Since agricultural marketing is a state concern, the Agricultural Produce Market Committee (APMC) is a system that falls under the state government. The APMC Mandis govern the livestock and agricultural products notified in the market region. The purpose of the APMC was to prevent farmers from making distressed sales due to being coerced and exploited by creditors and other middlemen.
The APMC regulates agricultural trade activities and ensures fair pricing and prompt payments to farmers for their produce. This has various advantages, including
- Ineffective middlemen are being removed.
- Reduced market charges, which leads to increased market efficiency.
- The interest of the producer-seller is effectively protected.
Agricultural Produce Market Committee: Background
In India, the history of agricultural market regulation programs dates back to the colonial era when raw cotton was first grown to attract the British government. The monarchs desired to supply pure or refined cotton to a textile factory in Manchester (UK) at a reasonable price.
- Subsequently, the first coordinated market was established under the Hyderabad Residency Order in 1886, and the Grain Market and Berar Cotton Act were enacted in 1887.
- The law allowed British residents to declare markets for the trade of agricultural products anywhere in their assigned districts and to establish a commission to oversee regulated markets.
- The Royal Agricultural Commission recommended the establishment of organized markets in 1928 to enhance trade methods and show market properties in India.
- As a result, the Indian Government created a model law in 1938 and distributed it to all states, but little progress was made until it became independent.
- During the 1960s and 1970s, the Agricultural Produce Markets Regulation (APMR) Acts were adopted and implemented in most states.
- These Acts were enacted to cover all critical wholesale assembly marketplaces.
- In 2015, with the support of state governments and NITI Ayog, the Union Budget proposed the plan to establish a United National Agriculture Market.
- After independence, many states enacted the Agricultural Market Ordinance and established market grounds and sub yards.
- The Agricultural Markets Commission (APMC) was established in each market area to develop and enforce rules to prevent the exploitation of agriculturalists by beneficiaries and other intermediates.
APMC Full Form
APMC Full Form stands for Agricultural Produce Market Committee. The Agricultural Produce Marketing Committee (APMC) Act gives the concerned State Governments the power to announce commodities, identify markets and market areas where regulated commerce occurs, and form APMCs responsible for the markets' smooth operation.
A state's entirety is divided into market areas, each of which is administered by market committees established by the state governments.
Objectives of APMC
The following are the Agricultural Produce Market Committee's (APMC) goals:
- Creating an effective marketing strategy.
- Promotion of agricultural exports and agri-processing.
- Specify methods and systems for establishing an efficient infrastructure for agricultural output marketing.
Model APMC Act, 2003
In 2003, the Indian government drafted a model APMC Act as the first step toward agricultural market reform. The following are some key characteristics of the Model APMC Act 2003:
- Increasing the viability of the contract farming (processing/marketing companies agree to production support at fixed pricing) paradigm.
- Perishables have their market.
- Providing opportunities for farmers and individuals to establish their markets.
- Relaxed licensing regulations
- Revenue from the APMC will be utilized to improve market infrastructure.
The provisions under the Model APMC Act were as follows-
- A contract for buyers and farmers
- Direct purchase
- Private wholesale markets
- New market channels except for the markets for APMC.
APMC act and the committee guarantees that farmers receive fair prices and timely payments for their goods. In addition, two major issues of the peasant movement were:
- Fear that the minimum support price (MSP) will not be enforced when private Mandi appears.
- Amendment of the Agricultural Products Sales Committee (APMC) Law.
Issues with the APMC Act
To solve the below problems related to APMC, the government introduced the APMC Act of 2003 and eNAM.
- Market fragmentation
- High market fees or fee incidents
- Few markets
- Lower credit line
- Licenses are subject to restrictions
- Asymmetric market information
- Decreased remuneration for farmers and high brokerage costs
- Inadequate marketing infrastructure
e-NAM and APMC
The National Agriculture Market (NAM) is an electronic trading platform that connects all of the APMC mandis in India to create a single national market for agricultural products. The e-NAM portal offers a single-window service for all APMC-related information and services, including:
- arrivals of commodities and prices
- offers to buy and sell trade
- among other services, the provision of responding to trade offers
Even as agricultural produce continues to flow via the mandis, the NAM lowers transaction costs and information irregularity. The states can manage agriculture marketing in accordance with their agri-marketing legislation, which divides the State into different market regions, each of which is managed by a distinct Agricultural Produce Market Committee and imposes its own set of marketing regulations, including fees.
The advantages eNAM offers to APMC are:
- Computerized record of financial data.
- Decreasing the requirement of staff.
- Complete statement on trade.
- Recording of real-time arrival.
- Examine cost trends, arrival, and trading actions.
- Free Software for System integration/ Mechanization of recording dealings.
Shortcomings of APMC
The shortcomings of the Agricultural Produce Market Committee are as follows-
- Monopoly of APMC: Monopoly in any industry is undesirable (with a few notable exceptions), whether exercised by a government agency, an MNC firm, or an APMC. Farmers are denied access to better customers, while consumers are denied access to original suppliers.
- Entry barriers: These markets have extremely high licence fees. Farmers were prohibited from operating in a lot of markets. Additionally, in addition to the licence cost, the rent and value of the stores are relatively high, discouraging competition. A small elite group typically runs APMC from the village or city.
- Cartelization: It frequently happens that agents in an APMC band together to form a cartel and purposefully refrain from placing greater bids. Produce is bought at a price that was artificially discovered and then sold for more money. Participants then divide the spoils, leaving farmers in the dark.
- High commissions, levies, and taxes: Costs are increased by farmers having to pay commissions, marketing fees, and APMC cess.
The topic of the APMC is very relevant from the UPSC Exam perspective. To cover the topic, one must refer to the Current Affairs from time to time. Studying about the topic can prove beneficial in covering the UPSC Agricultural Optional Syllabus.
APMC Act UPSC Question
Question: Which of the following statement(s) is / are correct?
- As per the Model APMC Act, the buyer doesn’t have to pay APMC charges if the produce is sold directly outside the APMC area and if no facility provided by the APMC is used.
- Due to the freedom given to the buyer and the seller, there is resistance seen towards reforming APMCs on lines of the Model APMC Act among the states.
Select the correct code from the options given below:
- Only 1
- Only 2
- Both 1 and 2
- None of the above
Answer: Option B
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