TRADE

REGULATED MARKETS

Bombay Agricultural Produce Markets Act, 1939.

To ELIMINATE UNFAIR PRACTICES IN THE COMMERCIAL TRANSACTIONS of agricultural produce and to provide for better regulation of buying and selling of agricultural produce, an effort was made in the late twenties and thirties of this century by enacting the Bombay Cotton Markets Act in 1927, which was subsequently repealed and replaced by the Bombay Agricultural Produce Produce Markets Act, 1939. The Royal Commission on Agriculture (1927) and the Bombay Provincial Banking Enquiry Committee (1931) both stressed the need for affording facilities and protection to the agricultural community in the disposal of marketable surplus of agricultural produce by establishing a chain of regulated markets.

"The prosperity of the agriculturists and the success of any policy of general agricultural improvement" observed the Royal Commission, "depend to a very large degree on the facilities which the agricultural community has at its disposal for marketing to the best advantage as much of its produce as surplus to its own requirements." Indian agriculturists are generally illiterate and traders were found to be taking undue advantage of the illiteracy prevalent among them. Their economic condition had also deteriorated on account of the "Great Depression" of 1930. To help agriculturists in such an unfortunate position, the then Government of Bombay enacted in 1939 the Bombay Agricultural Produce Markets Act, which came into force with effect from November, 1939; rules under the Act were prepared and finally promulgated in 1941.

This Act was passed with the avowed object of establishing equity in the bargaining power of agriculturists and merchants, promoting mutual confidence, preventing malpractices and giving a fair deal to the farmers. With these objects in view, the legislation sought to regulate the various features of agricultural marketing in regulated markets. The broad features of the Act are:-

(1) Clear definition of market charges, reduction of excessive charges and prohibition of unauthorised additions to them;

(2) Regulation of market practices;

(3) Licensing of market functionaries including buyers, brokers and weighmen;

(4) Use of standard weights and measures;

(5) Arrangement and settlement of disputes regarding quality, weighment, deductions, etc.;

(6) Sale by open auction or open agreement;

(7) Appointment of market committees, fully representative of growers, traders, local authorities and Government;

(8) Arrangement for display of reliable and up-to-date market information in the market yard; and

(9) Control by Government over markets and Market Committees.

These objectives are to be achieved by exercising control over purchases and sales of agricultural produce in specified areas. This control is to be exercised by the Agricultural Produce Market Committees, constituted under the Act and these are recognised as corporate bodies and given powers to levy fees and form a fund to be used for the purposes specified. All trade allowances except those that are specifically allowed by the rules and bye-laws are prohibited. Power is also taken for supersession of market committees that prove incompetent. Accordingly the Agricultural Produce Market Committee, Kolhapur was constituted on 15th October 1945, and the Gadhinglaj Agricultural Produce Market Committee was constituted on 27th May 1948.

The Act provides for establishment of market committees consisting of 15 members-seven from agriculturists' constituency, four representing traders, one representing local authorities and three Government nominees. It also empowers the market committee to issue licences to and recover licence fees from traders, general commission agents, weighmen, hamals and cartmen; to regulate trade practices by fixing maximum trade allowances such as brokerage, weighment, hamali, etc., to collect cess from general commission agent on agricultural produce brought by producers; and to settle disputes between traders and traders or traders and agriculturists, or both, arising out of quality, containers and trade allowances.

Method of sale.

The producers bring cartloads of their produce in the market yard i.e., in General Commission Agents' shops and godowns. The General Commission Agent enters the name of the owners of produce together with the quantity of each commodity brought by them in the arrivals and sales register given by the market committee. Cess clerks of the market committee collect cess on the produce brought to individual General Commission Agent's shops and godowns for sale. The produce is then unloaded and weighed by the licenced weighmen in the presence of the seller and General Commission Agent. The weights are then entered by the weighment slips in triplicate. The first copy is given to the seller, the second to the General Commission Agent and the third is retained by the office of the market committee. The produce is sold by open auction [as specifically mentioned in the Act] and not by secret signs and agreement. The secretary of the market committee and licenced purchasers move from shop to shop of general commission agents holding auction during the time of sale. Immediately after the bargain is struck, an agreement is entered into and signed by the seller, buyer and the commission agent in the presence of an official of the market committee. Once the bargain is struck, on no account is variation permitted.

A copy of the agreement is given to the office of the market committee. The buyer then takes delivery of the purchased produce on the same day or before 12 noon of the next day and pays the amount due to him to the General Commission Agent within three days from the date on which the bargain is struck. However, it is incumbent on the General Commission Agent to make immediate payment to the cultivator after deducting all trade allowances, such as commission, brokerage, godown rent, insurance, hamali, weighment, etc, The Commission Agent takes receipt for payment made to the cultivator in triplicate, the original being given to the cultivator, duplicate to the market committee office and the triplicate retained by the general commission agent. These receipts are checked by the staff of the market committee, verifying the rates and weights. If there are extra charges in the receipts, the market committee sees that they are refunded to the cultivator by the General Commission Agent concerned.

The Market Committee displays prices of the commodities ruling in the particular market and other important markets of the State.

The Kolhapur Agricultural Produce Markets Committee.

Prior to 1941, there was no Market Department in the State of Kolhapur, nor was there any provision for periodical inspection of the weights and measures used by merchants. The attention of the State Government was drawn to this question for the first time by the Trade Inquiry Committee (1938), with Shri P. C. Patil, as its Chairman. This committee recommended that Government should provide for inspection of weights and measures and regulate markets in the State. It was as a result of these recommendations that the Market Department came into existence.

In 1945, the Bombay Agricultural Produce Markets Act, 1939 was made applicable to the State. The Kolhapur market was regulated in accordance with the provisions of the above Act from 15th October 1945 and the full-fledged Market Department came into existence from 1st June 1946.

Kolhapur is an important market for Gul and groundnut and they were regulated under the Kolhapur Agricultural Produce Markets Act, 1945. A Market Committee has been appointed which works along the lines laid down in the Act with effect from the 1st March 1949.

Market Area.

A market as defined in the Bombay Agricultural Produce Markets Act, 1939, includes the market proper, a principal market yard and a sub-yard, if any. It is in fact a trading area in which substantially homogeneous conditions of supply and demand are encouraged. This definition presupposes (1) free mobility of the product within a given area so that when the price in one part of the market is out of gear in relation to the other, there will be a movement into, or out of, that part from and to other parts, and (2) easy communications among the potential buyers and sellers in the area so that each one of them has an access simultaneously to the market information. According to the recommendations of the Expert Committee (1955), appointed to review the Bombay Agricultural Produce Markets Act, 1939, ordinarily there should be one market in any given market area for the purpose of trading in agricultural commodities regulated under the Act. Before determining the market area for any regulated market, care should be taken to ensure that such an area is contiguous so as not to promote diversion of trade, that there is sufficient produce to be marketed and that, there are adequate resources for the market committee to enable it to provide reasonable facilities for orderly marketing of the agricultural produce. In this market area, the control of the market committee may be direct where possible and indirect where inevitable, depending upon the proximity of the committee's office and the staff at its disposal, but that its control must operate throughout the market area is the essential condition for the success of the regulated market within that area.

The market area of the Kolhapur Market Committee extends to Karvir, Bhudhargad and Radhanagari talukas and Panhala mahal.

Within the market area, there can be several types of markets which are but part and parcel of the regulated market. Control over the market proper, i.e., market yard and the place around it will have to be direct. This is really the primary wholesale market where goods are received from merchants, who might have purchased the same elsewhere for being marketed. The Act makes it obligatory for every market committee to have at least one market yard. It also requires that all agricultural produce brought in the market must pass through the market yard. The market yard of the Kolhapur Market Committee is situated in Shahupuri peth of Kolhapur. There are no sub-yards and the market proper extends to the area within the municipal limits of Kolhapur municipal borough. The market committee has already proposed to extend the present market area to Hatkanangale, Kagal and Shahuwadi talukas and Gagan-Bavada mahal and to open sub-market yards at Vadgaon in Hatkanangale taluka, Murgud in Kagal taluka and Malkapur in Shahuwadi taluka

Income and Expenditure.

The income and expenditure of the Kolhapur Market Committee as given in the annual report for the year 1955-56 reveal that in the year under review there was a deficit to the tune of Rs. 7,842-5-9. Income was Rs. 76,142-15-3 and expenditure Rs. 83,985-5-0. Similar figures for the years 1953-54 and 1954-55 show surpluses to the tune of Rs. 36.176-13-10 and Rs. 40,603-8-0 respectively. The reason for deficit in the year 1955-56 was that the market committee had to pay income-tax of Rs. 31,373-7-0 during that year. (It made an appeal to Government to exempt market committees from paying income-tax whereupon Government agreed to do so). Moreover the committee took a loan of Rs. 5 lakhs in the same year for which an expenditure of Rs. 6,893-12-0 was incurred by way of registration of documents, registration fee and stamp duty.

Market Functionaries.

A market can successfully function only when there are sellers to sell the commodity and buyers to buy the same and when they are assisted by a personnel which is required for completing the process of buying and selling. A transaction is said to be complete only when the buyer agrees to buy and the seller agrees to sell at a particular price; the commodity is weighed; and the sale note showing the description of the commodity, its weight, price and the market charges deductable therefrom is delivered to the seller and the cash due to the seller is paid against the delivery of goods.

Agriculturists (i.e. the sellers), though at liberty to sell their produce directly to the buyer (i.e. traders), generally employ an agent to act on their behalf and to conduct the transaction, as the act of sale requires some experience. These middlemen may be sellers or buyers, may be either commission agents i.e., adatyas, or brokers i.e., dalals. Their main job is to study the needs of the buying trade, assemble goods and sort them, and regulate the flow of goods.

Traders.

The trader, as defined under the Act is a person buying or selling agricultural produce as principal. These traders fall into four categories, viz., 'A' class traders who buy in a market yard and sell in the yard. 'B' class traders who act only as commission agents in the market yard or sub-yards, 'C' class traders who buy anywhere in the market area excepting the market yard and sub-yard and sell only in the market yard and sub-yard and 'D' class traders who buy anywhere in the market area but sell only to consumers. But all the four categories were not functioning in the market area in 1955-56.

Other Functionaries.

The two other important functionaries arte weighmen and hamals. The job of the former is to weigh the goods when the seller agreed to sell them at a particular price. In executing this weighmen discharge an important function in as much as the correctness of the weight is the first safeguard for the seller to get full value for his produce. Regulated commodities are weighed by them for which they get remuneration from the agriculturists, i.e., the sellers. In 1955-56 rates of remuneration were Re. 0-0-3 per "gul rawa" and Re. 0-0-9 per two groundnut bags; and hamuli was Re. 0-0-6 per gul rawa and Re. 0-0-6 per groundnut bag. Weighment is done on the premises of general commission agents who supply weighmen with standardized weights and measures and a balance. It is incumbent upon the agents to supply weights and measures according to the provisions of the Bombay Weights and Measures Act.

The other functionaries in the market are composed of a heterogenous group playing a secondary role in connection with the transfer of goods from one place to another or from one person to another. They include cartmen and other transport operators. Their contribution to the successful functioning of a regulated market is indirect.

The objectives of a well organised market can be served only when those participating in the market behave properly. The Expert Committee, appointed in 1955 by the Government of Bombay to review the working of the Bombay Agricultural Produce Markets Act, 1939, particularly emphasized this point. The success or failure of a market depends mainly on the behaviour of the market functionaries. Though agricultural producers are users of the market, they act through the General Commission Agents, and as such, it is these agents who are the main market functionaries who can make or mar a market. The regulation of their entry and control over their behaviour, therefore, require special attention.

The qualifications of market functionaries would depend upon the nature of the function. The General Commission Agent is the mainstay of the market, because as an agent to the seller, he is the custodian of the goods belonging to his principal and he is responsible for making payment to him. He is also expected to furnish a manifesto of the number of packages and their size, grade and quality, to the market committee and render the best service to the seller. To discharge the last function, he must be in close touch with the market mechanism. To qualify himself for the job, a Commission Agent must have sufficient financial resources to finance his business, must have a shop where goods can be inspected and auction-sale can be held, a godown where the produce can be stored, and weights, etc.

The Expert Committee have recommended that the basic qualification for allowing a person to function as 'A' and/or 'B' class trader should be an assurance to the market committee of his financial solvency and the guarantee that it would be maintained during the period he is allowed to function in the market, and his ability to maintain proper equipment, viz., a shop, a godown, stamped weights and measures and personnel to help him. They have further recommended that the conditions of solvency should be applicable to the other class of traders as well and should include his past conduct of a trader, his undertaking to conform to the provisions of the Act and the directions of the market committee and his capacity for the experience in trading.

Now a days, there is a tendency on the part of traders to work as commission agents. The Royal Commission on Agriculture and the Bombay Provincial Banking Enquiry Committee and several other committees have pointed out in the past the danger of one person being allowed to play a dual role. The two functions are in a way complementary to each other, but what is undesirable' is the process of merging one class of business with the other and it should not be allowed to thrive to the detriment of the market. In the main, when a commission agent selling goods on behalf of others is also a seller of his own goods, there is every likelihood that he will sell his goods first. To that extent the dual role inflicts injury on the sellers, i.e., the agriculturists, who appoint him as agent. Secondly, when he is an agent of a seller and also of a buyer, especially on behalf of a trader, in the same transaction, he may buy cheaper and sell dearer and charge his commission to both parties. These evils have got to be checked. The Expert Committee has therefore recommended that no commission agent ('B' class trader) should be allowed to act as an agent for two parties in the same transaction, nor should he be allowed to buy goods as a principal when he is himself the agent of the seller.

The following table gives the number of licence-holders in the Kolhapur Agricultural Produce Market Committee for the years 1950-51 to 1955-56. These include (1) general commission agents, (2) 'A' and 'B' class traders, (3) combined licences comprising ' A' class traders and general commission agents and (4) weighmen:-

TABLE No. 8.

TABLE SHOWING NUMBER OF LICENCE-HOLDERS IN KOLHAPUR MARKET COMMITTEE FOR THE YEARS 1950-51 TO 1955-56.

The following tables give figures of arrivals and sales of regulated commodities-Gul and groundnut:-

(1) giving figures of arrivals and sales of gul rawas and groundnut bags in the Kolhapur market, for the years, 1947-48 to 1955-56,

(2) giving figures of arrivals of gul and groundnut in the market area of Karvir, Bhudhargad and Radhanagari talukas and Panhala mahal for the years 1951-52 to 1955-56:-

TABLE No. 9.

TABLE SHOWING ARRIVALS AND SALES OF REGULATED COMMODITIES IN THE KOLHAPUR AGRICULTURAL PRODUCE MARKET COMMITTEE.

TABLE No. 10.

TABLE SHOWING ARRIVALS OF REGULATED COMMODITIES IN SUB-YARDS AT KARVIR, RADHANAGARI, BHUDHARGAD TALUKAS AND PANHALA MAHAL.

The Kolhapur market is the biggest market for gul in Maharashtra State. The average turnover of this regulated commodity is Rs. 5 crores. Gul rawas are exported by railway wagons and by motor trucks, although the latter are more expensive.

Exports from Kolhapur.

Export of gul to Gujarat area constitutes the bulk of exports, on an average 42 per cent. of this total. The arrivals of gul rawas increased from 20,55,000 in 1952-53 to 32,96,668 in 1955-56 and the export to Gujarat from 8,42,000 in 1952-53 to 15,00,000 (45½ per cent.) in 1955-56.

The following table gives figures of export of gul rawas from Kolhapur to various areas viz., Gujarat, Bombay, Karnatak, Konkan, Kathiawar (Saurashtra), etc.:-

TABLE No. 11.

TABLE SHOWING EXPORTS OF GUL RAWAS FROM KOLHAPUR TO VARIOUS AREAS FOR THE YEARS 1952-53 TO 1955-56.

continued..

Market Cess.

Under Section 11 of the Act, every market committee is empowered to levy fees on agricultural produce brought and sold by licencees in the market area. The Kolhapur Market Committee has levied the following cess ad valorem:-

The market cess on gul and groundnut both shelled and unshelled collected by the market committee for the last five years is given below:-

Prices of regulated Commodities.

Prices in the Kolhapur market naturally reflect the general price trend in the country.

The following table gives the prices for the quinquennium 1951-52 to 1955-56:-

TABLE No. 12.

TABLE SHOWING PRICES [(Prices are in Bengali Maunds of 82 2/7 lbs.).] OF GUL AND GROUNDNUT PREVAILING AT KOLHAPUR DURING THE QUINQUENNIUM, 1951-52 TO 1955-56.

N.B.- Table prepared from the Annual Reports submitted by the Market Committee, Kolhapur.

Gul was a controlled commodity from October 1950 and so the maximum rates were fixed by Government. But since 1951 the actual rate prevalent in the market was less than the controlled rate due to the increase in arrivals of gul in the market. The price of gul went down because of a favourable season. Similar was the case with groundnut which was not controlled. At the beginning of 1954-55 season, prices were higher but afterwards there was a decline which had an unhealthy effect on agriculturists. The year 1955-56 saw in the beginning a fall in prices, then stabilisation at a level and again an upward trend. The average price was Rs. 14-1-0 and Rs. 14-13-0 for gul and groundnut respectively, per Bengali maund. In January the level of price of gul and groundnut was at a peak level viz., Rs. 22-4-0 and Rs. 19-6-0 respectively, but afterwards there was a slight decline.

Storage Facilities.

The better functioning of a regulated market depends to a certain extent on the facilities available for storing the regulated commodities brought by sellers, often from a distance. There was only one licensed warehouse in the Kolhapur market owned by the Shetkari Sahakari Sangh Ltd., Kolhapur, but it was turned into a godown. It has a capacity to store 32,000 gul rawas at a time. In 1955-56 there were about 300 hired godowns owned by traders and general commission agents. The market committee did not own any godown or ware-house.

Credit Facilities.

There are ten co-operative banks in Kolhapur and merchants obtain loans on the security of goods. The rate of interest charged is about 9 per cent.

Development of Market Yard.

As stated in the report, the Committee experienced much difficulty in the administration of the Act on account of want of a separate enclosed market yard. A vigilant watch over the working of the market operators could not be kept, as the present yard is scattered. The trading in gul and arrivals of commodities in large volumes in the peak period has created another difficulty of sales by open auction. The market committee in 1955-56 had in its possession, 97 acres 35 gunthas of land on the Poona-Bangalore Road and about 27 acres of Government land are proposed to be handed over to the committee and when that is done the Committee hopes to provide facilities such as a cattle shed, drinking water facilities etc.

Government has appointed an ad-hoc Gul Market Yard Construction Committee for the purpose of carrying out various plans of development and construction work of the market yard. This committee intended to develop the yard completely by constructing all buildings and godowns required by traders. The market committee has obtained a loan of Rs. 5 lakhs from. Government for the construction of a gur market at Kolhapur.

Rates prevailing in the markets of Sangli, Baramati, Shrirampur, Karad, Tasgaon, etc, are received and the same are exhibited on the notice board for information to the various functionaries  in the market.

Market Intelligence.

The Government of India permitted Andhra and Madras States to export gul to foreign countries. The Market Committee of Kolhapur tried its best to secure such a licence because Kolhapur gul is considered to be the best in the whole State. The permission to this effect was granted in 1954.

Gadhinglaj Market Committee.

The Agricultural Produce Market Committee, Gadhinglaj was constituted under the Kolhapur Government Notification No. MK-GD/47, dated 15th November 1947, as per Kolhapur Markets Act, 1945. After the merger of Kolhapur State into the then State of Bombay in 1949, the market area of the Gadhinglaj Market Committee was notified under notification No. P.M.A.6253, dated 18th July 1954, for regulation of agricultural produce-gul, groundnut (shelled and unshelled) and chillies. The Bombay Agricultural Produce Market Act, 1939, was applied to the market area from 1949.

Area of operation and Market Yard.

Area of operation of the Gadhinglaj Market Committee is Gadhinglaj taluka, 37 villages of Kagal taluka and Ajra mahal. The principal market yard is situated in the "Pirajirao Peth" of Gadhinglaj. There is no sub-yard.

Income and Expenditure.

Income and expenditure figures of the Committee as given in the annual report for the year 1955-56 reveal that in the year under review there was a surplus to the extent of Rs. 3,885-14-0.

Income and expenditure figures for the last four years given below will give a clear picture about the working of this market committee:-

The table given below gives the number of licence-holders in the Market Committee. These include general commission agents ('A' and 'B' classes) traders ('A', 'B' and 'C' classes) and weighmen for the years 1951-52 to 1955-56:-

Market Functionaries.

TABLE No. 13.

TABLE SHOWING MARKET FUNCTIONARIES IN THE AGRICULTURAL PRODUCE MARKET COMMITTEE, GADHINGLAJ FOR THE YEARS 1951-52 TO 1955-56.

The following two tables show the figures of arrivals of regulated commodities, viz., gul, groundnut (shelled and unshelled) in the Gadhinglaj market yard and sub-yards at Halkarni, Ajra and Murgud. Table No. 14 gives figures of arrivals and sales of regulated commodities in the Gadhinglaj market yard and table No. 15 shows figures of arrivals at sub-yards of Halkarni, Ajra and Murgud:-

TABLE No. 14.

TABLE SHOWING ARRIVALS AND SALES OF REGULATED COMMODITIES IN THE GADHINGLAJ MAKET FOR THE YEARS 1951-52 TO 1955-56.

N.B.-Prepared from the Annual Reports of the Agricultural Produce Market Committee, Gadhinglaj.

TABLE No. 15.

STATEMENT SHOWING ARRIVALS OF REGULATED COMMODITIES IN HALKARNI, AJRA AND MURGUD SUB-YARDS FOR THE YEARS 1951-52 TO 1955-56.

N.B.-Prepared from the Annual Reports of the Agricultural Produce Market Committee, Gadhinglaj.

Market cess obtaining in this market, under the Act, is shown below:-

Cess collected by the Market Committee for two years is shown below: -

Market Charges.

In addition to the market cess, other market charges such as commission, hamali, etc., are levied by the market committee. They are as under: -

Prices of regulated commodities.

In the following two tables, an attempt is made to show wholesale and retail prices and those during harvest time and off-season in the Gadhinglaj market in respect of regulated commodities. Table No. 16 shows wholesale and retail prices of gul, groundnut and chillies and table No. 17 shows prices during the harvest time and those during off-season. The classification-'A', 'B', 'C' and 'D' is explained here:-

TABLE No. 16.

STATEMENT SHOWING WHOLESALE, AND RETAIL PRICES IN THE GADHINGLAJ MARKET.

(Prices in Rs. per B. Md.)

1. B - Primary wholesale price.

2. C - Secondary wholesale price.

3. D - Retail price.

TABLE No. 17.

STATEMENT SHOWING PRICES OF REGULATED COMMODITIES DURING HARVEST-TIME AND DURING OFF-SEASON IN THE GADHINGLAJ MARKET.

continued..

continued.

N.B.-Table prepared from the material received from the Gadhinglaj Agricultural Produce Market Committee (Ref. Replies to the questionnaire on Agricultural Price Variations Enquiry Committee).

As stated in the report of the committee, the price of gul in 1955-56 was higher in the beginning of the season at Rs. 14-0-0 to Rs. 16-15-0 per Bengali maund, but afterwards it declined to Rs. 10-0-0 and again rose to Rs. 15-0-0 and remained steady till the end of the season. Prices for groundnut and chillies were low in the beginning but by January 1956, there was an upward trend maintained till the end of the season. Due to this rise in prices, agriculturists as well as traders were benefited. In the beginning of the season groundnut prices were Rs. 9-0-0 to Rs. 10-4-0 per B. Md. and increased up to Rs. 19-2-0 during the season. Chillies prices were in the beginning Rs. 35-0-0 to Rs. 60-0-0 per B. Md. but later on increased up to Rs. 83-12-0. Thus it can be said that there were no major ups and downs in gul prices but there was a substantial increase in prices of chillies.

Storing Facilities.

There are no licensed warehouses in this market but there are 80 godowns in the yard out of which only six are built (pucca) while the rest are used as godowns for the purpose of storing agricultural produce by the general commission agents and traders, on hire basis.

Local banks help the dealers by advancing against goods at the rate of 44 to 55 per cent. of current market prices.

Octroi Duty.

The municipality levied octroi charges on the regulated commodities brought in the market for sale. The charges were levied at a flat rate of one anna per maund. This rate worked out to:-

Traders and general commission agents in Gadhinglaj market suffer considerable inconvenience for want of a branch office or an out-agency of the Southern Railway in the Peth and have to contact Sankeshwar, nine miles away for transport facilities.

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