Apmc
Apmc
Apmc
The APMC Act in each state of India requires all agricultural products to be sold only in government -
regulated markets. These markets impose substantial taxes on buyers, in addition to commissions and
fees taken by middlemen, but typically provide little service in areas such as price discovery, grading or
inspection. A key impact of this regulation is the inability of private sector processors and retailers to
integrate their enterprises directly with farmers or other sellers, eliminating middlemen in the process.
Farmers also are unable to legally enter into contracts with buyers. This leaves no incentives for farmers
to upgrade, and inhibits private and foreign investments in the food process sector.
In a move to allow farmers to directly sell their produce to industry, contract farming and setting up of
competitive markets in private and cooperative sector, the Centre has asked the state government to
amend the Agricultural Produce Marketing Act.
Under the present Act, the processing industry cannot buy directly from farmers. The farmer is also
restricted from entering into direct contract with any manufacturer because the produce is required to be
canalised through regulated markets. These restrictions are acting as a disincentive to farmers, trade and
industries.
The government has recently approved a central sector scheme titled “Development/strengthening of
agricultural marketing infrastructure, grading and standardisation.”
Under the scheme, credit linked investment subsidy shall be provided on the capital cost of general or
commodity specific infrastructure for marketing of agricultural commodities and for strengthening and
modernisation of existing agricultural markets, wholesale, rural periodic or in tribal areas.
The scheme is linked to reforms in state law dealing with agricultural markets (APMC Act). Assistance
under the new scheme will be provided in those states that amend the APMC Act.
The Centre has asked the state governments to inform as to whether necessary amendments to the APMC
Act have been carried out, in order to notify the reforming states for applicability of the scheme.
Along with the Centre, the industry is also interested in the amendment to the APMC Act as it restricts the
growth of trade in agricultural commodities.
“The policy regime pertaining to internal trade is particularly restrictive. The agricultural sector continues
to be hamstrung by a plethora of controls, which were introduced during the era of shortages,” said the
PHDCCI.
Meanwhile, a decentralised system of procuring wheat and rice would make the Public Distribution
System more cost effective, the government has said.
“APMC markets have already seen a reduction in business over the last few months,
ever since agricultureproducts have started directly entering Mumbai through private
companies. This has propelled the mathadiworkers’ unions to take up this issue along
with the traders, which by itself is a historic move,” said VinodShetty, spokesperson,
Vyapaar Rozgaar Suraksha Kriti Samiti, an organisation that is organising
a massiverally in Mumbai on Wednesday. All APMC mandis across Maharashtra will
voluntarily remain closed on the day. Among their variousdemands is one to cancel
the wholesale cash-and-carry permissions granted by the central government toGerman
Metro AG and South Africa’s Shoprite. Against the backdrop of a possible mid-term
election, the anti-APMC issue is expected to hit political centrestage. This is despite the
fact that the adoption of the Model APMC Act is a state subject. “Politicians willhave no
choice but to side with us. It is a question of their survival,” said Shetty. Reliance Retail
is trying to set up a large wholesale market at Navi Mumbai. But a company insider
admittedthat if its plans became a political target, it would delay the project. Trade
unions and anti-organised retail groups are slowly gaining the support of farmers.
Bhartiya KisanUnion, led by Mahendra Singh Tikait, has already promised support to
the cause. “These corporates will initially promise higher rates to the farmers. But after
that, they will create a monopolyand kill the farmer by paying less. These companies
only care for profit,” said Rakesh Tikait, son of Mahendra Tikait. BKU is organising a
rallyin Lucknow on October 18, and will also protest against the model APMC Act,
among other farmer-relatedissues. “My father met the prime minister last month. In that
meeting, he informed the PM that farmers in the Hindi-speaking belt would not sell their
produce to companies like Reliance Retail,” said Rakesh Tikait. On the other side,
retailers are claiming that the entire agitation is based on the fact that the
APMCcommittee members do not want to lose out on their powerful positions. One of
the country’s largest retailers said, “Every state committee collects as much as Rs
1,500-2,000 crore annually. These committees have become politcised and play a
major role during elections. Why would they want to lose out on their power?
India is endowed with approximately 141 million hectares of arable land, all the 20 types
of agro-ecological regions, long hours of sun-shine and incredible genetic bio-diversity.
Theagriculture sector in India is highly diverse and it supports the majority of
its population forlivelihood. Its contribution in National GDP is approximately 18%. This
is such a vital sector of our economy that without improving its growth, it is not possible
to achieve the desirable levelof growth of 9 or 10% of our National GDP. Most of our
farmers are small and marginalfarmers and, therefore, suitable market access for their
produce and assurance of remunerative prices to them, continues to be one of the
major challenges being faced in ouragricultural system. Without improving marketing
opportunities and competitiveness, it wouldbe difficult to achieve the targeted 4%
annual growth in Agricultural GDP. Thus, viability of thesmall holdings is an important
issue and promoting agricultural diversification towards highvalue crops through an
efficient marketing system is considered to be one of the meansthrough which this can
be achieved.
In India, the role of Government has generally remained focused on promoting
organizedmarketing of agricultural commodities in the country through a network of
regulated markets.To achieve an efficient system of buying and selling of agricultural
commodities, most of theState-Governments and Union Territories have enacted
legislations (APMC Act) to provide forregulation of agricultural produce markets.
This gave a tremendous strength to our agriculturalmarketing system and the total
number of regulated market yards/ sub-yard which was only286 in 1950, went up to
7566 by the end of March, 2006. The basic objective of setting up of network of physical
markets has been to ensure reasonable gain to the farmers by creatingenvironment in
markets for fair play of supply and demand forces, regulate market practicesand
attain transparency in transactions.Under the APMC Act, only the State Governments
are permitted to set up markets.Monopolistic practices and modalities of the State-
controlled markets have prevented privateinvestment in the sector. The licensing
of traders in the regulated markets has led to themonopoly of the licensed traders acting
as a major entry barrier for a new entrepreneur. Thetraders, commission agents and
other functionaries organize themselves into associations,which generally do not allow
easy entry of new persons, stifling the very spirit of competitivefunctioning.In view of
liberalization of trade and emergence of global markets, it became necessary topromote
development of a competitive marketing infrastructure in the country and to bringabout
professionalism in the management of existing market yards and market fee
structure.While promoting the alternative marketing structure, however, Government
needs to put inplace adequate safeguards to avoid any exploitation of farmers by the
private trade andindustries. For this, there was a need to formulate a Model Legislation
on agriculturalmarketing. The Ministry of Agriculture had accordingly formulated a Model
Law on agriculturalmarketing in consultation with the States Governments in 2003 and
circulated to them foradoption. The draft Model Legislation provides for establishment
of Private Markets/ Yards,Direct Purchase Centres, Consumer/Farmers Markets for
direct sale and promotion of PublicPrivate Partnership in the management and
development of agricultural markets in thecountry. It also provides for Special Markets
for Commodities like Onions, Fruits, Vegetables,Flowers etc. A separate Chapter has
been included in the legislation to regulate and promotecontract-farming arrangements
in the country. It provides for prohibition of commisssionagency in any transaction of
agricultural commodities with the producers. It redefines the roleof present Agricultural
Produce Market Committee to promote alternative marketing system,contract farming,
direct marketing and farmers/ consumers markets, it also redefines the roleof
State Agricultural Marketing Boards to promote standardization, grading,
qualitycertification, market led extension and training of farmers and market
functionaries inmarketing related areas. Provision has also been made in the Act for
constitution of StateAgricultural Produce Marketing Standards Bureau for promotion
of Grading, Standardizationand Quality Certification of agricultural produce. This would
facilitate pledge financing, E-trading, direct purchasing, export, forward/future trading
and introduction of negotiablewarehousing receipt system in respect of agricultural
commodities.Till now, twenty five States/ UTs have either amended their Act or have no
APMC Act. The 53rdmeeting of NDC chaired by the Prime Minister, Dr. Manmohan
Singh, in its resolution hasadvised the States to encourage development of modern
markets by completing the process of amending the APMC Act and notify the Rules
thereunder, and also encourage development of linkages to markets through a variety
of instruments including co-operatives of farmers,contract farming and other means
preferred by the States. The process of notifying Rulesunder the amended APMC
Legislation should be completed during 2007-08. In pursuance of this resolution, the
Ministry of Agriculture has also framed draft Model Rules for the guidanceof States/ UTs
and circulated to them for consultation.
A favourable regulatory environment has attracted the interest of several large
corporates of late. While corporate intervention in upstream agricultural activities was
limited to the Agri-input players largely, the recent times have witnessed a spurt in
business initiatives by otherindustry players as well. ITC's e-choupal is such an initiative
and endeavours to offer an
integrated bundle of services ranging from technical help on agricultural package
andpractices, supply of inputs, market information in rural areas, etc. to the farming
community.The impact of such integrated services at grassroot levels has been very
positive and hasencouraged even the small firms to divest innovative models to deliver
services and productsat the farmers' door steps.The emergence of direct retailing
in recent years and creation of quality retail space has led toan increased demand for
quality produce and thereby investment in supply chaininfrastructure including cold
chain. Modern food retailing will offer the prospect that lowermarketing costs could lead
to lower prices for consumers and higher realization for farmers.These economies need
to be fully exploited to increase the income of farmers. The corporateinvestments in the
farming sector have increased substantially in the recent years and hasreached the
inflection point with several large corporate such as ITC, the Tata Group, Adanisand
Godrej etc. ready to make significant investments. The entry of large
businessconglomerates such as Reliance Industries is likely to attract more investments
and areexpected to create a cascading effect across the SME segment of the food
and agri-space.With the effective implementation of the above reform measures initiated
by the Governmentof India, agricultural marketing sector is expected to achieve nation
wide integration andthereby enhance the competitiveness of Indian agriculture in global
markets. These measureswould also facilitate private sector in making massive
investments for development of agriculture infrastructure and ago-processing industries
in the years to come.Despite several initiatives undertaken by the Central Government,
it is seen that response formarket reforms from certain State Governments is lukewarm.
The arrangements of directmarketing and contract farming are being seen with
suspicion by some. The impact of growthof organized retail is being perceived as a
threat by certain sections of the agribusiness sector.While State Governments have
made certain amendments, they have not fully adopted thewidely accepted provisions
recommended through the model AMPC Act. Even though Jammuand Kashmir
Government has not notified the marekt areas and commodities, it has notconsidered
the proposed amendments. Punjab, Haryana and NCT of Delhi have made onlypartial
amendments in their Acts and the Governments of Uttar Pradesh and Uttarakhand
areyet to consider the proposed amendments. This Conference, I am sure, would
facilitate adebate on the various issues relating to agricultural marketing and would help
evolveconsidered opinions about the future course of action in this regard
Agri business in India is at a transition point. Having sailed through the shortage economy to an economy with
surplus in grains, it is important that governments at the Centre and state recognise the need for inclusive growth to
take agriculture forward, said Sivakumar, chairman agri business sub-committee, Confederation of Indian Industry —
southern region and chief executive, agribusiness, ITC Ltd.
Despite employing about 57 per cent of the population of the country, agriculture contributes only 27 per cent to the
GDP of India, he told CII’s meet on ‘Reforms in the APMC (Agricultural Produce Market Committee) Act and its
impact in the Southern States’.
This imbalance prevents agriculture from becoming a key employment generator. Hence,in keeping with the global
view, India needs to carve out opportunities in agri-exports sector, he added.
Contract farming and direct marketing to retail chains and processing units are the need of the hour. Regulations to
keep pace with these needs are required to create alternative marketing mechanisms.
Delivering his keynote address, Shankarlal Guru, Chairman-International Society for Agricultural Marketing, said the
APMC Act in each state imposes substantial taxes on buyers, in addition to commissions and fees taken by
middlemen, but typically provide little service in areas such as price discovery, grading or inspection.
A key result of the present regulation is the inability of private sector processors and retailers to integrate their
enterprises directly with farmers or other sellers, eliminating middlemen in the process, he added.
Farmers also are unable to legally enter into contracts with buyers. This leaves no incentives for farmers to upgrade,
and inhibits private and foreign investments in the food process sector.
Making a presentation on ‘Aligning State Policies with emerging new marketing models,’ Prof S Raghunath from the
Indian Institute of Management-Bangalore (IIM-B), emphasised the need for an effective and efficient distribution
system for agri-produce and provision for supply-demand transparency.
Since the main objective of the APMC Act was to prevent exploitation of farmers by various intermediaries, reforms
were required in the Act, with changing face of agriculture and the agricultural supply chain, said Prof Raghunath.
India is the largest producer of vegetables in the world, with a 15 per cent share of global produce. Also, 8 per cent of
world’s fruits are produced in India, ranking it second in the world market. According to Raghunath, in spite of this,
there is a high cumulative wastage of 40 per cent in India.
Inadequate infrastructure and lack of organised supply chains were the main culprits.
Agricultural Marketing indiainbusiness.nic.in
Organized marketing of agricultural commodities has been promoted in the country through a network
of regulated markets. Most of the State and Union Territory Governments have enacted legislations
(Agriculture Produce Marketing Committee Act) to provide for regulation of agricultural produce
markets. There are 7,139 regulated markets in the country as on March 31, 2009. The country has
20,868 rural periodical markets, about 15 per cent of which function under the ambit of regulation.The
advent of regulated markets has helped mitigate the market handicaps of producers/sellers at the
wholesale assembling level. But rural periodic markets in general and tribal markets in particular have
remained outside the developmental ambit of the Agriculture Produce Marketing Committee Act.
The Ministry of Agriculture has formulated a model law on agricultural marketing for guidance of and
adoption by State Governments. The legislation provides for establishment of private markets/yards,
direct purchase centres, consumers’/farmers’ markets for direct sale and promotion of public-private
partnership in the management and development of agricultural markets in the country. Provision has
also been made in the law for constitution of State Agricultural Produce Marketing Standards Bureaus
for promotion of grading, standardization and quality certification of agricultural produce. This would
facilitate pledge financing, direct purchasing, forward/ futures trading and exports. Sixteen States/UTs
have amended their Agriculture Produce Marketing Committee Acts and the remaining States are in
the process of doing so . Agriculture Produce Marketing Committee model rules based on the Model
Law are under formulation in consultation with states.
Agricultural Marketing
Organised marketing of agricultural commodities has been promoted in the country through
a network of regulated markets. Most of the State governments and Union Territories have
enacted legislations (APMC Act) to provide for regulation of agricultural produce markets.
While by the end of 1950, there were 286 regulated markets in the country, today the
number stands at 7,521 (31.3.2005). Besides, the country has 27,294 rural periodical
markets, about 15 per cent of which function under the ambit of regulation. The advent of
regulated markets has helped in mitigating the market handicaps of producers/ sellers at
the wholesale assembling level. but, the rural periodic markets in general, and the tribal
markets in particular, remained out of its developmental ambit.
Agriculture sector needs well functioning markets to drive growth, employment and
economic prosperity in rural areas of the country. In order to provide dynamism and
efficiency into the marketing system, large investments are required for the development of
post harvest and cold chain infrastructure nearer to the farmers’ field. A major portion of
this investment is expected from the private sector, for which an appropriate regulatory and
policy environment is necessary. Alongside, enabling policies need to be put in place to
encourage procurement of agricultural commodities directly from farmers’ field and to
establish effective linkage between the farm production and the retail chain and food
processing industries. Accordingly, amendment to the State APMC Act for deregulation of
marketing system in the country is suggested to promote investment in marketing
infrastructure, motivating corporate sector to undertake direct marketing and to facilitate a
national integrated market.
The Ministry of Agriculture formulated a model law on agricultural marketing for guidance
and adoption by State Governments. The model legislation provides for establishment of
Private Markets/Yards, Direct Purchase Centres, Consumer/Farmers Markets for direct sale
and promotion of Public Private Partnership in the management and development of
agricultural markets in the country. Provision has also been made in the Act for constitution
of State Agricultural Produce Marketing Standards Bureau for promotion of Grading,
Standardisation and Quality Certification of agricultural produce. This would facilitate pledge
financing, direct purchasing, forward/future trading and exports. Several States have
initiated steps for amending the APMC Act.
Agricultural Produce Market Committees constituted as per APMC Acts manage the
markets. Over the years, to achieve an efficient system of buying and selling of
markets and some of the rural primary markets have been brought under regulation.
Many of the regulated wholesale markets have a principal market with large area and
market. The establishment of regulated markets has helped in creating orderly and
in the number of regulated market yards, from a meager 286 at the time of
independence to 7557 in year 2005, has helped in increasing the access of farmers
to such orderly market places. These regulated markets (7557) consist of 2428
principal markets and 5129 sub yards. Some wholesale markets are outside the
linking primary markets with secondary wholesale and terminal markets, also
improved the process of price discovery at the primary market level where most of
the small farmers dispose off their produce. Increase in access of farmers to market
places, apart from reducing transaction costs of farmers has helped the small
farmers having low-marketed surplus and are not able to transport their surpluses to
markets going to the small and marginal farmers are not available, there is evidence
to show that expansion of such physical infrastructure in rural areas has helped small
and marginal farmers more by increasing their access to the markets. During 1992-
93, agricultural commodities worth Rs.62, 000 crore were traded in these regulated
wholesale markets, which account for about 43 per cent of the value of marketed
surplus (Acharya-2004).
However, this does not mean that everything is fine in all the regulated
inadequate. The cleaning, grading and packaging of agril. produce before sale by the
farmers have not been popularized by the market committees on a sufficient scale. Even
facilities for these have not been created in most of the market yards. The
execution of the market development work. So far 25 States and 2 UTs (Delhi and
Out of these 27 States/UTs, in A.P. the SAM Board has been established with only
advisory functions under the provisions of the market rules. Although the purpose of
establishment of State Agricultural. Marketing Board is almost the same in all the
States where Statutory Boards exist; a broad variation has been observed in their
composition/constitution and functioning. It is necessary to bring more uniformity in
Directorate of Marketing and State Agricultural Marketing Boards. This can facilitate
states viz. Andhra Pradesh, Bihar, Maharashtra, Madhya Pradesh, Uttar Pradesh and
West Bengal. These six States account for 53% of total regulated markets in the
transactions do not take place in their market premises, but market fee is collected
by the APMC at designated check posts. In such cases, it is more of a fee collection
activity rather than providing marketing functions. The States of Punjab and
owing to sizable quantity of surpluses of rice and wheat. These two states account
The area served by each regulated market across the States reveals large
variations. The area served per regulated markets varies from 115 Sq. Km. in Punjab
to 11215 Sq. Km. in Meghalaya. On an average, a regulated market serves 435 Sq.
Km. area in the country, which is quite high. Farmers have to travel long distances
with their produce to avail the facility of regulated market. The National Commission
recommended that the facility of regulated market should be available to the farmers
market should not exceed 80 Sq. Km. However, in the existing situation, except
Delhi and Pondicherry, in no State/UT, the density of regulated markets is even close
to the norm. The area served per market yard is as high as 7096 Sq. Km. in Sikkim, 1465 Sq. Km
in Himachal Pradesh, 940 Sq. Km in Uttaranchal and 823 Sq. Km. in
Rajasthan. The studies have shown that increase in the density of market has a
achieved if the remaining wholesale markets and rural periodic markets are
Area served by the market may not be a right indicator to assess the
optimum density of the markets, because the non-crop area which gets added to this
indicator may not require a market. Therefore, the gross cropped area served by
each market can be taken as useful indicator for assessing the density of the
markets and adequacy of number of markets in a state. As per this criteria, the State
of Punjab has one market for 18,000 ha. of gross cropped area. Similarly, one
market exist for every 13,580 ha. of gross cropped area in West Bengal, 15380 ha.
can be presumed that one market for every 15,000 to 18,000 ha. of gross cropped
area will be optimum so as to meet the requirements of the farmers. This, however,
though the regulated markets are shown as 889 in Andhra Pradesh, about 500
markets are either non-functional or very little transactions occur in those markets.
Though, the indicator of gross cropped area per market will give more realistic
indication of the adequacy of markets in a state, the actual requirement will have to
seasonality, production of crops etc. For example, the market arrivals are maximum
during the wheat harvesting season in Punjab as at that time the market
infrastructure and the market density may appear to be highly inadequate, requiring
The benefits available to the farmers from regulated markets depend on the
area. Both covered and open auction platforms exist in two-thirds of the regulated
markets. One fourth of the markets have common drying yards. Traders modules
viz; shop, godown and platform in front of shop exist in 63 percent of the markets.
The cold storage units exist in only nine percent of the markets and grading facilities
exist in less than one-third of the markets. The basic facilities viz., internal roads, boundary
walls, electric light, loading and unloading facilities and weighing
The comparative status of regulated markets and area served by them is depicted in
Annigerihubli
Arsikere
Athanibelgaum
Auradbelgaum
Badamibelgaum
Bagalkotbelgaum
Baikampady
Bailahongal belgaum
Bangalore
Bangarpet
Bantwala
Basavakalyanabelgaum
Belgaumbelgaum
Bellaryhospet
Belthangadi
Belur
Bhadravathidvn
Bhalkibelgaum
Bidarbelgaum
Bijapurbgm
BinnyMill(F&V)
Byadgihubli
C.R.Nagar
C.R.Patna
Challakere
Channagiri
Channapatna
Chickamaglur
Chickballapur
Chincholi
Chintamani
Chitradurga
Chittapura
Davanagere
Dharwar
Doddaballapur
Gadag
Gangavati
Gokak
Gonikoppal
Gowribidnur
Gubbi
Gulbarga
Gundlupet
HagariBommanaHalli
Haliyala
Hangal
Harapanahalli
Harihara
Hassan
Haveri
Hirekerur
Hiriyur
Holenarasipur
Honnali
Honavar
Hoovinahadagali
Hosadurga
Hospet
Hubli
Huliyar
Humnabad
Hungund
Hunsur
Jagalur
Jamkandi
K.R.Nagar
K.R.Pet
Kadur
Kalghatgi
Kanakapura
Karkala
Karwar
Kolar
Kollegal
Koppa
Koppal
Kottur
Kudchi
Kumta
Kundapur
Kundgol
Kunigal
Kustagi
Laxmeshwar
Lingasargur
Maddur
Madhugiri
Madikeri
Mahalingapura
Malur
Mandya
Mangalore
Manvi
Mudigere
Mulbagal
Mundagod
Mundargi
Mysore
Nagamangala
Nandagad
Nanjangud
Nargund
Nippani
Pandavapura
Pavagada
Periyapatna
Puttur
Raichur
Ramdurga
Ranibennur
Rona
Sagar
Sakleshpur
Sankeshwar
Santhesargur
Savanur
Sedam
Shahapur
Shikaripur
Shimoga
Shorapur
Siddapura
Sindagi
Sindhanur
Sira
Siraguppa
Sirsi
Somwarpet
Soundatthi
Sringeri
Srinivaspur
Srirangapatna
Sulya
T.Narsipur
Talikote
Tarikere
Tiptur
Tumkur
Turuvekere
Udipi
Yadgir
Yelahanka
Yelburga
Yellapura
Nittur
The MSAMB has 7 Divisional offices at Pune, Nasik, Aurangabad, Latur, Amravati, Nagpur and Ratnagiri for
proper co-ordination of the activities of all APMCs in the State. The map given bellow shows districts covered
under various divisions. The profile of APMCs under particular district can be seen by clicking on it.