APMC Act: Know about Agricultural Produce Market Committees (APMC)

By : Neha Dhyani

Updated : Feb 3, 2022, 8:37

Thousands of farmers protested controversial farming practices in the state capital as they were afraid that changes to the APMC law would strip the minimum support price (MSP) and put them at the mercy of multinationals and large corporations. In addition, two major issues of the peasant movement were:

  • Fear that the minimum support price (MSP) will not be enforced when private mandi's appear
  • Amendment of the Agricultural Products Sales Committee (APMC) Law

What is the APMC?

The Agricultural Produce Market Committees (APMC) is a marketing agency established by the state government to eliminate the exploitation of farmers by intermediaries who force the sale of agricultural products at very low prices. All foods must be on the market and must be sold through auctions. The marketplace and mandi are located in various locations throughout the states. Traders are licensed to operate in the market. Shopping centre owners, wholesalers, and retailers are not allowed to purchase products directly from farmers.

Issues with the APMC

  • 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

To solve the above problems related to APMC, the government introduced the APMC Act of 2003 and eNAM.

Background of APMC

In India, the history of agricultural market regulation programs dates back to the colonial era when raw cotton was first produced to attract the attention of the British government. The rulers wanted to supply pure cotton to a textile factory in Manchester (UK) at a reasonable price. As a result, the first regulated market was established under the Hyderabad Residency Order in 1886, and the Berar Cotton and Grain Market Act was passed in 1887. The law allowed British residents to declare markets for the sale and purchase of agricultural products anywhere in their assigned districts and to establish a committee to oversee regulated markets.

In 1928, the Royal Agricultural Commission recommended the establishment of regulated markets to improve trade practices and establish market yards in the country. As a result, the Government of India created a model law in 1938 and circulated it to all states, but little progress was made until it became independent.

After independence, many states enacted the Agricultural Market Ordinance (APMR) and established market yards and sub yards. The Agricultural Markets Commission (APMC) was established in each market area to develop and enforce rules to prevent the exploitation of farmers by creditors and other intermediaries.

Why is the APMC Act essential for farmers?

The 1964 law has been amended several times to protect farmers from abuse and exploitation by intermediaries during the pricing, weighing, measurement, or post-transaction payment of produce.

The APMC method includes a wide range of changes: To create a revolving fund to implement the lowest price system to protect farmers' interests, allow contract farming companies to purchase directly from farmers at pre-agreed prices, etc.

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FAQs about APMC Act

  • What is an APMC yard?

Agricultural Produce Market Committee (APMC) or Regulated Market Committee (RMC) yards are managed by the Market Commission to regulate reported agricultural and livestock marketing physically and electronically, including all the structures, enclosures, open spaces, warehouses/silos/packhouses, cleaning, sorting, packing, and processing units that exist on the market committee of the defined market area.

  • What is the minimum support price?

The minimum support price is the price set by the Government of India for agricultural products that are purchased directly from farmers. This rate is intended to ensure that farmers have the minimum profit for harvesting when the price in the open market is lower than the cost incurred.

  • Why was MSP introduced?

During the Green Revolution, Indian politicians realized that farmers needed incentives to grow food crops. Otherwise, they would not grow crops like wheat or rice as they were labour-intensive and didn't get a lucrative price. MSP was introduced in the 1960s to motivate farmers and promote production.

  • How many APMCs are associated with eNAM?

Currently, 1000 stores from 18 states and 3 UTs are connected to the eNAM network.