Agricultural produce market committee

The concept of agriculture produce market regulation programme in India dates back to British period as raw cotton was the first farm produce to attract the attention of the Government due to anxiety of British rulers to make available the supplies of pure cotton at reasonable prices to the textile mills of Manchester (UK). Consequently, first regulated market (Karanja) under Hyderabad Residency Order was established in 1886 in the Country and the first legislation was the Berar Cotton and Grain Market Act of 1887, which empowered British Resident to declare any place in the assigned district a market for sale and purchase of agricultural produce and constitute a committee to supervise the regulated markets. This Act became the model for enactment in other parts of the country. An important landmark in the agricultural marketing scene in the country has been the recommendation of the Royal Commission on Agriculture, 1928 for regulation of marketing practices and establishment of regulated markets. One of the measures taken to improve the situation was to regulate the trade practices and to establish market yards in the countryside. In pursuance, Government of India prepared a Model Bill in 1938 and circulated to all the States but not much headway was made till independence. Later, most of the States enacted Agricultural Produce Markets Regulation (APMR) Acts during sixties and seventies and put these in operation. All primary wholesale assembling markets were brought under the ambit of these Acts. Well laid out market yards and sub-yards were constructed and for each market area, an Agricultural Produce Market Committee (APMC) was constituted to frame the rules and enforce them. Thus, the organized agricultural marketing came into existence through regulated markets.

Prior to independence, the major concern of the Government policy related to agricultural marketing was to keep the prices of food for the consumers and agro-raw materials for the industry in check. However, after independence, the need to protect the interest of farmers and to provide them incentive prices to augment the production of agricultural commodities was also felt. Further, problems of local money lenders extorting high amounts of foodgrains from the farmer, at throwaway prices, as interest were common throughout the country. Recognizing the defects like losses to the farmers in terms of undue low prices, higher costs of marketing and considerable physical losses of the produce in the agricultural marketing system which the farmers had to face, the Government, with a view to establishing a mechanism to monitor the market conduct, introduced from time to time several mandatory regulations. Regulation and development of primary agricultural produce markets was taken up as an institutional innovation and construction of well laid out market yards was considered as an essential requirement for regulating the practices in primary wholesale markets.

APMCs operate on two principles:

1. Ensure that farmers are not exploited by intermediaries (or money lenders) who compel farmers to sell their produce at the farm gate for an extremely low price.
2. All food produce should first be brought to a market yard and then sold through auction.

Each state which operates APMC markets geographically divide the state. Markets (mandis) are established at different places within the state. Farmers are required to sell their produce via auction at the mandi in their region. Traders require a license to operate within a mandi. Wholesale and retail traders (e.g. shopping mall owners) and food processing companies cannot buy produce directly from a farmer.

Some of the salient features of the APMC Model Act 2003 are as follows

1) Facilitates contract farming model.

2) Special market for perishables.

3) Farmers, private persons can set up own market.

4) Licensing norms relaxed.

5) Single market fee.

6) APMC revenue to be used for improving market infrastructure.

However, not all states have passed the bill. Some states have passed but neither framed rules nor notified it. Thus, inter-state barriers continue. Further, Union Budget 2015 proposed to create United National Agriculture Market with the help of State Government and NITI Ayog.

There are many problems faced by farmers due to the restrictions imposed by the APMC Act. Even after receiving the produce, like some traders delay payment to farmers for weeks or months. If payment is made at the time of sale, then the trader may arbitrarily deduct some amount, on the excuse that he has not received payments from the other parties. To avoid tax, some traders do not give sale slips to farmers. As a result, it is difficult for the farmer to prove his income to get loans from banks. On average, the farmer is able to receive barely 25% to 33% of the final retail price. Middlemen receive a double commission (both from seller and buyer), thus making consumers pay for this spread. Also middlemen do not pass the benefit to either side. During peak seasons, when they buy from farmers at low prices, they do not drastically reduce the prices to final consumers. Conversely, during lean seasons, when consumer prices are high, the farmers do not get higher returns on their produce.

Further, since these APMCs markets are often in districts, some farmers cannot afford to take their produce to faraway APMC markets both in terms of time as well as the cost of transport. As such, they often sell their produce at a cheap price closer to their growing areas. Additionally, though the mandis charge multiple entry, exit, and other fees, the infrastructure remains poor, with a lack of cold-storage and transport facilities.

• National Agricultural Cooperative Marketing Federation of India
• E-NAM

• Maharashtra State Agriculture Marketing Board [MSAMB]: Homepage
• http://mrunal.org/2013/08/food-processing-nuisance-of-apmc-acts-commission-agents-marketing-of-agricultural-produce-issues-and-constrains-for-gs-mains.html