Agricultural produce market committee
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APMCs operate on two principles:
- Ensure that farmers are not exploited by intermediaries (or money lenders) who compel farmers to sell their produce at the farm gate for an extremely low price.
- All food produce should first be brought to a market yard and then sold through auction.
Each state which operates APMC markets geographically divide the state. Markets (mandis) are established at different places within the state. Farmers are required to sell their produce via auction at the mandi in their region. Traders require a license to operate within a mandi. Wholesale and retail traders (e.g. shopping mall owners) and food processing companies cannot buy produce directly from a farmer.
Some of the salient features of the APMC Model Act 2003 are as follows
1) Facilitates contract farming model.
2) Special market for perishables.
3) Farmers, private persons can set up own market.
4) Licensing norms relaxed.
5) Single market fee.
6) APMC revenue to be used for improving market infrastructure.
However, not all states have passed the bill. Some states have passed but neither framed rules nor notified it. Thus, inter-state barriers continue. Further, Union Budget 2015 proposed to create United National Agriculture Market with the help of State Government and NITI Ayog.
Examples within states
The state government of Karnataka has created APMCs in many towns to enable farmers to sell their produce at reasonable prices. Most APMCs have a market where traders and other marketing agents are provided stalls and shops to purchase agriculture produce from farmers. Farmers can sell their produce to agents or traders under the supervision of the APMC.
Farmers cannot sell produce outside the APMC mechanism. However, the government is now encouraging direct selling through 'Rautu Bazar' or to supermarkets directly. The present APMC system makes farmers vulnerable to traders' and marketing agents' price manipulations. The Government of India is considering improving the APMC Act to benefit all parties involved.
The Maharashtra State Agricultural Marketing Board runs 295 APMCs in Maharashtra, under the APMC Act enacted by the Government of India. In July, 2016, the Maharashtra State Government removed fruits and vegetables from the purview of the APMCs. The state government has urged the farmers to directly bring their produce for sale in Mumbai. Of the 307 APMCs in the state, 219 are operating, The government has granted 148 Direct Marketing Licenses of which 91 are for fruits and vegetables.The Pune APMC, meanwhile, appealed to the farmers from the state as well as from outside to bring their produce to the market and sell those directly..
In Tamil Nadu, the Tamil Nadu State Agricultural Marketing Board is the regulatory board for agricultural markets which is successfully running since 1977. 21 Market committees are established for every notified area and 277 Regulated Markets are functioning under these committees for better regulation of buying and selling of agricultural produce.
There are many problems faced by farmers due to the restrictions imposed by the APMC Act. Even after receiving the produce, some traders delay payment to farmers for weeks or months. If payment is made at the time of sale, then the trader may arbitrarily deduct some amount, on the excuse that he has not received payments from the other parties. To avoid tax, some traders do not give sale slips to farmers. As a result, it is difficult for the farmer to prove his income to get loans from banks.
On average, the farmer is able to receive barely 25% to 33% of the final retail price. Middlemen receive double commission (both from seller and buyer), thus making consumers pay for this spread. Also middlemen do not pass the benefit to either side. During peak seasons, when they buy from farmers at low prices, they do not drastically reduce the prices to final consumers. Conversely, during lean seasons, when consumer prices are high, the farmers do not get higher returns on their produce.
- "Archived copy" (PDF). Archived from the original (PDF) on 2016-04-22. Retrieved 2016-03-27.
- "Breaking APMC Monopoly: Maharashtra Takes A Bold Step To Double Farmers' Income". Retrieved 2016-07-16.