Agriculture Produce Marketing Committee (APMC)

Agricultural markets in India are mainly regulated by state Agriculture Produce Marketing Committee (APMC) laws.

Objective :

To ensuring fair trade between buyers and sellers for effective price discovery of farmers’ produce.

Regulate the trade of farmers’ produce by providing licenses to buyers, commission agents, and private markets,
Levy market fees or any other charges on such trade, and
Provide necessary infrastructure within their markets to facilitate the trade.

Issues identified by the Committee :

Most APMCs have a limited number of traders operating, which leads to cartelization and reduces competition, and
Undue deductions in the form of commission charges and market fees. Traders, commission agents, and other functionaries organise themselves into associations, which do not allow easy entry of new persons into market yards, stifling competition.
The Acts are highly restrictive in promotion of multiple channels of marketing (such as more buyers, private markets, direct sale to businesses and retail consumers, and online transactions) and competition in the system.

Agriculture Produce Marketing Committee – Key Issues and Analysis:

Availability of buyers for farmers’ produce and infrastructure: The Trade and Commerce Ordinance provides buyers the freedom to buy farmers’ produce outside the APMC markets without having any license or paying any fees to APMCs.

The Contract Farming Ordinance provides a framework for buyers and farmers to enter into a contract (before a crop season starts) which guarantees farmers a minimum price and buyers an assured supply.
The third Ordinance amends the Essential Commodities Act to provide that stock limits for agricultural produce can be imposed only when retail prices increase sharply and exempts value chain participants and exporters from any stock limit.
The three Ordinances aim to increase the availability of buyers for farmers’ produce, by allowing them to trade freely without any license or stock limit, so that an increase in competition among them results in better prices for farmers.
While the Ordinances aim to liberalise trade and increase the number of buyers, this may not be sufficient to attract more buyers.
in 2006, Bihar repealed its APMC Act with a similar objective to attract private investment in the sector and gave charge of the markets to the concerned sub-divisional officers in that area. This resulted in a lack of required marketing infrastructure as the existing infrastructure eroded over time due to poor upkeep.
In unregulated markets, farmers faced issues such as high transaction charges and lack of information on prices and arrival of produce.
The Standing Committee on Agriculture (2018-19) recommended that the central government should create marketing infrastructure in states which do not have APMC markets (i.e. Bihar, Kerala, Manipur, and certain union territories).

Gramin Agriculture Markets:

Most farmers lack access to government procurement facilities and APMC markets.
Small and marginal farmers (who hold 86% of the agricultural landholdings in the country) face various issues in selling their produce in APMC markets such as inadequate marketable surplus, long-distance to the nearest APMC markets, and lack of transportation facilities.
The average area served by an APMC market is 496 sq. km., much higher than the 80 sq. km. recommended by the National Commission on Farmers (Chair: Dr. M. S. Swaminathan) in 2006.
The Standing Committee (2018-19) noted that Gramin Haats (small rural markets) can emerge as a viable alternative for agricultural marketing if they are provided with adequate infrastructure facilities.
It recommended that the Gramin Agricultural Markets scheme (which aims to improve infrastructure and civic facilities in 22,000 Gramin Haats across the country) should be made a fully funded central scheme and scaled to ensure presence of a Haat in each panchayat of the country.
The central government has proposed development of basic infrastructure in Gramin Haats through the National Rural Employment Guarantee Scheme and of marketing infrastructure through the Agri-Market Infrastructure Fund.
The Fund will be set up by NABARD to provide Rs 1,000 crore to states at a concessional interest rate for development of marketing infrastructure in Gramin Haats.

The central government has informed that this bill allows intra-state and inter-state trade of farmers’ produce beyond the physical premises of APMC markets and other markets notified under the state APMC Acts.

The Centre has said that this bill will also permit the “electronic trading of scheduled farmers’ produce (agricultural produce regulated under any state APMC Act) in the specified trade area”.