Agricultural Produce Market Committee (APMC)

Agricultural Produce Market Committees (APMC) is the marketing board established by the state governments in order to eliminate the exploitation incidences of the farmers by the intermediaries, where they are forced to sell their produce at extremely low prices.

All the food produce must be brought to the market and sales are made through auction. The market place i.e, Mandi is set up in various places within the states. These markets geographically divide the state. Licenses are issued to the traders to operate within a market. The mall owners, wholesale traders, retail traders are not given permission to purchase the produce from the farmers directly.

This is an important topic for the Indian economy segment of the UPSC syllabus.

What is APMC?

  • Agricultural Produce Market Committee (APMC) is a system operating under the State Government since agricultural marketing is a State subject.
  • The APMC has Yards/Mandis in the market area that regulates the notified agricultural produce and livestock. 
  • The introduction of APMC was to limit the occurrence of Distress Sale by the farmers under the pressure and exploitation of creditors and other intermediaries.
  • APMC ensures worthy prices and timely payments to the farmers for their produce.
  • APMC is also responsible for the regulation of agricultural trading practices. This results in multiple benefits like:
    • Needless intermediaries are eliminated
    • Improved market efficiency through a decrease in market charges
    • The producer-seller interest is well protected

e-NAM & APMC

The National Agriculture Market (NAM) is a pan-India electronic trading portal, which links the existing Agricultural Produce Market Committee (APMC) mandis across the country to form a unified national market for agricultural commodities.

The e-NAM portal is a single-window service for any information and services related to APMC that includes:

  • Commodity arrivals and prices
  • Buy and sell trade offers
  • Provision to respond to trade offers, among other services

The NAM reduces the transaction costs and information irregularity even when the agriculture produce continues to flow through the mandis.

The states can administer agriculture marketing as per their agri-marketing regulations, under which, the State is divided into various market areas and each market area is administered by a separate APMC, which will impose its own marketing regulation that includes fees.

Aspirants can go through some relevant articles related to agriculture or their exam preparation-

Model APMC Act of 2003

The Government of India designed a model Agricultural Produce Market Committee (APMC) Act in 2003 as a first attempt to bring reformations in the agricultural markets. 

Provisions under this act were:

  • New market channels other than APMC markets
  • Private wholesale markets
  • Direct purchase
  • A contract for buyers and farmers

The Market Committees under the APMC Act, 2003 was responsible for:

  • Ensuring transparency in the transactions and pricing system of the market area
  • Providing market-led extension services to farmers  
  • Ensuring that farmers are paid for the produce sold on the same day
  • Promoting agricultural processing that will increase the value of the produce
  • Making the availability and dates public on which the agricultural produce is brought to the market
  • Promoting and establishing public-private partnerships (PPP) in these markets. 

Shortcomings in the APMC System

  1. The monopoly of APMC – Monopoly of any trade (barring few exceptions) is bad, whether it is by some MNC corporation by government or by any APMC. It deprives farmers of better customers and consumers from original suppliers.
  2. Entry Barriers – License fees in these markets are highly prohibitive. In many markets, farmers are not allowed to operate. Further, over and above license fee, rent/value for shops is quite high which keeps away competition. At most places, only a group of the village/urban elite operates in APMC.
  3. Cartelization – It is quite often seen that agents in an APMC get together to form a cartel and deliberately restraint from higher bidding. Produce is procured at a manipulatively discovered price and sold at a higher price. Spoils are then shared by participants, leaving farmers in the lurch.
  4. High commission, taxes, and levies – Farmers have to pay commission, marketing fee, APMC cess which pushes up costs. Apart from this many states impose Value Added Tax.
  5. Conflict of Interest – APMC plays the dual role of regulator and Market. Consequently, its role as regulator is undermined by vested interest in the lucrative trade. They despite inefficiency won’t let go of any control. Generally, members and chairman are nominated/elected out of the agents operating in that market.
  6. Other Manipulations – Agents have a tendency to block a part of the payment for unexplained or fictitious reasons. Farmer is sometimes refused a payment slip (which acknowledges sale and payment) which is essential for him to get a loan.

Click on the link to read more about Issues related to Indian Agricultural Sector.

Essential Commodities Act (ECA), 1955

  • The ECA has been used by the Government to regulate the production, supply and distribution of a whole host of commodities it declares ‘essential in order to make them available to consumers at fair prices.
  • The ECA gives consumers protection against irrational spikes in prices of essential commodities. However, it has acted against the interest of the farmers.
  • This has thwarted the creation of integrated value chains across the country.
  • ECA has its roots in the Defence of India Rules of 1943, when India was ravaged by famine and was facing the effects of World War II.
    • It was scarcity-era legislation.
    • By the mid-1960s, hit by back-to-back droughts, India had to depend upon wheat imports from the US and the country was labelled as a “ship to mouth” economy.
    • However, today, India is the largest exporter of rice in the world and the second-largest producer of both wheat and rice, after China.

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