APMC Act Revision

The Agricultural Produce Market Committee (APMC) Act governs the regulation of agricultural markets in India, ensuring that farmers receive fair prices for their produce and protecting them from exploitation by intermediaries. Over the decades, revisions to the APMC framework have been introduced to align agricultural marketing with changing economic conditions, modern trading practices, and farmers’ welfare objectives. The revisions primarily aim to liberalise agricultural trade, enhance market efficiency, and promote private sector participation.

Background and Purpose

The APMC system originated in the early post-independence period to safeguard farmers’ interests. State governments enacted APMC Acts to create regulated markets known as mandis, where the sale and purchase of notified agricultural commodities were supervised by committees. The committees ensured fair price discovery, weighed produce accurately, prevented malpractices by middlemen, and collected market fees to fund infrastructure.
Under the traditional APMC model:

• Farmers were required to sell produce in designated APMC yards or sub-yards.
• Licensed traders, commission agents (arhatiyas), and buyers operated under market rules.
• State marketing boards oversaw and standardised procedures.

While the APMC system protected farmers initially, over time it led to monopolistic tendencies, restricted competition, and reduced farmers’ freedom to sell directly to buyers. This necessitated major revisions and reforms.

Evolution and Need for Revision

By the early 2000s, it became evident that the existing APMC Acts in several states had become restrictive. They confined trade to regulated markets and discouraged private investment in infrastructure such as storage, processing, and logistics. Consequently, marketing inefficiencies emerged, and farmers’ share in the consumer rupee declined.
The following key developments led to reform initiatives:

• 1990s Economic Liberalisation: Opened up trade and called for competitive agricultural marketing.
• National Agricultural Policy (2000): Emphasised market reforms, private investment, and alternative marketing channels.
• Inter-Ministerial Task Force (2002): Recommended a model framework for uniform reform across states.

Model APMC Act, 2003

To promote uniformity and liberalisation, the Model APMC Act, 2003 was prepared by the Ministry of Agriculture and circulated to all states for adoption. Its key features included:

• Direct marketing by farmers to consumers, processors, or exporters without going through APMC mandis.
• Establishment of private markets and cooperative markets to foster competition.
• Promotion of contract farming, allowing pre-harvest agreements between farmers and buyers.
• Single licensing system for traders operating in multiple markets.
• Encouragement of e-trading and transparent price dissemination.
• Reduced government interference in day-to-day market operations.

Though several states adopted parts of the Model Act, implementation remained uneven. Variations in adoption led to fragmented markets and inconsistent reforms across India.

Model Agricultural Produce and Livestock Marketing (APLM) Act, 2017

To update and modernise agricultural marketing, the government introduced the Model APLM Act, 2017, expanding the scope of marketing to include livestock and allied sectors. Its innovations included:

• Single-point levy of market fee on the first transaction to reduce cascading taxes.
• Creation of a State Agricultural Marketing Board to regulate markets uniformly.
• Recognition of private wholesale markets, farmers’ markets (Kisan Markets), and direct farmer–buyer transactions.
• Provision for electronic trading platforms, linking with the National Agriculture Market (e-NAM).
• Encouragement for warehouse-based sales and negotiable warehouse receipts, allowing farmers to store produce and sell when prices rise.
• Simplified licensing and registration procedures for traders and buyers.

This revision aimed to make agricultural marketing more transparent, competitive, and farmer-oriented.

APMC Act and the 2020 Farm Laws

In 2020, the Government of India introduced three central farm laws, one of which — the Farmers’ Produce Trade and Commerce (Promotion and Facilitation) Act, 2020 — had a direct bearing on the APMC framework. It allowed:

• Free trade of farm produce outside the physical premises of APMC mandis.
• Barrier-free interstate and intrastate trade, reducing market fragmentation.
• Electronic trading platforms for wider buyer–seller participation.

The 2020 law aimed to provide farmers with choice of sale location and better price realisation. However, it led to widespread protests, especially in states like Punjab and Haryana, where APMC systems were deeply entrenched. Critics argued that the reforms could weaken mandis and expose farmers to corporate exploitation. The laws were repealed in November 2021 after public opposition, but the need for market reform continues to be recognised at policy levels.

Impact and Contemporary Developments

Despite challenges, revisions to the APMC Acts have produced notable transformations:

• Introduction of e-NAM (National Agriculture Market) integrating hundreds of mandis digitally across states.
• Growth of direct procurement by private companies, processors, and cooperatives.
• Expansion of Farmer Producer Organisations (FPOs) as collective marketing entities.
• Improved price discovery through real-time digital data and online bidding.
• Greater infrastructure investment in cold chains, storage, and logistics by private and public sectors.

Some states have further liberalised APMC Acts to facilitate the development of Agri Export Zones, Mega Food Parks, and Agri-Tech platforms.

Challenges and Criticism

Although progressive in intent, the revisions face several limitations:

• Slow state-level adoption, resulting in inconsistent implementation.
• Resistance from traders and commission agents benefiting from the old mandi system.
• Limited awareness among farmers regarding alternative marketing channels.
• Inadequate digital and physical infrastructure, especially in rural areas.
• Concerns about market regulation, price volatility, and farmer vulnerability in open markets.

Addressing these challenges requires balanced reforms combining market liberalisation with institutional safeguards for farmers.