Agriculture Produce Market Committee (APMC) - Examination of Objectives, Benefits, Significance, Issues & More

The Agriculture Produce Market Committee (APMC) results from the Centre’s concerted efforts in agricultural market reforms. In the initial years, APMC freed the farmers from exploitation and eliminated malpractices. However, with time, the APMCs lost their growth and market facilities. The Indian government has passed the Farmers’ Produce Trade and Commerce (Promotion and Facilitation) Act, 2020. This act aims to reform agricultural marketing in India. The farmers have argued that the amendment to the APMC Acts will impact the Minimum Support Price (MSP).

Considering the significant controversy over the farm laws in India, the Agriculture Produce Market Committee is one of the important topics for upcoming UPSC IAS, Prelims, and Main exams. In this article, we shall study the APMC significance, objectives, and related issues.

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What is the Agriculture Produce Market Committee (APMC)?

The Agriculture Produce Market Committee is often abbreviated as APMC. The Agricultural Produce Market Committee is the regulator of the agricultural commodity markets. It is constituted as per APMC Acts for managing the agricultural markets. APMCs operate under the State Governments in India.

History of Agricultural Produce Market Committee

• The idea of regulating agricultural markets in India traces back to the British colonial era.
• During the British Raj, the focus initially centered on raw cotton.
• The government aimed to ensure a stable and affordable supply of pure cotton for Manchester's textile mills in the UK.
• Consequently, India's inaugural regulated market, Karanja, emerged in 1886 under the Hyderabad Residency Order.
• The Berar Cotton and Grain Market Act of 1887 marked the first legislation, authorizing British residents to designate market areas and form committees for overseeing agricultural transactions.
• This Act served as a blueprint for similar regulations across the nation.

Objectives of the APMC

• To manage the farm to the retail price at adequate levels
• To ensure timely payments to the farmers in the APMC markets.
• To limit the Distress Sale by the farmers
• To prevent exploitation of farmers by creditors and other intermediaries.

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How e-NAM provide benefits to APMC?

The e-NAM stands for National Agriculture Market. It is an electronic trading portal operating all over India. The e-NAM portal provides a single window for services related to APMC. It forms a unified national market by linking all existing Agricultural Produce Market Committee (APMC) mandis. The e-NAM provides some benefits for an APMC. Some of the benefits are:

• Software for Recording transactions
• Real-time analysis of price trends and trading activities
• Records of financial information are generated automatically.
• Reducing the requirement for manpower
• It reduces information irregularity and transaction costs

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Issues associated with the current APMC System

• Monopoly in any trade (with a few exceptions) is bad, whether exerted by a multinational corporation, the government, or APMC.
• Better customers are denied to farmers, while consumers are denied access to sources.
• It’s fairly uncommon for agents in an APMC to form a cartel and refrain from bidding for greater prices.
• Produce is bought at a rigged price and then resold at a higher cost.
• The spoils are then divided among the participants, leaving farmers cold.
• In some areas, the cost of getting a licence is excessively high.
• Farmers were barred from participating in several markets.
• Aside from the licence fee, shop rent/value is relatively high, discouraging competition.
• APMC is usually governed by a small group of village/urban elite.
• The APMC is both a market participant and a regulator.
• As a result, vested interests in the lucrative trade harm the agency’s ability to regulate.
• Despite their inefficiencies, they are adamant about maintaining control. Members and the chairman are normally chosen and elected from among the market’s agents.
• Farmers must pay commissions, marketing fees, and the APMC cess, all increasing expenses.

Significance of the APMC Act for Farmers

• APMC safeguards the farmer’s interests. It prevents farmers’ exploitation by creditors and middlemen.
• APMC regulates agricultural trading practices.
• APMC Improves market efficiency by decreasing market charges
• APMC also protects producer-seller interest.
• APMC Act creates a revolving fund for implementing the Floor Price Scheme.
• APMC allows direct procuring of farm produce by contract farming companies with a predetermined agreed price.
• APMC provides an environment for the smooth functioning of the demand and supply chain.

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Why has the Farmers’ Produce Trade and Commerce (Promotion and Facilitation) Act of 2020 been criticized?

• Punjab, Haryana, and western Uttar Pradesh farmers sell their crop production at the MSP through APMC mandis. They are protesting due to fear of losing MSP.
• Farmers argue that the Act will weaken mandis. It will erode their entitlement to a remunerative price.
• Farmers fear that
  • There will be unscrupulous and unregulated traders.
  • This threatens the risk of the MSP system being phased out.

What Are The Issues Of The Agriculture Produce Market Committee?

The APMC Act provides the trade of agricultural produce in a designated market area. The APMC Act levied charges on farm produce irrespective of the place of sale. Some things could be improved with the working of the Agriculture Produce Market Committee. They are: –

• Huge Transportation and intermediation cost
• Price Volatility is another issue.
• Inadequate market infrastructure
• Restrictions on the sale of produce outside APMC markets
• Lack of market information like processing units and storage facility
• Agricultural Markets are Fragmented, reducing the efficiency of APMC.
• High market fees or charges
• Fewer markets and credit facilities
• Asymmetrical market information
• Remuneration price to farmers is very less

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What is the Minimum Support Price? How is it associated with APMC?

The Minimum Support Price (MSP) is the price of an agricultural product that the government purchases directly from the farmer. It is set by the Government of India to safeguard the farmer to a minimum profit over the cost incurred. The farmers sell their produce at the Agriculture Produce Market Committee mandis to get the appropriate MSP. The Commission recommends the MSP for Agricultural Costs and Prices (CACP) to the government.

What are the concerns associated with the Farmers’ Produce Trade and Commerce (Promotion and Facilitation) Act, 2020?

The act focuses on the intra-state and inter-state trade of farmers’ produce. The farmers can sell their products beyond the APMC and other state-notified markets. Important Features of the Act are: 

• The Act allows trade in ‘outside trade areas’. Outside trade areas include factory premises, warehouses, silos, farm gates and cold storage.
• The Act provides competitive alternative trading channels facilitating lucrative farmers' prices.
• It also promotes barrier-free trade through electronic trading in the predetermined trade area.

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About Model APMC Act of 2003

The Model APMC Act was passed by the Indian government in 2003. The act provides for the establishment of infrastructure for the agricultural marketing of farm produce.

Objectives of the APMC Act 2003

• To develop an efficient marketing system
• To promote agri-processing and agricultural exports

Salient features of the APMC Act 2002

• The act divides the State into market areas. The market area is administered by a separate Agricultural Produce Market Committee (APMC).
• The act allows the establishment of new markets by growers, legal persons, and local authorities.
• It promotes directly selling farm produce to contract farming sponsors from the farmer’s field.
• It establishes a single-point levy of market fees on notified agricultural produce.
• There is a provision for dispute resolution among different parties.

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What is the Agricultural Produce Market Committee Yard?

A Market Committee manages Agricultural Produce Market Committee (APMC) Yard. A market area is a place under the purview of the APMC. It extends to the entire Sub-district. The trade carried out in this market area is liable for payment of the mandi fee.

What Reforms Are Required For Efficient Working Of APMC?

• Emphasize Sample-based Sales: Establish grading and sorting facilities near the farm gate to save time and costs and eliminate double transportation in APMCs.
• Enhance Transparency in Trading: Conduct APMC trades through open auctioning involving multiple bidders for direct trade between buyers and sellers.
• Reduce Distress Sales: Provide storage facilities and loans against warehouse receipts near APMCs to avoid distress sales of agricultural produce.
• Implement Uniform Mandi Fees: Impose a fee of 0.25% or 0.50% for food grains, oilseeds, and fruits & vegetables to compensate for APMC losses.
• Expand Agricultural Markets: Establish "mini-markets," like GRAMs, to increase agricultural markets as the Ashok Dalwai Committee recommends.
• Lift Restrictions on Essential Commodities Act: Remove pricing, stockholding, and technology adoption restrictions imposed by the ECA to facilitate agricultural trade.
• Abolish restrictions: Remove restrictions on the inter-state trade of agricultural commodities outside APMC mandis. This frees up trade.
• Improve information dissemination: Share timely, accurate information about market prices and demand. This helps farmers get better prices.

Essential Commodities Act 1955

• The government has used the ECA to control the production, sale, and distribution of various "essential" commodities to ensure consumer affordability.
• The ECA safeguards customers from unreasonable price hikes on essential goods but has negatively affected farmers.
• Consequently, the growth of integrated value chains throughout the country has yet to be improved.
• The Defence of India Rules of 1943 was enacted after India was ravaged by famine and the effects of World War II.
• It has been the law since the days of shortage.
• India had to rely on wheat imports from the United States due to back-to-back droughts in the mid-1960s, and the country was branded a “ship to mouth” economy.
• Conversely, India is currently the world’s largest rice exporter and the world’s second-largest wheat and rice producer after China.
• The Essential Commodities Act of 1955 is legislation enacted by the Government of India.
• Its primary objective is to ensure the availability and control of the price of essential commodities.
• The Act empowers the government to declare certain commodities as "essential" to regulate their production, supply, and distribution.
• During emergencies like war, famine, or natural disasters, the government can impose stock limits on essential commodities to prevent hoarding and black marketing.
• The Act gives the government the authority to fix prices of essential commodities to protect consumers from excessive price fluctuations.
• Over the years, the Essential Commodities Act has been amended to adapt to changing economic conditions and market dynamics.

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Questions to Ace Your Exams
Q1. What is the role of the Agricultural Produce Market Committee?
Ans.1 Governments of every state established a marketing board known as Agricultural Produce Market Committees, APMC. The board was set up to stop the practice of exploiting and pressuring farmers to sell their products at lower prices. It was set up to save the interest of the farmers, to save them from being exploited by large retailers, and also to ensure that the price gap between farm and retail doesn't get too wide. The Agricultural Produce Market Committee mandis located all across the nation are connected by the National Agriculture Market. This electronic trading gateway spans India to create a single national market for agricultural commodities.

Q2. Who is the chairman of the APMC?
Ans 2 APMC serves as both a market and a regulator. As a result, those with a stake in the profitable trade weaken its regulatory role. They refuse to relinquish power despite their inefficiency. Members and the chairman are often chosen or nominated from among the agents that work in that market.
Each state's Agricultural Produce Market Committee has its chairman. The chairman of Delhi APMC is Shri Gopal Rai. Shri Sheikh Ahamad Bhai is the chairman of the Nagpur Agricultural Produce Market Committee.
States have the authority to control APMCs by enacting the Agriculture Produce Marketing Regulation Acts. Before gaining independence in 1947, controlling the cost of food for consumers and agro-raw materials for industry was the main focus of government policy of agricultural marketing.

Q3. How can I get an APMC license?
Ans 3 Obtain the form for application. You can get the application form for the license from the relevant government department or the APMC's official website. Next, complete the application form by filling up all the requested information. Include the appropriate attachments in the application. The officials will check your application and confirm the information on your paperwork.
To receive the APMC license, you must pay the necessary fees. The APMC officials will grant you the license if everything is in order. Several variables, including the application's thoroughness, the effectiveness of the APMC authority, and the volume of work at the APMC office, affect how long it takes to get an APMC license. 

Q4. Which is the largest APMC market in India?
Ans 4 One of the major markets in Asia and India is the Nagpur Agriculture Produce Market Committee. The market is situated at the most ideal location, which is at the center of the country and is close to the international airport and the cargo center.

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