All About APMCs

Why and how the APMCs were started to manage the distribution of agricultural produce in India? What led to its downfall and what does Farm Bill Act (2020) hold for them?

There is little doubt in the fact that agriculture during the British era broke the backs of Indian farmers and their livelihoods to get the raw materials needed for their country’s development in the cheapest possible manner. In those times farmers had no right over what they had grown, would not get fair prices and were forced to grow crops which did not help him in any way.

Post-independence saw another type of exploitation of the farmers where in even though they had a right to what they grew they had no say in how much they should sell it for. Farmers have since time immemorial been price takers and never the price setters. Just like how the Green Revolution transformed Indian Agriculture into a self-sustaining and commercial one, there was a need for a revolution in the marketing of agricultural output produced by farmers to get them the remuneration they deserve and to make sure that the produce is efficiently utilized to feed the population of the country. 

 

Birth of APMCs

The required reform in agricultural marketing started with the thought of establishment of regulated markets to control the process of who sells what, where, for how much and to whom. The idea took shape in 1886 under the Hyderabad Presidency Order in Karanja for cotton. The Berar Cotton and Grain Market Act, 1887 was passed giving British the power to name any place as a market within the district and form a committee to supervise the trading. 

A major step toward improving of agricultural marketing was when the Royal Commission on Agriculture, 1928 recommended setting up of regulated markets and regulation of marketing practices. The then government of India passed a model bill regarding this in 1938 and notified all the states but not much head way was made until independence.

After independence, the local money lenders, traders and former zamindars of the colonial era were the main enemy of farmers. They exploited the farmers by not paying fair prices for their agricultural produce. This went on to such an extent that the farmers were pushed into a vicious cycle of debt and distressed sales.

Owing to such atrocities on the farmers, the state governments ratified Agricultural Produce Markets Regulation (APMR) Acts in the 1960s-70s. Under this act, an Agricultural Produce Marketing Committee (APMC) was formed to lay down and enforce rules and regulations to be followed by all the parties participating in marketing of agricultural produce. This was the first major step taken towards protecting the farmers of India.

 

Journey of APMCs

Initial Growth:

APMC’s took charge of the marketing practices occurring in the region which fell under each committee’s jurisdiction. The area of the state was divided into several regions and each region had its own committee. By the end of 1950, the country had only 286 regulated markets. This rose to 6,630 APMC by February 2019. Such huge expansion was accompanied with few shortcomings of the act which was affecting the farmers adversely who should have benefitted from the act.

Setbacks of the APMC Act:

The growth of the regulated markets in the beginning gained some traction as the rules and regulation levied by it on the marketing of agricultural produce was thought beneficial to the farmers.

  • Slowly it started taking the shape of a monopoly of APMC’s. Conditions arose where in the commission agents working for the APMC started exploiting the farmers. The same old problem of farmers receiving less remuneration and consumers paying high sum for the products was seen across the country.
  • Cartelization of the auction process by the commission agents due to high financial or political power became a nuisance. This concealed the actual reason for which the committees were established.
  • Farmers started facing a problem of high market fee and taxes levied on them which increased the cost involved in marketing. The farmers spent a lot to sell their produce, but that cost was not included in the price that they received for it.
  • Delayed payment for their produce was a major drawback which suffocated the farmers.

 

 

Amendments:

To curb such malpractices Model APMC Act, 2003 was brought into practice.

  • This act gave little freedom to the farmers to sell directly to the buyers in case of a contract farming arrangement. But to do so they still had to pay a market fee.
  • Farmers/traders/retailers were given permission to set up market in the area. But the investment to do so was so high and was a major barrier to the small farmers who were the majority.
  • Promotion of value addition was another responsibility of the APMC like – grading, cleaning, primary processing etc. These were not at all explained to the farmers and even if they had to get it done special charges were applied.
  • Market led extension was to be followed by the APMC to provide clear knowledge to the farmers regarding the process and agricultural marketing. Such a step was taken very rarely by the APMC

Lot of such problems and inefficient management of the system led to a downtrend of APMC.

The APMC acts were highly restrictive in introducing several different channels of marketing to the farmers which can get them a better price for their produce. Less number of traders within the APMC led to cartelization and exploitation of farmers eventually.

 

Farm Bill Act in 2020

The Farmers’ Produce Trade and Commerce (promotion and Facilitation) Ordinance, 2020 was passed to release the farmers from the clutches of the APMC.

  • Under this act the farmer can sell his produce within his state or between neighboring states outside the areas marked under APMC and other markets notified under APMC. Such a trade can be conducted in any place of producing, collecting, processing, or storing of the produce. This will be called as trading in an outside area.
  • Electronic trading platforms set up by firms, societies or companies having a permanent account number can be utilized to sell the produce of a farmers.
  • No market fee/tax/cess will be levied on the trading of farmers’ produce in an outside area. 

A supply chain which ensures that the farmers get the correct remuneration and the consumers do not pay to fulfill the greed of the middlemen is of critical necessity. At Farmers Mandi, this puzzle is integrated with novel technologies to make everyone’s life easier so as to benefit everyone in the supply chain of getting food from land to mouth.

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