Institutional Reforms and Spatial Efficiency in Agricultural Supply Chains in India

Abstract

This paper reviews the institutional reforms in agricultural commodity markets in India and examines their implications for spatial efficiency in supply chains of the markets. In order to remove inefficiencies in the traditional supply chain, the Agricultural Produce Marketing Committee (APMC) Act was revised, and a Model APMC Act 2003 was introduced with the provisions for establishing private markets/yards, direct purchase centres, farmers markets for direct sale, contract farming and promotion of public–private partnership in the management and development of agricultural markets. Initiative has been taken to set up a National Agricultural Market as an all-India electronic trading portal to develop a ‘common national market’ for agricultural commodities. The institutional reforms in agricultural marketing system since the early 1990s appear to have contributed towards improving the spatial efficiency in rice and wheat markets. The finding of an increase in the extent of spatial integration of markets after the reforms and the tendency of the prices to move towards a common stochastic trend lend support to the idea of setting up a ‘common national market’ for agricultural commodities. Further reforms in the marketing system with better infrastructure facilities would strengthen market integration and improve efficiency in the supply chains. JEL classification: O13, Q13, Q18.