Agricultural Produce Marketing Committees (APMC), History, Benefits, Challenges, Model APMC Act

Agricultural Produce Marketing Committees: In India, agricultural markets, commonly known as mandis, are established at different locations within the states, dividing the state into various units. These markets are regulated by the Agricultural Produce Marketing Committee (APMC), which operates under the respective State Governments. The APMC Act empowers the states to establish and govern these agricultural markets.

APMC benefits

• The APMC committee was introduced to safeguard the farmers from exploitation by creditors and other intermediaries.
• These committees were also expected to ensure that the farm-to-retail price does not spike unreasonably and that timely payments are made to the farmers via the auctions in the APMC markets.
• APMCs also were mandated to provide storage facilities such as go-downs etc. to the farmers.
• APMCs also were to arrange for farmer markets so that the farmers could sell their produce to the consumers directly.
• APMCs also helped in controlling price fluctuations.

APMC issues

• Monopoly of APMC: Among the most significant issues is the issue of the monopoly of APMC that has deprived farmers of better customers, and consumers of original suppliers.
• Cartelization: The monopoly of a few is called cartelization. Agents of APMC get together to form a cartel and deliberately restrain from higher bidding.
  • The produce is thus procured at a manipulatively discovered price and sold at a higher price.
• Entry Barriers: License fee in these markets is highly prohibitive. Further, over and above the license fee, rent/value for shops is quite high which has kept away competition.
  • Due to this reason, in most places, only a group of village/urban elite operates in APMC. For example, Many APMCs in northern India are managed by politicians.
• Conflict of Interest: APMC plays the dual role of a regulator and market provider.
  • Its role as a regulator is undermined by a vested interest in trade. More often, members and the chairman are nominated/elected out of the agents operating in that market.
• High commission, taxes, and levies: Farmers have to pay commissions, marketing fees, and APMC cess which shoot up the costs of production.

To resolve the above-mentioned issues related to the APMC, the Government of India introduced the Model APMC Act of 2003.

Model APMC Act 2003

• According to the model APMC Act, the farmer doesn’t need to bring his produce to APMC Mandi.
  • The farmer can directly sell its produce to whomever he wants.
  • However, if he doesn’t bring his produce to the mandi, then he can’t stand for election to the APMC marketing committee.
• The model Act allows alternate markets such as direct purchase centers, private market yards/mantis, etc.
• Increased responsibility of APMCs: Provisions were made like Full payment, promotion of private partnership in the management of APMCs, display of quantity brought, and prices near arrival gate.
• The Model Act mandates the establishment of the ‘State Agricultural Produce Marketing Standards Bureau for Grading, Standardization, and Quality Certification.
• The Model Act provides for the provision of contract farming.
• Single point levy of market fee on the sale of notified agricultural commodities in any market area.
• Provisions were also made for resolving disputes arising between the stakeholders
• The Model Act provides for the creation of marketing infrastructure from the revenue earned by the APMC.

Issues in Model APMC Act

• The model legislation has given rise to a conflict of interest because the APMC has been made the regulator/registering authority.
• State governments are reluctant to reform their APMC legislation, as it generates huge revenues.
• Some states have created entry barriers by prescribing either prohibitive license fees for setting up such markets, or the minimum distance between private markets and APMC markets.

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