up of the external trade regime. The important problems which have emerged in the recent past pertain to the following areas: i) Increase in Production levels and Market Arrivals With increased market arrivals, and in order to enforce strictly market regulations, it is necessary that a large number of market yards should be developed in rural areas with all the necessary marketing facilities. Without spacious market yards, it is not possible to centralise and effectively supervise the transactions taking place in the area. ‘The development of these spacious market yards is also essential for the performance of various marketing functions, such as grading, cleaning, serving and weighment of the produce. Recently, some market committees have constructed spacious market yards, but a majority of market committees do not have them because of the paucity of funds and the non-availability of land.> ii) Price Instability Agricultural prices are very unstable and fluctuate violently. ‘These prices fall in the post harvest months and increase later in the year. This situation has worsened with the increased market arrivals as a result of the emergence of surpluses, especially of wheat and rice. The increasing instability in prices adversely affects the income of farmers as well as the tempo of increasing production. There is, therefore, a need for * Ibid. p.249,reducing price instability. Several steps may be taken for farmers to get a better share in the consumer's rupee. Some of the steps to check price instability are: fixation of minimum support prices of the crops by the government; purchase of the commodities if market prices fall below that level; and development of warehousing facilities to check post-harvest sales among the farmers.° ili) Market Intelligence Market intelligence is another problem that has emerged and is an important shunt of orderly marketing. With the increased marketed surplus and opening up of trade, the importance of market intelligence has increased. Farmers market the produce in the village and nearby assembling centres out of their ignorance of the price prevailing in the nearby primary wholesale, secondary wholesale and terminal markets. Traders take the advantage of the ignorance of the farmer because they have full knowledge of the prices prevailing in other markets. This places the traders in a superior bargaining position. The Directorate of Economics and Statistics, Government of India, as well as the State Departments of Agricultural Marketing have been collecting data on wholesale and retail prices at various markets and disseminating the information through periodical bulletins issued on the All India Radio and in the form of publications. However, this is not a satisfactory position because the information provided is stale in the sense that, by the time it reaches the farmers, the market prices have changed. Farmers are not able to take advantage of available intelligence because of their illiteracy. There is, therefore, an urgent need for refinement in the available market intelligence, so that announcements of market information may be made on the expected prices, arrivals, demand and supply. pid.‘There is also a need for the publication of “Market report” for each district to help the farmers to decide about their cropping and production programmes.” Agricultural Marketing scenario in the country has undergone a sea change over the last two decades. Some of these changes which have significant bearing on the working of the regulated markets are: (i) Rapid increase in the marketable surplus on account of increase in agricultural production; (ii) Specialization in production in different agro-climatic zones; (iii) Emergence of relatively new concepts of markets of national importance; and (iv) Changes in the consumer preferences and tastes for food products. These apart, the marketing policy regime for agriculture has undergone considerable changes since 1991 when a programme of economic reforms was launched in the country. The policy regime has changed both in terms of domestic market and extemal trade, The liberalization of domestic markets and changes in trade policy ought to subserve the objectives of further improvement in food and nutrition security at the macro as well as household level; reduction in levels of poverty; development of backward and less developed areas; reduction in inter-personal and inter-regional disparities in development and overall accelerated growth of the economy. . The marketing system has to respond effectively to the changing requirements in the domestic and international market. The role of state should change from controller of the market to facilitator for ensuring competition in the marketing system. With gradual liberalisation of the markets, it is expected that the country would witness flurry of activities by the private traders. In general, output markets are characterised by large number of sellers and small number of buyers. The buyers’ collusion results in affecting the interests of farmers by lowering the price. Agricultural input markets for seeds, pesticides and * Ibid, p.250.machinery is controlled by a few dominant players. There should be an effective competition policy to ensure efficient functioning of agricultural markets which would deliver efficient outcomes thus protecting interests of both producers and consumers.* The achievement of these objectives in the liberalized environment poses considerable challenge to various stakeholders particularly the cooperatives and such marketing organizations as Agricultural Produce Market Committees (APMCs), State Marketing Boards and State Directorates of Agricultural Marketing and agri business It is in this context that there is a need to redefine the role of APMCs. Their existing activities were laid down in a situation of scarcity syndrome and when the domestic market for most of the agricultural commodities was insulated from the world market and government intervention was pervasive. No doubt, in the initial phases attention was needed on establishment of market yards, creation of various infrastructures in the yards and evolving systems and procedures for regularization of practices in the yards and sub- yards. The emphasis now, however, should shift to other important activities of topical relevance. 1.1 The Problem More than three-fifths of India’s population draws their livelihood from agriculture that adds less than one-fifth to its GDP. There are serious concerns about efficient functioning of this sector both in terms of its output and productivity. The issues of marketing agricultural produce are also while output and productivity are supply side factors, markets provide an intermediate link between producers and final demand by consumers. Efficiently functioning markets add to welfare of producers as well as consumers. Interventions in domestic agricultural markets can affect the efficient | R.Chadha, supra, a1, p2.allocation of resources negatively thus making domestic agricultural sector less competitive in intemational markets. This effect can get further magnified through interventions in the border trade policies. Efficient agricultural markets can be potent tools for poverty reduction. “Improved agricultural market systems are important for poverty reduction first because agricultural growth can play a critical and unique role in pro-poor growth; second because improved coordination and exchange are critical for agricultural growth; and third because improved coordination and exchange are also critical for the processes by which pro-poor agricultural growth contributes to wider growth”. Distribution of operational land holdings is highly skewed. There are about 119,931 thousand holding spread over 159,436 thousand hectares with average size as 1.33 hectares. More than four-fifths of the holdings have area less than two hectares each and are spread over two-fifths of operated area. Only 1 per cent of holdings are large with area greater than 10 hectares each but account for more than 13 per cent of operated area. Thus there is huge inequity in land distribution. Agriculture continues to play an important role in the Indian economy despite its share in the total GDP has declined over time. At all India level, it has contributed 18.5 per cent of total GDP in 2006-07. At state level, its share is considerably high in Punjab (21.7 per cent), Bihar (20.4 per cent), Uttar Pradesh (18.7 per cent), Madhya Pradesh (18.4 per cent), Rajasthan (16.3 per cent) and Haryana (15.9 per cent). The declining share of agriculture GDP is expected as the economy progresses towards high growth trajectory. However, the continued dependence of large number of workers on the sector for employment is a serious concern. Thelimited availability of non-farm employment opportunities to absorb the surplus labour in rural areas further compounds the problem of low productivity in agriculture Traditionally, India’s agriculture development was based on protected policy environment, which included controls on market, pricing, trade, storage, transport, and quantitative restrictions on foreign trade. The policy was primarily intended to attain long term food security and stabilise agricultural prices. During 1970s huge public investments were made on irrigation, research and extension to augment food production by increasing cropped area and productivity. The “Green Revolution” technology initially introduced in resource endowed areas in late 1960s spread into other parts of the country during 1980s. The agriculture sector observed spectacular growth of over 4 per cent per annum during 1980-81 to 1989-90. However, this growth optimism did not continue during 1990s. Several factors including slowdown in public investment, low yield growth, declining water table and environmental problems led to poor performance of agriculture However, two important policy changes occurred during 1990s affected incentive structure of the agriculture sector. These included domestic economic reforms and WTO Agreement on Agriculture. Though measures affecting agriculture sector were not included in economic reforms, but reduced levels of industrial protection have improved the incentives in agriculture. Further, raising per capita income has resulted in diversification of food consumption pattern, WTO Agreement on Agriculture has forced to bind the tariff levels of agricultural commodities and to convert the non-tariff barriers into tariffs, The government also removed quantitative restrictions on imports in April 2001. Despite policy changes in liberalising border measures controlling agriculture10 trade, domestic regulations continued to exist restricting the private entry and investment in this sector. The government interventions in agricultural markets cover wide range of activities. However, a series of domestic market reforms were introduced since 2000 to improve the efficiency of the marketing system and to attract private investment. These included reform of Agriculture Produce Marketing Regulation (APMC) Act’, futures market, direct marketing and private markets and contract farming. Several domestic and multinational firms have entered into marketing and processing of agricultural products. The original intention with which the regulated markets were established in the 1950s has oullived its objectives. The marketing system has to respond effectively to the changing requirements in the domestic and international market. The role of state should change from controller of the market to facilitator for ensuring competition in the marketing system. With gradual liberalisation of the markets, it is expected that the country would witness flurry of activities by the private traders. In general, output markets are characterised by large number of sellers and small number of buyers. The buyers’ collusion results in affecting the interests of farmers by lowering the price. Agricultural input markets for seeds, pesticides and machinery is controlled by a few dominant players. There should be an effective competition policy to ensure efficient functioning of agricultural markets which would deliver efficient outcomes thus protecting interests of both producers and consumers, In India, farmers’ produce is generally disposed off in the village, rural/primary market or secondary agricultural market. The number of regulated (secondary) agricultural markets stood at 7,521 as of March 2005 as compared to just 286 in 1950. ‘There are also about 27,294 rural periodical markets, about 15 per cent of which function > huap://agmarknet nic in/amrscheme/modelact htmiL under the ambit of regulation. Regulated markets are managed by Agricultural Produce Market Committees or APMC, though in some states they may be given different names such as Agricultural Market Committees (AMCs) in Andhra Pradesh, Regulated Market Committees (RMCs) in West Bengal. Once a particular area is declared as a “market area” it falls under the jurisdiction of an Agricultural Produce Market Committee. Under the APMC Acts'°, only State Governments have been permitted to set up markets. The states and Union Territories that did not enact their APMC Acts are Kerala, Manipur, Meghalaya, Nagaland, Sikkim, A&N Islands, Dadra & Nagar Haveli, Daman, Diu and Lakshdweep."! Such restrictions and also harassment by officials, corruption and bribery, have resulted in slow movement of grains from surplus to deficit regions, increase in price variation across regions and added to cost of marketing/trading, making domestic prices internationally uncompetitive. Moreover, zoning resulted in farmers in surplus areas getting a lower price than their counterparts in deficit areas. In fact the movement restrictions on foodgrains were meant to bring down prices to MSP levels in surplus states in order to facilitate foodgrains’ procurement. This has also led to shifting to other crops with no such restrictions as happened with a shift from wheat to mustard in the north-western states. There had been restrictions on the inter-state sale of agricultural commodities in many states. A number of states (e.g. Utar Pradesh, West Bengal, Assam, Orissa etc.) have used entry permit, which must accompany the sale invoice without which goods are not allowed to enter the consuming state, Obtaining entry permit is a major source of harassment for the dealers wishing to import goods into the © Before its revision in 2004 " SS.Acharya, “Agricultural Marketing in India", Vol17, New Delhi: Millennium Study of Indian Farmers, Government of India and Academic Foundation.12 consuming state. There is a practice followed by many states of collecting tax on the entry of commercial vehicle into their jurisdiction. This is an impediment to inter state trade. This causes significant losses to the traders due to delays, payment of entry tax and, possibly bribes (NCAER, 2003). Other market interventions include restrictions on private marketing, investment scale in food processing industries, land ownership and ceilings and lack of clear guidelines on contract farming. Regulatory barriers have constrained investments in development of storage and processing, hampered the development of effective market institutions, and lowered the capacity of agricultural producers to be internationally competitive. India, for example, is the world’s largest producer of fruit and vegetables but inadequate post-harvest storage and transportation cause losses of around 30-40 per cent, only 7 per cent value addition takes place, and only about 2 per cent of production is processed commercially (Government of India, 2001). As a result a broad consensus has emerged about the need for reforms in agricultural market policies and quite significant reforms have been implemented in recent years, as part of the ongoing policy reform process in India. In a liberalised trade regime for both domestic and foreign trade, prices stabilise across the states and there are welfare gains to producers, consumers and wholesale traders at the national level. Deregulating domestic trade results in steep decline in government costs of procurement and storage of cereals. Decentralised procurement at market prices for safety net programme can be used in a cost effective manner. Efficient markets encourage efficient allocation of land resources across crops. Better and hindrance-free transportation infrastructure reduces transaction costs of private traders and hence adds to welfare gains while it is important to liberalise all the variousB factors that affect the entire chain of agricultural marketing mentioned above so as to make their operations relatively efficient. To grasp the changes taking place in agriculture market structure at grassroots level; to identify the existing market structure and infrastructure at the village level; and to see the pattem of marketing prevalent at the farm level, micto level investigations were undertaken with village and household as the units of inguiry. 1.2 Reforms in Agriculture Market To protect the farmers’ interests and to ensure adequate availability of food grains for official procurement from the unfair practices by private grain traders, a large number of restrictions were imposed by the central and state government. However, excessive regulations of domestic marketing had resulted in increased marketing costs, risks and uncertainty, which impacted the performance of agriculture sector (World Bank, 2004). Excessive regulations dampen growth through suppressing competition in the market. Further, India has achieved food security at the national level through its interventionist policies in input and output markets. However, it is not sustainable to continue with controlled markets for long time. To achieve higher growth and move the sector in long term sustainable growth trajectory, market reforms in agriculture need to be undertaken. 1.3 The Objectives of the Study ‘The study is undertaken with the primary objective of studying the impact of state regulation of marketing of agriculture produce on agricultural sector and farmer's interest. The other objectives are: (1) To examine the status of Indian agriculture;14 (2) To analyse the Indian agricultural system; (3) To analyse the role played by various institutions in regulating the agricultural produce marketing; (4) To study the provisions of The Model Agricultural Marketing Act and also to find the status of implementation of its provisions by States; (8) To critically evaluate the provisions of the Kamataka State Agricultural produce Marketing Act (© To offer pertinent suggestions for improvements in marketing of agricultural products and changes in the existing law. 1.4 Methodology ‘The methodology adopted for the study is completely doctrinal, involving content analysis, for which original sources consulted. Relevant books, articles in journals, treatises by agricultural experts, Planning Commission Reports, secondary data compiled by various agencies have been analysed and data has been obtained. Further various websites were visited and extensive data has been collected. The standard form of super script system has been adopted for the study. 1.5 Importance of the Study The importance of study lies in the fact that it makes a very comprehensive analysis of the effectiveness of regulatory mechanism created by the state in protecting the interest of the farming community in the country. Indian agricultural marketing suffers from a number of defects. As a consequence, the Indian farmer is deprived ‘of a fair price for his produce. There is an absence of proper ware housing facilities in the villages. Different varieties of agricultural produce are not graded properly, Transport45 facilities are highly inadequate in India. Only a small number of villages are joined by railways and pucca roads to mandies. Even now the number of unregulated markets in the country is substantially large. Indian farmer, being poor, tries to sell off the produce immediately after the crop is harvested though prices at that time are very low. Regulated markets have been organized with a view to protect the farmers from the malpractices of sellers and brokers. The present study makes a comprehensive study of the role played by the various agencies in streamlining the agricultural marketing; it also reveals the loopholes prevailing in the various legislations. The study thus would be useful to the government to improve the entire regulatory system in the light of findings made by the study. 1.6 Scheme of the Study and Its Presentation The present study into the problem of state regulation of marketing of agricultural marketing is planned and presented in seven chapters. Chapter-I: Introduction ‘The Chapter elucidates the problem, the objectives of the study, the importance and the methodology adopted for the study. Chapter -II: Status of Agriculture in India In this chapter an attempt has been made to study the status of Indian agriculture and its contribution in ensuring the development of the economy. Indian Agriculture is characterized by small and marginal operational holdings. About 85% of total cultivated land has been fragmented into less than 10-hectare land, About 60% of farmland is less than 4 hectare in size. Agriculture derives its importance from the fact that it has vital supply and demand links with the manufacturing sector. The nation is striving to find16 ways and means to keep its burgeoning population adequately fed. On the one hand it is facing the problem of declining productivity and on the other, challenges posed by liberalization. An average Indian spends almost half of his/her total expenditure on food, while roughly half of India’s work force is still engaged in agriculture for its livelihood. Being both a source of livelihood and food security for a vast majority of low income, poor and vulnerable sections of society, its performance assumes greater significance in view of the proposed National Food Security Bill and the ongoing Mahatma Gandhi National Rural Employment Guarantee Act (MGNREGA) scheme. The study also revealed that the agriculture sector in India has undergone significant structural changes in the form of decrease in share of GDP and State of Indian Agriculture indicating a shift from the traditional agrarian economy towards a service dominated one. This decrease in agriculture’s contribution to GDP has not been accompanied by a matching reduction in the share of agriculture in employment. The increasing divergence between the growth trends of the total economy and that of agriculture & allied sectors suggests an under performance by agriculture, It is also significant that unlike the overall economic growth pattern, agricultural performance in India has been quite volatile. The analysis in this Chapter has revealed the actual status of Indian agriculture Chapter-III: Indian Agricultural Marketing System: An Analysis In this chapter analyses the Indian agricultural marketing system. Marketing is as critical to better performance in agriculture as farming itself. Therefore, market reform ought to be an integral part of any policy for agricultural development, The study has revealed that agricultural marketing involves activities like (a) assembling (concentration) (6) preparation for consumption (processing) and (c) distribution,7 Agricultural markets are special types of markets that have special characteristics that differ from other markets. These are mainly due to factors affecting supply of agricultural products, and the situation of producers in this business. First of all the agricultural market is very competitive because the producers are all very small and large in number. ‘The study further analyses the various types of markets and the problems the farmers face in them. An analysis of importance of grading, storage, agricultural produce market infrastructure, farm road infrastructure, farmers’ organisations in marketing has been made in this Chapter. Chapter-IV: Institutions Providing Assistance to Agricultural Marketing in India: an Appraisal This Chapter analyses the various organizations and institutions that provide direct or indirect assistance to agricultural marketing in India, The marketing institutions have been grouped into public organisations and co operatives and other informal bodies Public sector organisations include Food Corporation of India, Directorate of marketing and inspection, Agricultural and Processed Food Products Export Development Authority (APEDA), Cotton Corporation Of India, Jute Corporation of India, Agricultural Produce Marketing Committees, Central and State Warehousing Corporations. The Food Corporation of India under the Department of Agriculture and Cooperation Government of India was set up to provide price support to producers, to distribute food grains at concessional prices through to the poor trough the Public Distribution System (PDS) and to ensure national food security by carrying buffer stocks. FCI by itself is not a Decision making authority; it does not decide anything about the MSP, Imports or Exports. The Directorate of Marketing acts as a nodal agency to promote cold storages in the country by coordinating Research & Development in cold storage, facilitate collection18 and dissemination of information related to better price realization by the farmers, to sensitize and orient farmers to new challenges in agricultural marketing by using ICT as a vehicle of extension, to improve efficiency in agricultural marketing through regular training and extension for reaching region specific farmers in their own languages, to provide assistance for marketing research to generate marketing information for its dissemination to farmers and other market functionaries to create an ambience of good marketing practices in the country. Other important agencies studied in this chapter are ‘The Agricultural and Processed Food Products Export Development Authority (APEDA), The National Cooperative Development Corporation (NCDC), NAFED, National Institute of Agricultural Marketing State Agricultural Marketing boards, Warehousing corporations, etc. The study has clearly established the stellar role played by all these organisations in the proper functioning of regulatory mechanism. Chapter-V: Legal Regulation of Agricultural Produce Marketing in India The Chapter analyses the effectiveness of legal regulation of marketing of agricultural produce. Law is one of the key tools available to policy makers wishing to reform agricultural marketing system. Programme to liberalize agricultural marketing have to be based on adequate understanding of relationship between law and the functioning of marketing system. The developing countries world over have recognized the importance of market liberalization programme and the need for legal reforms intended to improve the efficiency and effectiveness of marketing system. . A series of measures, such as the Agricultural Produce Market Act, the Weights and Measures Act, the Agricultural Produce (Grading and Marketing) Act, etc. have been enacted for the marketing of agricultural produce in more orderly manner beneficial to the farmers19 Under these measures, marketing practices are regulated, marketing charges are clearly defined and specified, unwarranted deductions are prohibited, correct weighments are ensured, suitable arrangements for the settlement of disputes regarding quality weighments, deductions, etc. are made, reliable and correct information of prices is supplied and suitable quality standards and standard contracts for buying and selling are enforced. The Agricultural Produce Market Act exists in all the states and the union territories, except in Kerala, Manipur and the union territories of Andaman and Nicobar Islands, Dadra and Nagar Haveli, Lakshadweep, and Daman and Diu, to protect the farmers from exploitation by middlemen and traders. More than 27 regulated Markets ‘Acts are in vogue in different States and Union Territories of the country. Although the purpose of enactment of these Acts is basically the same ie. regulation of trading practices, increased market efficiency through reduction in market charges, elimination of superfluous intermediaries and protecting the interest of producer-seller, many of these ‘Acts differ even in vital contents. The restrictive legal provisions did not augur well with competitive market structure. The supply chain of agriculture products remain very fragmented with a large number of intermediaries. ‘The advent of legal regulation of markets helped in mitigating marketing problems of the farmers to a considerable extent but they did not come up to the expectations of efficient marketing system. Over a period of time, these markets have, however, acquired the status of restrictive and monopolistic markets, providing no help in direct and free marketing, organised retailing and smooth raw material supplies to agro-industries. Exporters, processors and retail chain operators cannot procure directly from the farmers as the produce is required to be channelised through regulated markets and licensed traders. There is, in the process, an enormous20 increase in the cost of marketing and farmers end up getting a low price for their produce. A Committee appointed by the Central Government has suggested various reforms relating to agricultural marketing system as well as in policies and programs for development and strengthening of agricultural marketing in the country. A draft Model Legislation has been drafted by the Committee after holding discussions with the State officials. In this Chapter an analysis of the salient features of the Model Act has been made. Chapter-VI: Legal Regulation of Agricultural Produce Marketing in State of Karnataka: An Appraisal In this Chapter an analysis of the provisions of the Kamataka Agricultural Produce Marketing (Regulation) Act, 1966 has been made. The Act treats agricultural marketing to be a localized subject confined to a specific notified area and therefore it endeavours to create a mechanism to regulate sale of farm produce grown in that area by the farmers to the traders located within such notified area. In fact, it goes to the extent of prohibiting end users and processors located elsewhere from buying from the farmers directly in absence of license from respective APMC .The Act has been amended several times to incorporate the provisions of the Model Act. The new Act provides for the better regulation of Marketing of agricultural produce and the establishment and administration of markets for agricultural produce in the State of Karnataka. Chapter-VII : Conclusions and Suggestions This Chapter presents major findings of the study and in the light of them offers pertinent conclusions and suggestions for the improvements in the regulation of the marketing of the agricultural produce