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Absence of suitable farm marketing legislation
Siraj-ul-Hasan
ARTICLE (December 23 2002) : Marketing legislation provides a framework to enable the farmers to sell their produce under certain rules and regulations, both individually and collectively. But in its wider sense it brings the various marketing aspects right from the market preparation of the produce till it reaches the consumer's hands under a discipline.
Various marketing aspects include preparation for market (grading, processing, packing/packaging, handling and transportation, trading and pricing).
In order to bring about improvements in marketing, it is generally believed that any measure considered necessary for its progress must be backed up by some legal power to enforce them effectively.
Before arguing for the desirability of controlling various marketing functions through some suitable legislation, the nature of various farm problems in Pakistan must be understood.
The basic problem in this regard is the imbalance between predictive capacity in agriculture and effective demand for its products.
More specifically the position is as under:
a) Productive capacity
It is increasing steadily through the application of improved production practices, mechanisation and cultivation of better varieties. By and large these new approaches have tended to increase output rather than reduce costs.
b) Effective demand
It has not kept pace with production domestically. Domestic consumption of food in Pakistan has closely followed the population increase over the years. No doubt there has been considerable substitution in food produced and consumers' habits that have moved away from starchy food towards meat, fruits, and vegetables, particularly in Urban areas.
As for the export demand, while there is a large potential market for many food products in the Gulf States, we have not yet been successful to exploit it fully for the benefit of all concerned.
c) Trading terms
Economic power can be defined as the ability to influence the allocation of resources and distribution of income. Farmers have usually been in a relatively weak bargaining position. When a farmer takes his produce to market, he has no alternative but to accept the price that is offered. But when he goes to buy his requirements of equipment and other inputs he has to pay the price asked for. Of the major economic groups, farmers stand alone and aloof in making economic decisions individually.
In order to give a boost to our agriculture, it is, therefore, imperative to improve the bargaining power of the farmers so as to enable them to control the market to their benefit.
The popular methods of market control include
i) Voluntary producers organisations, usually co-operatives,
ii) Compulsory producers organisations under public sector legislation, and
iii) Direct government intervention through price control and production control.
In Pakistan the emphasis appears to have been placed on market intervention through price control/support programmes etc.
The co-operatives or others have not been much effective due to a variety of reasons.
A brief account of these two approaches may be both interesting and relevant. There is a public sector intervention of one sort or the other in the marketing of main foodgrains, sugarcane, cotton, tobacco to name a few.
The nature of intervention depends on its specific objectives. The procurement of wheat at prices fixed from season to season, is made with three-fold objectives of meeting the food requirements of the general consumer, ensuring economic price to the growers and finally for export purposes.
Likewise, rice is procure by government for export purposes as well as to provide incentive to the growers for increased output by ensuring them better price.
In the case of sugarcane, the sugar mills have to purchase the cane at prices fixed periodically by the government.In respect of cotton government announce prices of both lint and seed cotton in each season.
The ginners have thus to purchase seed cotton from the producers at fixed prices, on the one hand, and sell their lint cotton at the specified prices. As for tobacco, prices of different grades are also fixed from time to time, below which tobacco companies are not allowed to pay to the producers for their purchases.
Of various types of producers organisations, co-operatives have provided great strength to the countervailing power of the producers in marketing their produce profitably in many countries under the following conditions:-
i) Production is concentrated in a small area, making supervision easy.
ii) The number of producers is small who produce special crops.
iii) Producers have had successful past experience in working together.
iv) Skilful leadership and good administration is available.
v) Realistic marketing objectives are set.
Unfortunately, the co-operative effect made in Pakistan, eg co-operative farming in Khanewal (Punjab) and co-operative farming service centres set-up there in 1960, could not succeed mainly due to the non-fulfilment of some or all the prescribed conditions.
Frankly speaking, the corporative marketing system of agricultural products has failed in our country.As a matter of fact some of the obstacles are inherent in the system. Others relate to the social, political and administrative environments in which co-operative societies have to work.
In Pakistan no specific legislation exist which provides a common and collective forum to the producers of various crops to arrange the marketing of their products, as are enforced in agricultural advanced countries like USA and Canada.
Perhaps advantages of marketing legislations for group selling have not yet been brought home to the planners, economists and leaders of agricultural community.
It is truly said that marketing is the weakest link in our agriculture.It is so because no marketing legislation has been made in Pakistan since independence.What we have at present, are the two pieces of legislation which were enacted, in the thirties in pre-independence days.
Although these two help the producers directly, yet these have not been instrumental in regulating the agricultural marketing in general. These are:
i) Agricultural produce (grading and marketing) Act 1937 and
ii) Agricultural produce (Markets) Act, 1939.
The former is a Federal Act and the latter is a provincial Act. The former empowers the government to formulate national grade standards of quality for different types and varieties of agricultural and livestock products and prescribe grade designation marks to indicate quality.
The Act and the General Rules framed thereunder provide for the issuance of a certificate of quality by the Agricultural and Livestock Marketing Adviser (ALMA) to the Government of Pakistan to suitable merchants to grade and mark their respective commodities with 'Pak-mark' on the basis of the prescribed standards.
Prior to 1964 the Federal Marketing Department (of which ALMA is the head) had been undertaking grading under this Act both for domestic marketing as well as for export.
Under 1960 constitution of the country, grading for domestic consumption had to be transferred to the provinces and the Grading Act was duly amended for the purpose.
Unfortunately, the provinces have not yet been able to start work in this regard. The grading for export is, however, being carried on unhampered.
It has been conducive to streamlining agricultural export trade, improving quality and obtaining better prices of the graded commodities to the ultimate benefit of the producers and nation at large.
The other Act viz Agricultural Produce (Markets) Act 1939, duly amended is being administered in all the four provinces to varying extent.
This legislation aims at
(i) regulation of trade practices in accordance with the prescribed rules and
(ii) elimination of various malpractices to safeguard the interest of the growers-sellers.
In order to achieve these objectives, wholesale markets of agricultural produce are regulated wherein all market functionaries are licensed and there charges fixed.
The Punjab province took a lead in this regard where some 325 such markets are in operation.In Sindh there are about 87 regulated markets where NWFP and Balochistan, have one or two each.
This measure has assisted the primary producers a lot to obtain an equitable deal in disposing of their products.As for the establishment and creation of government marketing departments, parastatis or other marketing organisations whether co-operatives or limited companies, there are no specified legislation in vogue.
The government departments/organisations are set up under administrative orders. The marketing co-operatives were established under the Co-operative Societies Act 1925 adapted by the provinces.
Similarly, the establishment of corporations/companies relating to marketing in general or dealing with any specific commodity or function is governed by a pre-Independence Act, the Companies Act 1913 as adapted in Pakistan.
Among other measures to streamline the marketing of farm produce in Pakistan, and marketing legislation which may provide a legal framework to the farmers for undertaking collective sale of their produce on equal terms with the buyers is considered a sine-qua-non for overall development of agriculture in Pakistan.
It is, therefore, suggested that suitable marketing legislation for compulsory enforcement may be enacted by the newly established provincial legislations for various areas/regions and products on the lines of USA/Canada marketing legislations.
The potential impact of compulsory marketing legislation depends on the degree of authority that a particular marketing plan has been granted or has been willing to exercise.
Marketing legislation enables producers to develop plans to market their produce collectively to their advantage.
Courtesy Business Recorder
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