Agricultural Produce Market Committee (APMC)

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In this content we are going to talk about the Agricultural Produce Market Committee (abbreviated as APMC), the history, underlying issues with the committee and the Farmers' Produce Trade and Commerce (Promotion and Facilitation) Act, 2020.

We will know APMC meaning or what is APMC? about the APMC act, APMC Market. How is APMC established?  How APMC Works? 

Without further ado, let us hit the topic. 

What is the Issue?

The farmers in our country have expressed their outrage against all the three agriculture ordinances which were recently passed by the Government of India, particularly their objections were mostly against the provisions of the first. The farmers alleged the amendment to the APMC Acts will deprive them of the Minimum Support Price (abbreviated as MSP) and this will let them be left at the mercy of the multinational companies and to the big corporate houses.

In this article, we are going highlight the Agricultural Produce Market Committee (APMC), its history, the dreading issues with the committee, and the Farmers' Produce Trade and Commerce (Promotion and Facilitation) Act, 2020.  

APMC Market - Agricultural Produce Market Committee (APMC)

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Image: Farmers selling their products in the APMC

This is a marketing committee that operates under the State Governments of India. The APMC was initially introduced to safeguard all the farmers from the exploitation done by the creditors and by other intermediaries between them. The APMC ensures that the farm will have a retail price that does not reach unreasonably at elevated levels and they will also have timely payments which are being made to the farmers via the auctions in the APMC markets.

Before the introduction of the Farmers' Produce Trade and Commerce (Promotion and Facilitation) Act, 2020, the farmers could only sell their agricultural produce like rice, wheat, etc. at the market yards of the APMC. 

History on Farmers’ Produce Trade and Commerce (Promotion and Facilitation) Act, 2020

The Farmers’ Produce Trade and Commerce (Promotion and Facilitation) Bill was first passed in Lok Sabha on 17th September 2020 and by the Rajya Sabha on 20th of September in the year 2020. While the Bill received the President’s assent on the 27th of September in the year 2020, this turned the Farmers’ Produce Trade and Commerce (Promotion and Facilitation) Bill into Farmers’ Produce Trade and Commerce (Promotion and Facilitation) Act. 

What Does this Act Mandate?

Following the Act Mandates:

• The Act mandates the intrastate and inter-state trading of the farm production beyond the APMC and other market zones as notified under the state APMC Acts. 

• Now the farmers can trade in an area that is outside the trading area like – on-farm gates, factory premises, warehouses, silos, and also in the cold storages. 

• The Act facilitates the lucrative prices for the farmers through the help of the competitive alternative trading channels which promotes barrier-free inert-state and intra-state trading of the agricultural goods. 

• Also, the Act allows electronic trading of the farmers which are produced in the predetermined trade area. This also encourages online buying and selling of agricultural-related items. 

• Additionally, this Act will restrict the State Governments from levying any market fee or cess on the poor farmers, traders, and in the electronic trading platforms for the trading done by the farmers on the outside trade areas.

What is APMC?

Agricultural Produce Market Committee (abbreviated as APMC) is a system that operates under the State Government. This is under the state governments since agricultural marketing is a subject falling under the State. The APMC has its own Yards/Mandis in the market area which is being regulated by the notified agricultural produce and by the livestock. 

APMC was introduced in order to limit the occurrence of ‘Distress Sale’ which was suffered by the poor farmers. This sale was possible due to the pressure from the exploitation of the creditors and other middlemen. 

APMC Benefits

• APMC guarantees the best prices and also timely payments to be made to the farmers for their agricultural produce.

• APMC has other duties like regulating agricultural trading practices. This duty of APMC resulted in multiple benefits like:

• Needless intermediaries are eliminated from the market.

• The market structure became improved and it also became quite efficient as irrelevant market charges were decreased.

• The producer-seller interest is also well protected in APMC. 

APMC Act 

The Agricultural Markets in India were established and were also regulated by the State APMC Acts. Once a particular area is declared as a market area then it will fall under the jurisdiction of a Market Committee, and no other person or any agency is allowed to freely carry on their wholesale marketing activities. This undue monopoly of the Government regulated the wholesale markets, which caused many problems - this has prevented the development of a competitive marketing structure in the country, it did not provide any help to the farmers in the direct marketing, organizing retailing.

To Solve This –

The Government of India re-designed the model of Agricultural Produce Market Committee (APMC) Act in 2003. This was the first attempt to bring some reformations in the agricultural markets via APMC Act India.

• Provisions under this act were:

• New market channels other than APMC markets were to open.

• Private wholesale markets were initiated.

• Direct purchase was allowed.

• A contract for the buyers and farmers was mandated.

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

• To ensure transparency in the transactions and between the pricing system of the market area.

• To providing market-led extension and easy services to the farmers.  

• The model also took care that the farmers are paid for their products sold on the same day.

• It promoted agriculture which will eventually increase the value of the produce 

Until the year 2020, the sale of the agricultural produce could occur only at the local markets, haats, or mandis but after the passing of the Act in 2020 it allowed the farmers to sell outside APMC mandis and in various other states as well.   

Issues and Shortcoming of Agricultural Produce Market Committee Act

• Fragmentation of the market areas.

• Chance of high market fee or charges. 

• Existence of fewer markets.

• There are fewer credit facilities.

• Restrictions are imposed in the licensing.

• Asymmetrical market information can be ascertained.

• Farmers get less remuneration with expending high intermediation costs.
  Inadequate or lack of marketing infrastructure.\

• Created the monopoly of APMC – Monopoly of the trade deprived the farmers of better customers and consumers of the original suppliers.

• Entry Barriers – Due to the license fees in these markets, the markets became highly prohibitive. In many markets, farmers were not allowed to operate. 

• Cartelization is often seen, where the agents in an APMC come together to form a cartel and they will deliberately restraint it from higher bidding. The produce is procured at a very manipulatively discovered price and is sold at a much higher price. Then it is shared by the participants, leaving farmers at loss.

• High commission, taxes, and levies – The farmers are required to pay a high commission, marketing fee, the APMC cess which pushes up their costs. Apart from this many of the states impose the VAT, Value Added Tax.

• Conflict of Interest – APMC plays the dual role of being the regulator and also being the market. Consequently, the role as a regulator is also undermined and is vested by the interest in the lucrative trade. This is done despite the inefficiency control. Generally, the members and the chairman are being nominated or elected out of these agents to operate in that particular market.

• Other Manipulations – The greedy agents have a tendency to block the part of the payment for any unexplained or any fictitious reasons. Poor farmers are sometimes refused a payment slip (which would acknowledge the sale and payment) which is very much essential for them to get an agricultural loan.

Did You Know?

• APMC is facing controversy. The APMC Act has mandated the sale or purchase of the agricultural products which are to be carried out in a designated market area, and the producer-sellers or the traders must also pay the requisite market fee which the user charges, levies on it and the commissions are for the agents.  

• These charges were being levied irrespective of the sale being taken at the place inside of the APMC premises or outside it and here the charges will vary widely across all the states and the commodities. 

• The superb era for these markets ended in the year 1991 and by the year 2006, the Indian farmers were distressed as the market facilities were not keeping pace with the increased production. Also, the farmers were not allowed to sell their own products which were outside the designated APMC markets as notified. 

• This led the farmers to seek the help of those exploitative middlemen who brutally exploited them.