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The Centre has for long been asking states to facilitate agricultural produce market committee (APMC) reforms to give better market access and prices to farmers. Mint analyses why states are responding to the Centre’s request actively now, in the middle of a lockdown.

How are APMCs run and what’s their job?

APMCs are agricultural marketing boards established by state governments in the 1960s under the APMC Act. Agricultural markets are developed in various places across a given state and regulated through these marketing boards. The aim of these boards is to ensure that farmers get a fair price for their produce and are safeguarded from exploitation by middlemen or large retailers. Produce is brought to the market and sold through auction. Traders are issued licences to operate within the market and private traders are not allowed to buy the produce directly from farmers.

Why is there a need to reform the APMCs?

Ideally, a regulated market should serve farmers within a 5km radius and a command area of 80sq. km. In reality one mandi serves around 450sq. km, creating accessibility issues for farmers. The price-setting mechanism is not transparent and has often led to cartelization by APMC agents, who procure the produce from farmers at low prices and sell it to retailers at a higher price. The existing infrastructure for storage, sorting, grading and post-harvest management is inadequate. Farmers pay a variety of taxes that increase their costs. Retailers and traders face multiple barriers in these APMC-regulated markets.

What’s the reason for states to oppose APMC reforms?

Agriculture in on the State List and so as to achieve efficiency in agricultural markets, state governments have enacted their own legislation. They have built a monopoly in mandis and earn significant cess from transactions taking place in these markets. Despite efforts by the Centre, states have been lukewarm to the plan of distributing the set-up among multiple stakeholders.

Has the Centre tried to make things better?

The Centre introduced the Model Agricultural Produce and Livestock Marketing (Promotion & Facilitation) Act, 2017, to provide farmers other marketing channels. States have been adopting the Act since the coronavirus crisis happened, thus ensuring better prices and profits for farmers. The Essential Commodities Act, 1955, that controls trade and commerce of certain commodities will be amended to help realize better prices for farmers by letting them choose their buyers and through deregulation of some crop items.

How does the new Act improve the situation?

APMCs’ jurisdiction would be limited to their respective markets and they can levy cess only on transactions within the market area. Private entities can set up their markets/market committees, which will attract investment in infrastructure and offer farmers competitive remuneration. The new unified trading licence will let traders participate in markets all over the state and they can buy directly from farmers without having to pay APMCs a fee.

Jhoomar Mehta is a Delhi-based development finance consultant.




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