• The Centre has for long been asking states to facilitate agricultural produce market committee (APMC) reforms to give better market access and prices to farmers.
  • States have been adopting the Act since the coronavirus crisis happened, thus ensuring better prices and profits for farmers.

More on news:

  • The Agricultural Produce Trade & Commerce Facilitation Act: Centre has proposed a central law for dismantling the monopoly of agricultural produce market committee (APMC) mandis in wholesale trading of farm commodities.
  • States can continue to charge market and licensing fees from buyers and arhtiyas for all transactions within the boundaries of the mandis. 
  • Farmers, too, may prefer to sell in APMC mandis, given the existing infrastructure (auction platforms, facilities for grading, sorting and cleaning of produce, weighbridges, godowns, etc) and advantages of dealing with multiple buyers assembling there
  • Agriculture being a state subject under the Constitution, any central legislation seeking to remove barriers to trade and creating a unified national market for farm produce could trigger a fresh debate on federalism.

How are APMCs run and what’s their job?

APMC(Agriculture Produce Marketing Committee)

Functions of APMC

  • APMCs are agricultural marketing boards established by state governments in the 1960s under the APMC Act.
  • The aim of these boards is to ensure that farmers get a fair price for their produce and are safeguarded from exploitation by middlemen or large retailers.
  • Traders are issued licences to operate within the market and private traders are not allowed to buy the produce directly from farmers.
  • Produce is brought to the market and sold through auction. 

Need to reform APMC

  • Increased middleman: An increased number of middlemen formed a virtual barrier between the farmer and the consumer.
  • Lack of transparency: The price-setting mechanism is not transparent and has often led to cartelization by APMC agents, who procure the produce from farmers at low prices and sell it to retailers at a higher price. 
  • Fragmentation of Market: The fragmentation of markets hinders the free flow of agro- commodities from one market area to another and multiple handling of agri-produce and multiple levels of mandi charges end up escalating the prices for the consumers without commensurate benefit to the farmer.
    • Ideally, a regulated market should serve farmers within a 5km radius and a command area of 80sq. Km.
    • In reality one mandi serves around 450sq. km, creating accessibility issues for farmers.
  • Inadequate Infrastructure: The existing infrastructure for storage, sorting, grading and post-harvest management is inadequate. 
  • Farmers pay a variety of taxes that increase their costs. Retailers and traders face multiple barriers in these APMC-regulated markets.
  • Most state APMC laws today permit first sale of farm produce to take place only in notified mandis within the particular tehsils or talukas. Buyers, too, need to obtain individual licenses from each APMC in order to transact.

Reason for states to oppose APMC reforms:

  • Agriculture is on the State List and so as to achieve efficiency in agricultural markets, state governments have enacted their own legislation.
  • States have built a monopoly in mandis and earn significant cess from transactions taking place in these markets. Despite efforts by the Centre, states have been lukewarm to the plan of distributing the set-up among multiple stakeholders.

Efforts made by centre to reform APMC:

  • The Centre introduced the Model Agricultural Produce and Livestock Marketing (Promotion & Facilitation) Act, 2017, to provide farmers other marketing channels. 
    • To abolish the fragmentation of market within the State/Union Territory (UT) by removing the conception of ‘notified market area’ in the regulation of Agricultural Produce and Livestock Market Committee (APLMC). 
    • In simple terms, APLM provides recognition of a State/UT as a single market.
    • In addition to cereals, pulses and oilseeds, the Act provides geographical restriction-free trade transaction of agricultural produce including commercial crops like cotton, horticulture crops, livestock, fisheries and poultry.
    • Disintermediation of food supply chain by the integration of farmers,  exporters, processors, bulk retailers and consumers.
    • There is a clear separation of functions and powers between the Director of Agricultural Marketing and the Managing Director of State/UT Agricultural Marketing Board. The former is responsible for carrying out regulatory functions, while the latter would have to look after the developmental responsibilities under the Act.
    • Creation of a conducive environment to set up operative private wholesale market yards and farmer-consumer market yards, to enhance competition among different markets.
    • Promoting direct interface between farmers and processors/bulk-buyers/exporters/end users to reduce the price spread to benefit both producers and consumers.
    • Enable declaration of warehouses/silos/cold storages and other structure/space as market sub-yard to provide better market access/linkages to farmers.
  • The Essential Commodities Act, 1955, that controls trade and commerce of certain commodities will be amended to help realize better prices for farmers by letting them choose their buyers and through deregulation of some crop items.
  • e- NAM: National Agriculture Market (eNAM) is a pan-India electronic trading portal which networks the existing APMC mandis to create a unified national market for agricultural commodities.  Small Farmers Agribusiness Consortium (SFAC) is the lead agency for implementing eNAM under the aegis of Ministry of Agriculture and Farmers' Welfare, Government of India.


Image Source: financial express