Expert Committee Submits its Report on Determining Methodology for Fixing National Minimum Wage, Ministry of Labour and Employment Click here

Agricultural Produce Market Committee (APMC)

From Arthapedia
(Difference between revisions)
Jump to: navigation, search
(Created page with "<p> Agricultural Produce Market Committee (APMC) is a statutory market committee constituted by a State Government in respect of trade in certain notified agricultural or hor...")
 
 
(10 intermediate revisions by one user not shown)
Line 10: Line 10:
 
   <li>Setup and promote public private      partnership in the management of agricultural markets</li>
 
   <li>Setup and promote public private      partnership in the management of agricultural markets</li>
 
</ul>
 
</ul>
<p>There are about 2477 principal regulated  markets based on geography (the APMCs) and 4843 sub-market yards regulated by  the respective APMCs in India.</p>
+
<p>There are about 2477 principal regulated  markets based on geography (the APMCs) and 4843 sub-market yards regulated by  the respective APMCs in India.<sup class="reference">[[#ref1|[1]]]</sup></p>
 
<p>  The typical amenities available in or around  the APMCs are: auction halls, weigh bridges, godowns, shops for retailers,  canteens, roads, lights, drinking water, police station, post-office,  bore-wells, warehouse, farmers amenity center, tanks, Water Treatment plant,  soil-testing Laboratory, toilet blocks, etc. </p>
 
<p>  The typical amenities available in or around  the APMCs are: auction halls, weigh bridges, godowns, shops for retailers,  canteens, roads, lights, drinking water, police station, post-office,  bore-wells, warehouse, farmers amenity center, tanks, Water Treatment plant,  soil-testing Laboratory, toilet blocks, etc. </p>
 +
 +
The list of online APMCs may be seen [http://www.enam.gov.in/NAM/home/index.html here].
 +
 +
 
<p><strong>Legal Background of  APMCs</strong><br>
 
<p><strong>Legal Background of  APMCs</strong><br>
   Under Constitution of India, agricultural marketing is a state  (provincial) subject. While intra-state trades fall under the jurisdiction of  state governments, inter-state trading comes under Central or Federal  Government (including intra-state trading in a few commodities like raw jute,  cotton, etc.).  Thus, agricultural markets are established and  regulated mostly under the various State APMC Acts. <br>
+
   Under Constitution of India, agricultural marketing is a state  (provincial) subject. While intra-state trades fall under the jurisdiction of  state governments, inter-state trading comes under Central or Federal  Government (including intra-state trading in a few commodities like raw jute,  cotton, etc.)<sup class="reference">[[#ref2|[2]]]</sup>.  Thus, agricultural markets are established and  regulated mostly under the various State APMC Acts. <br>
 
   Most  of the state governments and Union Territories have since enacted legislations  (Agriculture Produce Marketing Committee Act) to provide for development of  agricultural produce markets and to achieve an efficient system of buying and  selling of agricultural commodities. Except the States of Jammu and Kashmir, Kerala,  Manipur and small Union Territories such as Dadra and Nagar Haveli, Andaman and  Nicobar Islands, Lakshadweep, etc. all other States and UTs in the country have  enacted such State Marketing Legislations. The purpose of these Acts is  basically the same i.e. regulation of trading practices, increased market  efficiency through reduction in market charges, elimination of superfluous  intermediaries and protecting the interest of producer-seller. </p>
 
   Most  of the state governments and Union Territories have since enacted legislations  (Agriculture Produce Marketing Committee Act) to provide for development of  agricultural produce markets and to achieve an efficient system of buying and  selling of agricultural commodities. Except the States of Jammu and Kashmir, Kerala,  Manipur and small Union Territories such as Dadra and Nagar Haveli, Andaman and  Nicobar Islands, Lakshadweep, etc. all other States and UTs in the country have  enacted such State Marketing Legislations. The purpose of these Acts is  basically the same i.e. regulation of trading practices, increased market  efficiency through reduction in market charges, elimination of superfluous  intermediaries and protecting the interest of producer-seller. </p>
 
<p>  The whole geographical area in the State is  divided and each one is declared as a market area which is managed by the  Market Committee (APMC) constituted by the State Government. States also  constitute a Market Board which supervises these market committees. APMCs  generally consist of representatives of farmers, traders, warehousing entities,  registrar of cooperative societies etc. Market Boards generally consists of  chairmen of all APMCs, representatives from the relevant Government Departments  etc.</p>
 
<p>  The whole geographical area in the State is  divided and each one is declared as a market area which is managed by the  Market Committee (APMC) constituted by the State Government. States also  constitute a Market Board which supervises these market committees. APMCs  generally consist of representatives of farmers, traders, warehousing entities,  registrar of cooperative societies etc. Market Boards generally consists of  chairmen of all APMCs, representatives from the relevant Government Departments  etc.</p>
 
<p>  Once a particular area is declared as a  market area and falls under the jurisdiction of a Market Committee, no person  or agency is allowed to freely carry on wholesale marketing activities. APMC  Acts provide that first sale in the notified agricultural commodities produced  in the region such as cereals, pulses, edible oilseed, fruits and vegetables  and even chicken, goat, sheep, sugar, fish etc., can be conducted only under  the aegis of the APMC, through its licensed commission agents, and subject to  payment of various taxes and fee. The producers of  agricultural products are thus forced to do their first sale in these markets.</p>
 
<p>  Once a particular area is declared as a  market area and falls under the jurisdiction of a Market Committee, no person  or agency is allowed to freely carry on wholesale marketing activities. APMC  Acts provide that first sale in the notified agricultural commodities produced  in the region such as cereals, pulses, edible oilseed, fruits and vegetables  and even chicken, goat, sheep, sugar, fish etc., can be conducted only under  the aegis of the APMC, through its licensed commission agents, and subject to  payment of various taxes and fee. The producers of  agricultural products are thus forced to do their first sale in these markets.</p>
 +
 +
 
<p><strong>The main differences in Acts of different states/UTs are noted in the  following areas:-</strong><br>
 
<p><strong>The main differences in Acts of different states/UTs are noted in the  following areas:-</strong><br>
 
   <em>Commodity coverage</em> – A few states cover all the commodities while others provide the list.<br>
 
   <em>Commodity coverage</em> – A few states cover all the commodities while others provide the list.<br>
Line 22: Line 28:
 
<p><em>Agricultural Marketing Boards</em> – variations in powers  exercised by the Boards in different states i.e. their role vary from advisory  to binding. </p>
 
<p><em>Agricultural Marketing Boards</em> – variations in powers  exercised by the Boards in different states i.e. their role vary from advisory  to binding. </p>
 
<p><em>Demarcation of functions between Director Marketing and</em><strong> </strong><em>Board</em> – Administrative structure  for the implementation structure of the Act vary from state to state in terms  of functions assigned.</p>
 
<p><em>Demarcation of functions between Director Marketing and</em><strong> </strong><em>Board</em> – Administrative structure  for the implementation structure of the Act vary from state to state in terms  of functions assigned.</p>
 +
 +
 
<p><strong>Functioning of APMCs:  Issues involved </strong><br>
 
<p><strong>Functioning of APMCs:  Issues involved </strong><br>
 
   The APMC system was introduced  to prevent distress sale by farmers to their creditors, to protect  farmers from the exploitation of intermediaries and traders and to ensure  better prices and timely payment for their produce through  the auctions in the APMC area. However, APMC Acts restrict the farmer from  entering into direct contract with any processor/ manufacturer/ bulk processor  as the produce is required to be routed through these regulated markets.  Over a period of time, these markets  have acquired the status of restrictive and Monopolistic markets, harming the  farmers rather than helping them to realise remunerative  prices. </p>
 
   The APMC system was introduced  to prevent distress sale by farmers to their creditors, to protect  farmers from the exploitation of intermediaries and traders and to ensure  better prices and timely payment for their produce through  the auctions in the APMC area. However, APMC Acts restrict the farmer from  entering into direct contract with any processor/ manufacturer/ bulk processor  as the produce is required to be routed through these regulated markets.  Over a period of time, these markets  have acquired the status of restrictive and Monopolistic markets, harming the  farmers rather than helping them to realise remunerative  prices. </p>
Line 28: Line 36:
 
<p>  Further, APMCs play dual role of regulator and  Market. Consequently, their role as regulator is undermined by vested interest  in lucrative trade. Generally, member and chairman are nominated/elected out of  the agents operating in that market.</p>
 
<p>  Further, APMCs play dual role of regulator and  Market. Consequently, their role as regulator is undermined by vested interest  in lucrative trade. Generally, member and chairman are nominated/elected out of  the agents operating in that market.</p>
 
<p>  Exporters, processors and retail chain operators cannot  procure directly from the farmers as the produce is required to be channelised  through regulated markets and licensed traders. There is, in the process, an  enormous increase in the cost of marketing and farmers end up getting a low  price for their produce. Monopolistic practices and modalities of the  state-controlled markets have prevented private investment in the sector. Thus, the monopoly of Government regulated wholesale  markets has prevented development of a competitive marketing system on a  pan-India basis, providing no help to farmers in direct marketing, organizing  retailing, a smooth raw material supply to agro-processing industries and  adoption of innovative marketing system and technologies. </p>
 
<p>  Exporters, processors and retail chain operators cannot  procure directly from the farmers as the produce is required to be channelised  through regulated markets and licensed traders. There is, in the process, an  enormous increase in the cost of marketing and farmers end up getting a low  price for their produce. Monopolistic practices and modalities of the  state-controlled markets have prevented private investment in the sector. Thus, the monopoly of Government regulated wholesale  markets has prevented development of a competitive marketing system on a  pan-India basis, providing no help to farmers in direct marketing, organizing  retailing, a smooth raw material supply to agro-processing industries and  adoption of innovative marketing system and technologies. </p>
 +
 +
 
<p><strong>Model APMC Act of 2003</strong><br>
 
<p><strong>Model APMC Act of 2003</strong><br>
 
   An efficient  agricultural marketing is essential for the development of the agriculture  sector as it provides outlets and incentives for increased production and contribute  to the commercialization of subsistence farmers. Worldwide Governments have  recognized the importance of liberalized agriculture markets. Keeping,  this in view, Ministry of Agriculture formulated  a model law on agricultural marketing - [http://agmarknet.nic.in/amrscheme/modelact.htm#Background State  Agricultural Produce Marketing (Development and Regulation) Act, 2003] and requested the state governments to  suitably amend their respective APMC Acts for deregulation of the marketing  system in India, to promote investment in marketing infrastructure, thereby  motivating the corporate sector to undertake direct marketing and to facilitate  a national  market.</p>
 
   An efficient  agricultural marketing is essential for the development of the agriculture  sector as it provides outlets and incentives for increased production and contribute  to the commercialization of subsistence farmers. Worldwide Governments have  recognized the importance of liberalized agriculture markets. Keeping,  this in view, Ministry of Agriculture formulated  a model law on agricultural marketing - [http://agmarknet.nic.in/amrscheme/modelact.htm#Background State  Agricultural Produce Marketing (Development and Regulation) Act, 2003] and requested the state governments to  suitably amend their respective APMC Acts for deregulation of the marketing  system in India, to promote investment in marketing infrastructure, thereby  motivating the corporate sector to undertake direct marketing and to facilitate  a national  market.</p>
 
<p>  The Model APMC Act, 2003  provided for the freedom of farmers to sell their produce. The farmers could  sell their produce directly to the contract-sponsors or in the market set up by  private individuals, consumers or producers. The Model Act also increases the  competitiveness of the market of agricultural produce by allowing common  registration of market intermediaries. </p>
 
<p>  The Model APMC Act, 2003  provided for the freedom of farmers to sell their produce. The farmers could  sell their produce directly to the contract-sponsors or in the market set up by  private individuals, consumers or producers. The Model Act also increases the  competitiveness of the market of agricultural produce by allowing common  registration of market intermediaries. </p>
<p><em>Salient Features of the  Model APMC Act:</em></p>
+
<p><em>Salient Features of the  Model APMC Act:</em><sup class="reference">[[#ref3|[3]]]</sup></p>
 
<ul>
 
<ul>
 
   <li>The Preamble of the Act is to provide  for development of efficient marketing system, promotion of agri-processing and  agricultural exports and to lay down procedures and systems for putting in  place an effective infrastructure for the marketing of agricultural produce.</li>
 
   <li>The Preamble of the Act is to provide  for development of efficient marketing system, promotion of agri-processing and  agricultural exports and to lay down procedures and systems for putting in  place an effective infrastructure for the marketing of agricultural produce.</li>
Line 57: Line 67:
 
<p>As  per the [http://agmarknet.nic.in/stminprreform.pdf final report] of the <em>Committee of State Ministers,  in-charge of Agriculture Marketing to Promote Reforms</em>, submitted in January  2013, only 16 States have amended their Act and only six states have notified  the amended Rules. There are some States which do not have APMC Act and some  have partially amended their Act. Karnataka Model provides for a single licensing  system, offers automated auction and post auction facilities. It also  facilitate warehouse-based sale of produce, facilitate commodity funding,  prices dissemination by leveraging technology and private sector investment in  marketing infrastructure.</p>
 
<p>As  per the [http://agmarknet.nic.in/stminprreform.pdf final report] of the <em>Committee of State Ministers,  in-charge of Agriculture Marketing to Promote Reforms</em>, submitted in January  2013, only 16 States have amended their Act and only six states have notified  the amended Rules. There are some States which do not have APMC Act and some  have partially amended their Act. Karnataka Model provides for a single licensing  system, offers automated auction and post auction facilities. It also  facilitate warehouse-based sale of produce, facilitate commodity funding,  prices dissemination by leveraging technology and private sector investment in  marketing infrastructure.</p>
 
<p>  The  Model APMC Act does not go far enough to create a national or even state level  common market for agriculture commodities. The Act retains the mandatory  requirement of the buyers having to pay APMC charges even when the produce is  sold directly outside the APMC area. Though the Model Act provides for setting  up of markets by private sector, this is not adequate to create competition  even within the state since the owner will have to collect fees/taxes on behalf  of the APMC in addition to their own charges.&nbsp;</p>
 
<p>  The  Model APMC Act does not go far enough to create a national or even state level  common market for agriculture commodities. The Act retains the mandatory  requirement of the buyers having to pay APMC charges even when the produce is  sold directly outside the APMC area. Though the Model Act provides for setting  up of markets by private sector, this is not adequate to create competition  even within the state since the owner will have to collect fees/taxes on behalf  of the APMC in addition to their own charges.&nbsp;</p>
 +
 +
 
<p><strong>Suggestions  in Economic Survey 2014-15&nbsp;to Create a National Common Market in  Agricultural Commodities:</strong><br>
 
<p><strong>Suggestions  in Economic Survey 2014-15&nbsp;to Create a National Common Market in  Agricultural Commodities:</strong><br>
 
   The  Economic Survey 2014-15 emphasizes on the need for a national common  agricultural market (a [http://indiabudget.nic.in/ Budget Announcement of 2014-15])  and identifies un-integrated and distortion ridden agricultural market as the  one of the most striking problems in agriculture growth.&nbsp;The Economic  Survey suggests 3 incremental steps as possible solutions for setting up a national  market.&nbsp;</p>
 
   The  Economic Survey 2014-15 emphasizes on the need for a national common  agricultural market (a [http://indiabudget.nic.in/ Budget Announcement of 2014-15])  and identifies un-integrated and distortion ridden agricultural market as the  one of the most striking problems in agriculture growth.&nbsp;The Economic  Survey suggests 3 incremental steps as possible solutions for setting up a national  market.&nbsp;</p>
Line 66: Line 78:
 
<p>As a last resort, the  Economic Survey suggests using Constitutional provisions to create a national  common market for agricultural commodities. </p>
 
<p>As a last resort, the  Economic Survey suggests using Constitutional provisions to create a national  common market for agricultural commodities. </p>
 
<p>  Economic Survey  reemphasize that India needs a national common market for agricultural  commodities by making the Agricultural Produce Market Committee just one among  many options available for the farmers to sell their produce.&nbsp;</p>
 
<p>  Economic Survey  reemphasize that India needs a national common market for agricultural  commodities by making the Agricultural Produce Market Committee just one among  many options available for the farmers to sell their produce.&nbsp;</p>
 +
 +
 
<p><strong>The National Agricultural Market (NAM)</strong><br>
 
<p><strong>The National Agricultural Market (NAM)</strong><br>
   [http://indiabudget.nic.in/budget2014-2015/index.asp Union Budget 2014-15] (para 82) and [http://indiabudget.nic.in/ Union  Budget 2015-16] (para 33) had suggested the creation of a National Agricultural  Market (NAM) as a priority issue. On 2 July 2015, Union Cabinet unveiled its plan  to go ahead with the project amidst the constitutional constrains as mentioned  above.</p>
+
   [http://indiabudget.nic.in/budget2014-2015/index.asp Union Budget 2014-15] (para 82) and [http://indiabudget.nic.in/ Union  Budget 2015-16] (para 33) had suggested the creation of a [http://www.arthapedia.in/index.php?title=The_National_Agricultural_Market_(NAM) National Agricultural  Market] (NAM) as a priority issue. On 2 July 2015, Union Cabinet unveiled its plan  to go ahead with the project amidst the constitutional constrains as mentioned  above.</p>
 
<p>  The National Agriculture Market is envisaged as a  pan-India electronic trading portal which seeks to network the existing APMCs  and other market yards to create a unified national market for agricultural  commodities. NAM is a &ldquo;virtual&rdquo; market but it has a physical market (mandi) at  the back end. NAM is proposed to be achieved through the setting up of a common  e-platform to which initially 585 APMCs selected by the states will be linked.  The Central Government will provide the software free of cost to the states and  in addition a grant of up to Rs. 30 lakhs per mandi will be given as a onetime  measure for related equipment and infrastructure requirements. In order to  promote genuine price discovery, it is proposed to provide the private mandis  also with access to the software but they would not have any monetary support  from Government.</p>
 
<p>  The National Agriculture Market is envisaged as a  pan-India electronic trading portal which seeks to network the existing APMCs  and other market yards to create a unified national market for agricultural  commodities. NAM is a &ldquo;virtual&rdquo; market but it has a physical market (mandi) at  the back end. NAM is proposed to be achieved through the setting up of a common  e-platform to which initially 585 APMCs selected by the states will be linked.  The Central Government will provide the software free of cost to the states and  in addition a grant of up to Rs. 30 lakhs per mandi will be given as a onetime  measure for related equipment and infrastructure requirements. In order to  promote genuine price discovery, it is proposed to provide the private mandis  also with access to the software but they would not have any monetary support  from Government.</p>
  
Line 73: Line 87:
  
  
 +
<span class="small_footernote" id="ref1">1. Source: Economic Survey 2014-15</span>
  
==Also See==
+
<span class="small_footernote" id="ref2">2. Constitutional Provisions regarding  Agricultural markets<br>
*[http://arthapedia.in/index.php?title=Mandi Mandi]
+
[http://india.gov.in/sites/upload_files/npi/files/coi-eng-schedules_1-12.pdf  Schedule VII of the Constitution of India] details the allocation of subjects between  the state and the Union Governments. <br>
National Agricultural Market
+
The subject &ldquo;Markets and fairs&rdquo;, is covered in entry 28 of the State List in the Schedule VII of the Constitution of India and  hence, the intra-state commodity trading is subject to the regulation of the  State Governments in their respective jurisdictions. <br>
 +
However, &ldquo;inter-state trade and commerce&rdquo;, is  covered in the entry 42 of the Union List and hence comes under the purview of  the Union / Central Government.<br>
 +
Entry 26 of the State List covers &lsquo;Trade and  Commerce within the State&rdquo; but made it subject to the provisions of Entry 33 of  List III (Concurrent list wherein both State and Union have powers) which is as  follows:<br>
 +
33. Trade and commerce in, and the production, supply and  distribution of,—<br>
 +
a) the products of any industry where the  control of such industry by the Union is declared by Parliament by law to be  expedient in the public interest, and imported goods of the same kind as such  products; <br>
 +
b) foodstuffs, including edible oilseeds  and oils; <br>
 +
c) cattle fodder, including oilcakes and other  concentrates; <br>
 +
d) raw cotton, whether ginned or unginned,  and cotton seed; and <br>
 +
e)raw jute.<br>
 +
Thus, the Parliament is competent to enact  legislation covering trade and commerce – inter-state and intra-state in the  above commodities.</span>
  
 +
<span class="small_footernote" id="ref3">3. {http://agmarknet.nic.in/amrscheme/modelact.htm# Salient Features}</span>
  
  
==References and Useful Links==
 
[http://agmarknet.nic.in/amrscheme/taskrepmarketing.htm Report of Task Force on Agricultural Marketing Reforms]
 
[http://agmarknet.nic.in/amrscheme/modelact.htm Salient Features of the Model Act on Agricultural  Marketing]
 
[http://indiabudget.nic.in/es2014-15/echapter-vol1.pdf Chapter  8 of Volume 1 of Economic Survey 2014-15] for  state wise details on taxes and levies imposed by APMCs, biggest APMCs etc.
 
[http://pib.nic.in/newsite/mainpage.aspx PIB  release of Cabinet Committee on Economic Affairs dated 2 July 2015]
 
[http://agmarknet.nic.in/amrscheme/compprovimain.htm STATE APMC Acts]
 
[http://agmarknet.nic.in/amrscheme/rythu_bazarmodel.htm Rythu Bazar ]
 
  
 +
==Also See==
 +
*[http://arthapedia.in/index.php?title=Mandi Mandi]
 +
*[http://www.arthapedia.in/index.php?title=The_National_Agricultural_Market_(NAM) National Agricultural  Market]
  
  
  
==Contributed by==
 
* [http://www.ies.gov.in/myaccount-profile-view.php?memid=338 Rosemary K Abraham (IES 2006)]
 
*Email- [mailto:rosemary.a@nic.in rosemary.a@nic.in]
 
  
[[Category:concepts|Agricultural Produce Market Committee (APMC)]]
 
  
 +
==References and Useful Links==
 +
*[http://agmarknet.nic.in/amrscheme/taskrepmarketing.htm Report of Task Force on Agricultural Marketing Reforms]
 +
*[http://agmarknet.nic.in/amrscheme/modelact.htm Salient Features of the Model Act on Agricultural  Marketing]
 +
*[http://indiabudget.nic.in/es2014-15/echapter-vol1.pdf Chapter  8 of Volume 1 of Economic Survey 2014-15] for  state wise details on taxes and levies imposed by APMCs, biggest APMCs etc.
 +
*[http://pib.nic.in/newsite/mainpage.aspx PIB  release of Cabinet Committee on Economic Affairs dated 2 July 2015]
 +
*[http://agmarknet.nic.in/amrscheme/compprovimain.htm STATE APMC Acts]
 +
*[http://agmarknet.nic.in/amrscheme/rythu_bazarmodel.htm Rythu Bazar ]
  
  
  
  
<span class="small_footernote" id="ref1">1. Source: Economic Survey 2014-15</span>
+
==Contributed by==
<span class="small_footernote" id="ref2">2. <strong>Constitutional Provisions regarding  Agricultural markets</strong><br><br>
+
* [http://www.ies.gov.in/myaccount-profile-view.php?memid=338 Ms. Rosemary K Abraham (IES 2006)] and [http://www.ies.gov.in/myaccount-profile-view.php?memid=82 Dr. Seema Gaur (IES 1984)]
      [http://india.gov.in/sites/upload_files/npi/files/coi-eng-schedules_1-12.pdf Schedule VII of the Constitution of India] details the allocation of subjects between  the state and the Union Governments. <br><br>
+
*Email- [mailto:rosemary.a@nic.in rosemary.a@nic.in] and [mailto:seema.gaur@nic.in seema.gaur@nic.in]
      The subject &ldquo;Markets and fairs&rdquo;, is covered in entry 28 of the State List in the Schedule VII of the Constitution of India and  hence, the intra-state commodity trading is subject to the regulation of the  State Governments in their respective jurisdictions. <br><br>
+
 
      However, &ldquo;inter-state trade and commerce&rdquo;, is  covered in the entry 42 of the Union List and hence comes under the purview of  the Union / Central Government.  <br><br>
+
[[Category:concepts|AgriculturalProduceMarketCommittee(APMC)]]
      Entry 26 of the State List covers &lsquo;Trade and  Commerce within the State&rdquo; but made it subject to the provisions of Entry 33 of  List III (Concurrent list wherein both State and Union have powers) which is as  follows:                      <br><br>
+
[[Category:Contributed|A]]
    33. Trade and commerce in, and the production, supply and  distribution of,—
+
    <ul>
+
      <li><em>the products of any industry where the  control of such industry by the Union is declared by Parliament by law to be  expedient in the public interest, and imported goods of the same kind as such  products; </em></li>
+
      <li><em>foodstuffs, including edible oilseeds  and oils; </em></li>
+
      <li><em>cattle fodder, including oilcakes and other  concentrates; </em></li>
+
      <li><em>raw cotton, whether ginned or unginned,  and cotton seed; and </em></li>
+
      <li><em>raw jute.</em></li>
+
    </ul><br><br>
+
    Thus, the Parliament is competent to enact  legislation covering trade and commerce – inter-state and intra-state in the  above commodities.
+
  </span>
+
<span class="small_footernote" id="ref3">3. {http://agmarknet.nic.in/amrscheme/modelact.htm# Salient Features}</span>
+

Latest revision as of 12:04, 17 May 2016

Agricultural Produce Market Committee (APMC) is a statutory market committee constituted by a State Government in respect of trade in certain notified agricultural or horticultural or livestock products, under the Agricultural Produce Market Committee Act issued by that state government.

APMCs are intended to be responsible for:

There are about 2477 principal regulated markets based on geography (the APMCs) and 4843 sub-market yards regulated by the respective APMCs in India.[1]

The typical amenities available in or around the APMCs are: auction halls, weigh bridges, godowns, shops for retailers, canteens, roads, lights, drinking water, police station, post-office, bore-wells, warehouse, farmers amenity center, tanks, Water Treatment plant, soil-testing Laboratory, toilet blocks, etc.

The list of online APMCs may be seen here.


Legal Background of APMCs
Under Constitution of India, agricultural marketing is a state (provincial) subject. While intra-state trades fall under the jurisdiction of state governments, inter-state trading comes under Central or Federal Government (including intra-state trading in a few commodities like raw jute, cotton, etc.)[2]. Thus, agricultural markets are established and regulated mostly under the various State APMC Acts.
Most of the state governments and Union Territories have since enacted legislations (Agriculture Produce Marketing Committee Act) to provide for development of agricultural produce markets and to achieve an efficient system of buying and selling of agricultural commodities. Except the States of Jammu and Kashmir, Kerala, Manipur and small Union Territories such as Dadra and Nagar Haveli, Andaman and Nicobar Islands, Lakshadweep, etc. all other States and UTs in the country have enacted such State Marketing Legislations. The purpose of these Acts is basically the same i.e. regulation of trading practices, increased market efficiency through reduction in market charges, elimination of superfluous intermediaries and protecting the interest of producer-seller.

The whole geographical area in the State is divided and each one is declared as a market area which is managed by the Market Committee (APMC) constituted by the State Government. States also constitute a Market Board which supervises these market committees. APMCs generally consist of representatives of farmers, traders, warehousing entities, registrar of cooperative societies etc. Market Boards generally consists of chairmen of all APMCs, representatives from the relevant Government Departments etc.

Once a particular area is declared as a market area and falls under the jurisdiction of a Market Committee, no person or agency is allowed to freely carry on wholesale marketing activities. APMC Acts provide that first sale in the notified agricultural commodities produced in the region such as cereals, pulses, edible oilseed, fruits and vegetables and even chicken, goat, sheep, sugar, fish etc., can be conducted only under the aegis of the APMC, through its licensed commission agents, and subject to payment of various taxes and fee. The producers of agricultural products are thus forced to do their first sale in these markets.


The main differences in Acts of different states/UTs are noted in the following areas:-
Commodity coverage – A few states cover all the commodities while others provide the list.
Market Committee – There are differences in no. of market committees and number of members therein, the appointment of committee members etc.

Agricultural Marketing Boards – variations in powers exercised by the Boards in different states i.e. their role vary from advisory to binding.

Demarcation of functions between Director Marketing and Board – Administrative structure for the implementation structure of the Act vary from state to state in terms of functions assigned.


Functioning of APMCs: Issues involved
The APMC system was introduced to prevent distress sale by farmers to their creditors, to protect farmers from the exploitation of intermediaries and traders and to ensure better prices and timely payment for their produce through the auctions in the APMC area. However, APMC Acts restrict the farmer from entering into direct contract with any processor/ manufacturer/ bulk processor as the produce is required to be routed through these regulated markets.  Over a period of time, these markets have acquired the status of restrictive and Monopolistic markets, harming the farmers rather than helping them to realise remunerative prices.

The APMC Act treats APMC as an arm of the state and the market fee as the tax levied by the state, rather than as a fee charged for providing services, which acts as a major impediment in creating a national common market.   Various taxes, fees/charges and cess levied on the trades conducted in the markets or Mandis are also notified under the APMC Act.  APMCs charge a market fee from buyers, and a licensing fee from the commissioning agents who mediate between buyers and farmers. They also charge small licensing fees from a whole range of functionaries (warehousing agents, loading agents etc.). In addition, commissioning agents charge commission fees on transactions between buyers and farmers. The levies and other market charges imposed by states vary widely. Statutory levies/mandi tax, VAT etc. all add up to hefty amounts, create market distortions with cascading effects and  strong entry barriers. Further, multiple licences are necessary to trade in different market areas in the same State. All this has led to a highly fragmented and high-cost agricultural economy, which prevents economies of scale and seamless movement of agri goods across district and State borders.

APMC operations are hidden from scrutiny as the fee collected, which are at times exorbitant, is not under State legislature’s approval.  Agents in an APMC may get together to form a cartel. This creates a monoposony (a market situation where there is only one buyer who then exercises control over the price at which he buys) situation. Produce is procured at manipulatively discovered price and sold at higher price, defeating the very purpose of APMCs. 

Further, APMCs play dual role of regulator and Market. Consequently, their role as regulator is undermined by vested interest in lucrative trade. Generally, member and chairman are nominated/elected out of the agents operating in that market.

Exporters, processors and retail chain operators cannot procure directly from the farmers as the produce is required to be channelised through regulated markets and licensed traders. There is, in the process, an enormous increase in the cost of marketing and farmers end up getting a low price for their produce. Monopolistic practices and modalities of the state-controlled markets have prevented private investment in the sector. Thus, the monopoly of Government regulated wholesale markets has prevented development of a competitive marketing system on a pan-India basis, providing no help to farmers in direct marketing, organizing retailing, a smooth raw material supply to agro-processing industries and adoption of innovative marketing system and technologies.


Model APMC Act of 2003
An efficient agricultural marketing is essential for the development of the agriculture sector as it provides outlets and incentives for increased production and contribute to the commercialization of subsistence farmers. Worldwide Governments have recognized the importance of liberalized agriculture markets. Keeping, this in view, Ministry of Agriculture formulated a model law on agricultural marketing - State Agricultural Produce Marketing (Development and Regulation) Act, 2003 and requested the state governments to suitably amend their respective APMC Acts for deregulation of the marketing system in India, to promote investment in marketing infrastructure, thereby motivating the corporate sector to undertake direct marketing and to facilitate a national  market.

The Model APMC Act, 2003 provided for the freedom of farmers to sell their produce. The farmers could sell their produce directly to the contract-sponsors or in the market set up by private individuals, consumers or producers. The Model Act also increases the competitiveness of the market of agricultural produce by allowing common registration of market intermediaries.

Salient Features of the Model APMC Act:[3]

As per the final report of the Committee of State Ministers, in-charge of Agriculture Marketing to Promote Reforms, submitted in January 2013, only 16 States have amended their Act and only six states have notified the amended Rules. There are some States which do not have APMC Act and some have partially amended their Act. Karnataka Model provides for a single licensing system, offers automated auction and post auction facilities. It also facilitate warehouse-based sale of produce, facilitate commodity funding, prices dissemination by leveraging technology and private sector investment in marketing infrastructure.

The Model APMC Act does not go far enough to create a national or even state level common market for agriculture commodities. The Act retains the mandatory requirement of the buyers having to pay APMC charges even when the produce is sold directly outside the APMC area. Though the Model Act provides for setting up of markets by private sector, this is not adequate to create competition even within the state since the owner will have to collect fees/taxes on behalf of the APMC in addition to their own charges. 


Suggestions in Economic Survey 2014-15 to Create a National Common Market in Agricultural Commodities:
The Economic Survey 2014-15 emphasizes on the need for a national common agricultural market (a Budget Announcement of 2014-15) and identifies un-integrated and distortion ridden agricultural market as the one of the most striking problems in agriculture growth. The Economic Survey suggests 3 incremental steps as possible solutions for setting up a national market. 

As a last resort, the Economic Survey suggests using Constitutional provisions to create a national common market for agricultural commodities.

Economic Survey reemphasize that India needs a national common market for agricultural commodities by making the Agricultural Produce Market Committee just one among many options available for the farmers to sell their produce. 


The National Agricultural Market (NAM)
Union Budget 2014-15 (para 82) and Union Budget 2015-16 (para 33) had suggested the creation of a National Agricultural Market (NAM) as a priority issue. On 2 July 2015, Union Cabinet unveiled its plan to go ahead with the project amidst the constitutional constrains as mentioned above.

The National Agriculture Market is envisaged as a pan-India electronic trading portal which seeks to network the existing APMCs and other market yards to create a unified national market for agricultural commodities. NAM is a “virtual” market but it has a physical market (mandi) at the back end. NAM is proposed to be achieved through the setting up of a common e-platform to which initially 585 APMCs selected by the states will be linked. The Central Government will provide the software free of cost to the states and in addition a grant of up to Rs. 30 lakhs per mandi will be given as a onetime measure for related equipment and infrastructure requirements. In order to promote genuine price discovery, it is proposed to provide the private mandis also with access to the software but they would not have any monetary support from Government.



1. Source: Economic Survey 2014-15

2. Constitutional Provisions regarding Agricultural markets
Schedule VII of the Constitution of India details the allocation of subjects between the state and the Union Governments.
The subject “Markets and fairs”, is covered in entry 28 of the State List in the Schedule VII of the Constitution of India and hence, the intra-state commodity trading is subject to the regulation of the State Governments in their respective jurisdictions.
However, “inter-state trade and commerce”, is covered in the entry 42 of the Union List and hence comes under the purview of the Union / Central Government.
Entry 26 of the State List covers ‘Trade and Commerce within the State” but made it subject to the provisions of Entry 33 of List III (Concurrent list wherein both State and Union have powers) which is as follows:
33. Trade and commerce in, and the production, supply and distribution of,—
a) the products of any industry where the control of such industry by the Union is declared by Parliament by law to be expedient in the public interest, and imported goods of the same kind as such products;
b) foodstuffs, including edible oilseeds and oils;
c) cattle fodder, including oilcakes and other concentrates;
d) raw cotton, whether ginned or unginned, and cotton seed; and
e)raw jute.
Thus, the Parliament is competent to enact legislation covering trade and commerce – inter-state and intra-state in the above commodities.

3. {http://agmarknet.nic.in/amrscheme/modelact.htm# Salient Features}


Also See



References and Useful Links



Contributed by

Personal tools
Variants
Actions
Navigation
Concepts
Share Tools
Toolbox
Translate