Agricultural Produce Marketing Committees

In India, there are agricultural markets known as mandis spread across different areas within each state. These markets are overseen by the Agricultural Produce Marketing Committee (APMC) under the control of the State Governments. The APMC Act grants the states the authority to set up and manage these agricultural markets.

What is APMC?

The Agricultural Produce Market Committee (APMC) is a system managed by the State Government, focusing on agricultural marketing, which falls under the jurisdiction of the state.
APMCs establish yards or mandis in market areas to oversee the trading of specified agricultural products and livestock.
APMC was introduced to protect farmers from being forced into selling their produce at low prices due to pressure from creditors and middlemen.
APMC ensures that farmers receive fair prices and timely payments for their agricultural products.
APMC also regulates the trading practices in agriculture, resulting in several advantages, including:
- Reducing the need for unnecessary middlemen in the agricultural supply chain.
- Enhancing market efficiency by reducing trading costs.
- Safeguarding the interests of producer-sellers (the farmers).

APMC Benefits

The APMC committee was set up to protect farmers from being taken advantage of by moneylenders and middlemen.
These committees had a crucial role in ensuring that the prices of agricultural products from farms to retail shops stayed reasonable and that farmers received their payments on time through auctions at APMC markets.
APMCs were also responsible for providing storage facilities like warehouses to farmers.
APMCs organized farmer markets, enabling farmers to sell their produce directly to consumers.
APMCs played a part in stabilizing and regulating price fluctuations.

APMC Issues

APMC Monopoly: One major concern is the dominance of APMC (Agricultural Produce Market Committee), which has limited farmers’ access to better buyers and consumers to diverse suppliers.

Cartelization: When a select group within APMC forms a cartel, they intentionally avoid competitive bidding, setting prices to their advantage. This results in artificially inflated prices for agricultural products.

Entry Barriers: Accessing these markets is challenging due to steep license fees and high shop rents. This has discouraged new players and kept APMCs mainly in the hands of a few elite individuals, often with political connections.

Conflict of Interest: APMC acts both as a regulator and a market provider, but this dual role can lead to conflicts of interest. Frequently, market members and chairpersons are chosen from the same agents who operate in the market, undermining its regulatory function.

High Costs: Farmers bear the brunt of high commissions, marketing fees, and APMC taxes, which add significant costs to their production.

To address these APMC-related issues, the Government of India introduced the Model APMC Act of 2003, aiming to bring more fairness and competition to agricultural markets.

Model APMC Act 2003

Under the APMC Act, farmers have the freedom to sell their produce without having to take it to the APMC Mandi. They can choose their buyers.
However, if a farmer doesn’t use the Mandi, they are ineligible to run for a position in the APMC marketing committee.
The model Act allows for alternative markets, such as direct purchase centers and private market yards.
APMCs now have added responsibilities, including ensuring full payment to farmers, encouraging private involvement in APMC management, and displaying information on quantities and prices near the entry gate.
The Model Act requires the establishment of a ‘State Agricultural Produce Marketing Standards Bureau’ for grading, standardizing, and certifying product quality.
It also provides guidelines for contract farming.
Market fees are now collected at a single point on the sale of specified agricultural products within a market area.
Provisions are in place to address disputes among stakeholders.
The Model Act emphasizes using APMC earnings to create marketing infrastructure.

Issues in Model APMC Act

The current legislation has led to a conflict of interest because it designates the APMC as both the regulator and the entity responsible for registration.
State governments are hesitant to change their APMC laws since they generate significant income from them.
Certain states have imposed obstacles by charging exorbitant licensing fees for establishing alternative markets or by mandating a minimum distance between private markets and APMC markets.

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