APMC Markets - From being a Solution to a Problem

What is the issue?

In the light of the ongoing farmer protests, here is a look at how APMC (Agriculture Produce Market Committee) markets went from being a solution to a problem.

How did the APMC act help?

• From the 1960s, there have been concerted efforts to bring all wholesale markets for agricultural produce in various states under the Agriculture Produce Market Regulation (APMR) acts.
• All states, except Kerala, Jammu and Kashmir and Manipur, enacted such laws.
• The APMC Acts mandated that the sale/purchase of agricultural commodities is carried out in a specified market area.
• Producer-sellers or traders pay the requisite market fee, user charges, levies and commissions for the commission agents (arhatias).
• These charges were levied irrespective of whether the sale took place inside APMC premises or outside it.
• Also, the charges varied widely across states and commodities.
• In the initial years, APMC acts helped remove malpractices.
• It freed the farmers from the exploitative power of middlemen and mercantile capital.
• The golden period for APMC markets lasted till around 1991.

How did APMCs become a problem then?

• With time, there was a considerable loss in growth in market facilities.
• By 2006, it had declined to less than one-fourth of the growth in crop output after which there was no further growth.
• This increased the woes of Indian farmers.
• Market facilities did not keep pace with the increase in output.
• But regulation did not allow farmers to sell outside APMC markets.
• So, the farmers were left with no choice but to seek the help of middlemen.
• Due to poor market infrastructure, more produce is sold outside markets than in APMC mandis.
• The net result was a system of interlocked transactions that robs farmers of their choice to decide to whom and where to sell.
• This, ultimately, subjected farmers to exploitation by middlemen.
• Over time, APMC markets have been turned from infrastructure services to a source of revenue generation.
• In several states, commission charges were increased without any improvement in the services.
• And to avoid any protests from farmers against these high charges, most of these were required to be paid by buyers like the FCI (Food Corporation of India).
• This resulted in a heavy burden on the Centre.
• It also increased the logistics cost for domestic produce and reduced trade competitiveness.

• Given the above drawbacks, successive governments at the Centre made attempts to persuade the states to make appropriate changes in their APMC acts.
• But for 18 long years, the progress in reforms remained slow.

What is the latest move?

• It is in the above backdrop that the Farmers’ Produce Trading and Commerce Act 2020 (FPTC Act) was brought in. Click here to know more on farm reform laws.
• The FPTC Act gives farmers the freedom to sell and buy farm produce at any place in the country.
• They can sell and buy in APMC markets or outside the mandated area, to any trader, like sale of milk.
• The Act also allows transactions on electronic platforms to promote e-commerce in agriculture trade.

Source: The Indian Express