While retail chains opened by business houses are running into rough patches at several places, the states are acting fast to allow private parties to set up markets for agriculture produce, ending the state monopoly in this field.

At least 10 states and the Union Territory of Chandigarh have identified more than 30 sites for setting up modern terminal markets in the private sector for trading in fruits, vegetables and other perishable farm produce.

This opens the doors for the private sector to invest in setting up and running agricultural markets to link farmers with the end-users of the perishable produce.

Under this novel initiative aimed at reforming agricultural marketing, the proposed terminal markets with state-of-the-art facilities will be constructed by private enterprises with the support of the selected financial institutions and the state governments by way of minority equity participation, according to sources in the ministry of agriculture.

The state governments will identify land for such markets and create legal and regulatory framework for enabling the private entrepreneurs to operate the markets on a level playing field with existing markets.

The states have to amend their agricultural produce marketing committee Acts as a pre-requisite for setting up the private terminal markets, the ministry sources pointed out.

The Central or state governments' equity participation in these ventures would be limited to a maximum of 49 per cent and determined through a competitive bidding process taking into account the market or fair value and not the face value of the project.

The proposal for setting up these markets under the National Horticulture Mission was approved by the Cabinet Committee on Economic Affairs in November 2006.

The agriculture ministry has already circulated the operational guidelines of the scheme to the states which have amended their APMC Acts to facilitate direct marketing and setting up of markets in the private sector.

The terminal markets will operate on the Hub-and-Spokes format. Under this, it will constitute the hub, which will be linked to a number of collection centres, constituting the spokes, located in key production centres to facilitate easy access to markets by the farmers.

The markets will be set up by corporates or other private enterprises or cooperatives by themselves or through the outsourcing route. The concerned private entity could even be a consortium of entrepreneurs from agri-business sectors, cold stores, transporters, warehouses or other agri-infrastructure providers.

They would be free to levy user charges for their services. The facilities to be provided at the markets will include electronic auction, cold chain and logistics support from the primary collection centres located at convenient places.

"The objective is to provide professionally-managed competitive alternative marketing structures that provide multiple choices to farmers for the sale of their agricultural produce", says the agriculture ministry's note on scheme circulated to the states.

The mandatory electronic auction system will ensure transparency in the market transactions and price fixation.

The states which have already identified the sites for such markets include Andhra Pradesh, Bihar, Madhya Pradesh, Maharashtra, Orissa, Punjab, Rajasthan, Tamil Nadu, West Bengal, Nagaland and Chandigarh.

The governments of Madhya Pradesh, Punjab and Chandigarh have also issued notices inviting expression of interest for setting up these markets.

Maharashtra has intimated to the Centre that it has identified 100 acres of land in Mumbai for offering to the prospective operator of the terminal market. The process is on to locate suitable sites in Nasik and Nagpur.

West Bengal government has identified 3 locations in Kolkata where the land is being acquired for setting up terminal markets.

It has also told the agriculture ministry that about 10 to 15 acres of land is also available in Purba Medinipur and Hooghly areas for such markets. The state government has initiated the process of amending the APMC Act for this purpose.

Among other states, Madhya Pradesh is in the advance stages of selecting the private parties for operating the proposed markets in Bhopal and Indore where land has already been earmarked for this purpose.