India is agricultural land. A significant segment of the Indian population depends upon agriculture for livelihood. Hence, agriculture always remains a vital concern for the government. From time to time, the Indian government took specific measures to check the agricultural market, one among which is APMC Act.
APMC full form stands for “Agricultural Produce Market Committees.” It’s one such initiative by the respective state governments. The act intends to:
- establish a marketing board to eradicate the mishandling and manipulation of the agriculturalists by the middlemen, and
- ensure that their product gets sold at a reasonable price.
Table of Contents
What is Mandi?
APMC regulated the markets by gathering all the food produced and selling them through auctions. The concept of “Mandis” got introduced in the respective states. Mandis were the market places that fractionated the States territorially. Such markets operated through the licenses issued to the traders. APMC restricted the farmers to sell their produce directly to the wholesalers or the retailers.
The mandi system is an integral part of the Indian Agricultural sector. The recent controversy surrounding the Farmers Bill 2020 revolves around the abolition of the Mandi system to which farmers disagree. As per the new Bill, farmers are better off without the mandis as like this farmers can easily trade with the private traders and will not get restricted to the mandi alone.
History Of APMC Act
In the pre-Independence era, it was a challenge for the government to check the prices of food and agro-raw materials for the industry.
However, in the post-independence era, the situation changed drastically. The preservation of the interests of the farmers became the prime focus. Itit was necessary to provide farmers with price incentives to inflate agricultural production.
Further, various incidents of exploitation of farmers at the hand of loan sharks and money lenders highlighted the defect in the agricultural administration.
The drawbacks of poor administration lead to higher interest rates, poor infrastructure, high marketing costs and lower selling prices. Hence, the Indian government initiated various imperative canons to ensure market conduct.
Features of APMC
- APMC introduced the Yards/Mandis system in the APMC market to check the registered agricultural produce and livestock.
- To annihilate Distress Sales made by the farmers under the pressure and harassment by the loan sharks and other mediators.
- To ensure fair prices and prompt payments to the farmers for their produce.
- To regulate agricultural trade practices.
- To eliminate mediators.
- To enhance the efficiency of the agricultural markets.
Shortcomings of APMC Act
APMC adopts a monopolistic approach, and hence, it prevents the farmers from selling their produce to better customers and consumers.
Mandis require licences to operate. The fees for such license fees are excessive. Some markets do not allow farmers to operate. Further, high license fees, rent and shop values are unreasonably high. Such high prices tend to keep the competition at bay. In some states, only wealthy g.roups of villagers were allowed to operate under APMC.
Formation of Cartels
APMC often gives rise to the formation of cartels deliberately restraining the higher bids. Usually, the products are procured at manipulatively lower prices from the farmers and sold at sky-high prices. “Spoils are then shared by participants, leaving farmers in the lurch”.
The commission, Marketing Fee, APMC Cess
Farmers pay unreasonably high fees, taxes and levies. In addition to it, many states do apply Value-added Tax (VAT).
Evolution of APMC
Before the inception of APMC, customary markets were prevalent in India. Trends like village sales of agricultural produce, post-harvest immediate sales by farmers were widespread.
Problems highlighted by the “Royal Commission ” in 1928 were high marketing costs, nominal selling price, unreasonable levies and exploitation of farmers. The demand for regulated markets in India.
The regulation of markets tends to eliminate unhealthy and unethical trade practices, eliminating unreasonable costs and providing satisfaction to both manufacturers and buyers in the market area. Thus, many states adopted the Agricultural Produce Market Regulation Acts (APMR Acts) at the dawn of the seventies.
Over time and changed circumstances, the benefits of the age-old APMR Act withered away, which led to the realisation of the need for amended or new provisions.
Amendments in APMC Acts
In 2002 following amendments were recommended for the APMC Act:
- Permission for establishment of direct agricultural markets or APMC markets by the private traders and the Cooperative sector.
- Employing efficient marketing strategies to attract investments
- The proposition of a Model Act on Agricultural Marketing by the Union Ministry of Agriculture after consultation with State governments.
Model APMC Act 2003
- The act segregated the State into several market areas managed by a separate Agricultural Produce Market Committee (APMC) having their marketing policies and regulations.
- “Legal persons, Producers, and Local Authorities” were authorised to establish new agricultural markets in any area.
- The Act removed the obligation on the producers to sell their agricultural produce through existing markets operated by APMC.
- Separate regulations for “Special Markets” in the existing market area for specified agricultural commodities
- Introduction of Contract Farming.
- The act contained provisions regarding dispute resolution between the private market and the Market.
- Building required infrastructure for markets from the earnings of the APMC
Model Agricultural Produce and Livestock Marketing (Promotion & Facilitation) Act, 2017/ APMC Act 2017
To fulfil the loopholes of the previous act, in April 2017, the Union Ministry of Agriculture and Farmers Welfare formulated the Model Agricultural Produce and Livestock Marketing (Promotion & Facilitation) Act, 2017. Said bill repairs the existing legal provisions concerning agricultural marketing and replaces the Agricultural Produce Market Committee (APMC) Act.
Features of Model APLM Act, 2017
- This Act abolished the segregated market within the State/Union Territory (UT) by eliminating the “notified market area“. Hence, the new MOdel APLM Act advocates the perception of a State/UT as a complete market.
- The Act provides “restriction-free trade transactions” of commercial agricultural products like cotton, horticultural crops, livestock, fisheries and poultry.
- The Act amalgamated farmers, processors, exporters, bulk retailers and consumers.
- Demarcated powers and functions between “the Director of Agricultural Marketing” and “Managing Director of State/UT Agricultural Marketing Board“. The act empowers the former to execute regulatory functions, and the latter was obligated to take up the growth responsibilities.
- The act permitted the establishment of private agricultural markets and farmer-consumer yards to maintain a competitive edge amongst various established markets.
- This new act promoted the direct link between farmers and bulk traders to eliminate the excess price, benefiting producers and consumers.
- Declared warehouses as market sub–yards to create enhanced market connectivity.
- Maintaining transparency in the market operations by encouraging e-trading and integrating the markets spread over the geographical boundaries
- Introduction of “single point levy of market fee” across the State markets and trading licence
- Provision of inter-state trading licence, appraisal of goods, standardisation and certification of quality.
- Elucidation of fees and commissions.
- Establishment of Special Commodity Market yard(s) and Market yard(s) of National Importance (MNI)
- Standardisation of market Committee and marketing Board
Model Contract Farming Act 2018
A new version of the Model agriculture Act got introduced in May 2018 as the Model Agriculture Produce and Livestock Contract Farming and Services (Promotion & Facilitation) Act, 2018. The said act, for the very first time, introduced the concept of Contract Farming in India. The Act was a model law on contract farming in India.
Meaning of Model Contract Farming Act
Contract Farming (CF) denotes “a system of farming, in which bulk purchasers including agro-processing/exporting or trading units enter into a contract with the farmer(s), to purchase a specified quantity of any agricultural commodity at a pre-agreed price.“
Salient Features Of Model Contract Farming Act
- The Act is persuasive and conducive and not regulatory.
- The Act emphasised heavily on the benefits of the farmers.
- Introduction of service contracting, including pre-production, production and post-production
- The Act took out the contract farming outside the scope of the APMC Act.
- Coverage of contracted producers under crop/livestock insurance in operation.
Status Quo in India
The APMC Act of 2003 governs contractual farming in India. Due to the conflict of interest between the sponsors and APMCs, the concept of contract farming has not picked up its pace yet.
Hence, in the states like Maharashtra, Haryana, Karnataka and Madhya Pradesh, contract farming is in operation at a small scale. Thus, the purpose of the Model Contract Farming Act 2018 was to accentuate the practice of contract farming in India.
In evolving the agricultural sector in India, the Model Acts introduced so far made significant transformation but could not subside the burning issue of farmer’s benefit and income. Keeping it in mind, the Government of India introduced the following three acts:
- The Farmers’ Produce Trade and Commerce (Promotion and Facilitation) Act, 2020 / Farmer Bill 2020
- The Farmers (Empowerment and Protection) Agreement of Price Assurance and Farm Services Act, 2020
- Essential Commodities (Amendment) Act, 2020
These Acts aimed at eliminating limitations placed on the holdings of private stock of agricultural produce. And doing away with the middlemen to bring the market and the farmers closer.
The Farmers’ Produce Trade and Commerce (Promotion and Facilitation) Act, 2020
- No Re strictions: Under the Act, farmers have enough liberty to choose the products to buy and sell.
- Elimination of the Cess: The Act frees the farmers from paying any cess or charges for their produce sale.
- The mechanism for Dispute Resolution: The Act provides for a separate dispute resolution mechanism for the farmers
- Trade Promotion: The trade promotes unrestricted interstate and intrastate out of the scope of the physical premises of markets set up under State APMCs.
- Efficient pricing: The Act widens the horizon of choices for the farmers by reducing the high marketing costs and arranging efficient prices for them.
- Homogeneous Market: The Act advocates creating “One India, One Agriculture Market” and works to ensure profitable harvest for the farmers.was formulated
The Farmers (Empowerment and Protection) Agreement of Price Assurance and Farm Services Act, 2020
The Act got introduced to draft a national structure on agriculture arrangements to safeguard and authorise farmers to engage with agribusiness firms, traders, wholesalers and retailers for agricultural services.
- Level playing field: This legislation empowers the farmers for working with “processors, wholesalers, aggregators, wholesalers, large retailers, exporters“.
- Transfer of risk: The Act transfers the risk of market uncertainty from the farmer to the sponsors. The farmer provides the farmers with improved infrastructure and access to modern technology and improved inputs.
- Private sector Investments: The Act aims at attracting private sector investment for developing supply chains for selling the Indian farm produce to national and global markets.
- Removal of intermediaries: The Act eliminates the system of intermediaries for farmers to engage in direct marketing and reaping the benefits of the total price.
Amendments to Essential Commodities Act (1955)
- India achieved self-sufficiency in most agri-commodities, but farmers could not reap the price benefits owing to lack of investment in cold storage, processing and export.
Despite the numerous benefits offered by the new legislation, it gets crowded with controversy as the farmers are dissatisfied with the benefits provided by the new legislation. The insecurity owing to the removal of MSP is the primary concern for the farmers
Further, in the absence of adequate infrastructure to store the crops, the farmers will be obligated to sell their products as soon as possible due to the fear of crops getting spoiled. Hence, in one way or the legislature exploits the farmers.
List of APMC Companies
- Aplomb Technology
- Hill Green Exim Inc.
- Julie Enterprises
- Rablon Healthcare Pvt. Ltd.
- Exim World Corporation
- Jeerawala Traders
- VijayKumar & Co.
- Spice & Rice
- Abrar Bros. & Co.
- Gopal Brothers
Contract Farming Companies in Maharashtra
- Pacific Herbs Agro Farms Pvt. Ltd.
- Agriculture Contract Farming
- Ambegaon Agro Contract Farming Services
- Ujjwal Shetichatra Contract Farming
- Contract Farming Consultants for Lemon Grass n Palmarosa Cultivation and Marketing with Training
- Daulat Poultry Farm
- Baramati agro ltd
- InI Farms Private Ltd
The act provides for the election of the officer-in-charge, commission-in-charge and members when such an APMC Market is formed initially under this Act.
The Act empowers the State Government or the Director or Managing Director to appoint by an order:
- An officer-in-charge for a tenure of a maximum of two years.
- A committee-in-charge for a term of a maximum of two years.
- Market Committee members from amongst the persons showcasing similar interests and in the proportion described under section 14 under the said Act.
The Officer-in-Charge of the Committee-in-charge of the Market Committee shall work under the control of the Director/Managing Director. The officer is obliged to exercise the powers and discharge the duties of the Market Committee provided under the Act.
Case Study Involving APMC Act
The case study talks about “the Indian Government’s Intervention in the Agricultural Markets through the Agricultural Produce Market Committee Act.“
In 1950, to achieve food security, the government evaluated that the farmer’s exploitation is the major roadblock in reaching this goal—the realisation that middlemen unreasonably exploit them through distress selling needed to get cured.
Hence, the state governments stepped in and independently introduced the Agricultural Produce Market Committee Acts, as per their convenience. Despite the variation in the legal framework, unanimously, the Act tends to:
- Promote transparency in the pricing of commodities
- Ensuring timely payments to the farmers.
- Encouraging PPPs in agricultural market operations.
- Publicising the details of the arrival of commodities for sale with their prices out of the Mandis.
- Division of state into markets.
The market committees looked after these markets. And Mandis was provided with the commission agents issued licenses by the government and given a shop in the mandi.
The farmers got the liberty to choose his agent. The buyers then sent in the bids for procuring the produce. Initially, the bids were genuine, but unfortunately, this is hardly the case now.
Hence, the Model APMC Act, 2003 was introduced to cover up the shortcomings. It highlighted the following concerns concerning the implementation of previous acts:
- The concept of intermediaries was never done away with by the government.
- The burden of excessive pricing got transferred to the consumers.
- Formation of cartels by the agents.
- Low bidding leads to less income for the farmers.
- Payments and exploitation of farmers by the creditors.
- Unknowingly, the governments paved the way for hoarders to set the prices of a particular commodity in the market.
Initially, The Act of 2003 tried its best to eliminate the shortcomings to reap benefits but could not succeed.
Later, various acts with the same objectives got introduced to initiate a change. The main reason farmers still face difficulties despite a “model act” is the different courses adopted by the various state governments. Some states take the issues of farmer exploitation seriously and work upon it, and some do not.
Each state incorporates its act that they modify according to them, thus creating difference and difficulty in its operations.
The Act seems to be providing the benefits, but it gets mismanaged. That is why despite various amendments and the introduction of new Model Acts over the years, the primary goal of farmer’s upliftment could not get achieved.
Achieving food security and food sufficiency is the primary concern of any nation. Before independence, India relied heavily for food on other countries. With agricultural reforms, India attained adequacy and security through the green revolution post-independence.
Even though India became independent in terms of food, the plight of farmers could not be resolved. Over the years, the government introduced various amendments and the ordinance to achieve the ultimate goal of farmer’s benefit but failed miserably.
With such considerations, the latest ordinances were passed in 2020, which caused severe controversy. Even after the protest of nine months, desired results could not be achieved. The need of the hour is to reconcile the farmer’s wishes and governmental requirements to benefit our nation’s agricultural sector ultimately.
FAQs on APMC Act
Who will act as a person of contact in case of dispute between traders and farmers?
Sub divisional magistrate of jurisdiction for the trade area of the disputed transaction.
What is e-Nam?
Electronic trading portal of the National Agricultural Market where the integrated national transactions take place
Who purchases the product from APMC?
Agents and the marketing traders enabled by the said Act.
Can anyone buy the produce directly from the farmers?
As per the new Ordinance of 2020, anyone with a PAN card is eligible to purchase directly.
How many APMC get linked to e-NAM?
Approximately 1000 markets are linked to e-NAM.