Meaning of APMC Act
APMC full form stands for “Agricultural Produce Market Committees.” It’s one such initiative by the respective state governments. The act intends to:
- establish a marketing board to eradicate the mishandling and manipulation of the agriculturalists by the middlemen, and
- ensure that their product gets sold at a reasonable price.
What is Mandi?
APMC regulated the markets by gathering all the food produced and selling them through auctions. The concept of “Mandis” got introduced in the respective states. Mandis were the market places that fractionated the States territorially. Such markets operated through the licenses issued to the traders. APMC restricted the farmers to sell their produce directly to the wholesalers or the retailers.
The mandi system is an integral part of the Indian Agricultural sector. The recent controversy surrounding the Farmers Bill 2020 revolves around the abolition of the Mandi system to which farmers disagree. As per the new Bill, farmers are better off without the mandis as like this farmers can easily trade with the private traders and will not get restricted to the mandi alone.
History Of APMC Act
India is agricultural land. A significant segment of the Indian population depends upon agriculture for livelihood. Hence, agriculture always remains a vital concern for the government. In the pre-Independence era, it was a challenge for the government to check the prices of food and agro-raw materials for the industry.
However, in the post-independence era, the situation changed drastically. The preservation of the interests of the farmers became the prime focus. To inflate agricultural production, it was necessary to provide farmers with price incentives.
Further, various incidents of exploitation of farmers at the hand of loan sharks and money lenders highlighted the defect in the agricultural administration.
The drawbacks of poor administration lead to higher interest rates, poor infrastructure, high marketing costs and lower selling prices. Hence, the Indian government initiated various imperative canons to ensure market conduct.
Features of APMC
- APMC introduced the Yards/Mandis system in the APMC market to check the registered agricultural produce and livestock.
- To annihilate Distress Sales made by the farmers under the pressure and harassment by the loan sharks and other mediators
- To ensure fair prices and prompt payments to the farmers for their produce.
- To regulate agricultural trade practices.
- To eliminate mediators.
- To enhance the efficiency of the agricultural markets.
Shortcomings of APMC Act
Monopolistic Approach
APMC adopts a monopolistic approach, and hence, it prevents the farmers from selling their produce to better customers and consumers.
Restricted Entry
Mandis require licences to operate. The fees for such license fees are excessive. Some markets do not allow farmers to operate. Further, high license fees, rent and shop values are unreasonably high. Such high prices tend to keep the competition at bay. In some states, only wealthy groups of villagers were allowed to operate under APMC.
Formation of Cartels
APMC often gives rise to the formation of cartels deliberately restraining the higher bids. Usually, the products are procured at manipulatively lower prices from the farmers and sold at sky-high prices. “Spoils are then shared by participants, leaving farmers in the lurch”.
The commission, Marketing Fee, APMC Cess
Farmers pay unreasonably high fees, taxes and levies. In addition to it, many states do apply Value-added Tax (VAT).
Evolution of APMC
Before the inception of APMC, customary markets were prevalent in India. Trends like village sales of agricultural produce, post-harvest immediate sales by farmers were widespread.
Problems highlighted by the “Royal Commission ” in 1928 were high marketing costs, nominal selling price, unreasonable levies and exploitation of farmers. The demand for regulated markets in India.
The regulation of markets tends to eliminate unhealthy and unethical trade practices, eliminating unreasonable costs and providing satisfaction to both manufacturers and buyers in the market area. Thus, many states adopted the Agricultural Produce Market Regulation Acts (APMR Acts) at the dawn of the seventies.
Over time and changed circumstances, the benefits of the age-old APMR Act withered away, which led to the realisation of the need for amended or new provisions.
