Review of APMC Act and Reform Initiatives
(28th-30th August,2012)
Lallan Rai
Ex-Asstt AMA/Consultant,
Directorate of Marketing and Inspection
N.H.IV, Faridabad-121001
COSAMB Meeting
1
Outline of Presentation
•
•
•
•
•
•
•
•
•
Agriculture Scenario
Agricultural Marketing Scenario
Review of APMC Act
Present APMC Act-Issues and Concerns
Need for Market Reforms
Model APMC Act, 2003
Progress of Market Reforms
Initiatives by States
Need for Future Action
COSAMB Meeting
2
Agriculture Scenario
Strength
• Varied agro-climatic conditions – wide range of
Agricultural/Horticultural products
• Leadership across several products-volume
• Large Domestic Market
• Provides large raw material base to industry
• Abundant labour supply at competitive cost
• Strong Research and Development Set up
Weakness
• Small land holdings with Small Individual Marketable
Surplus
• Weak Credit flow and inadequate risk coverage
• Low level of value addition at the farm gate
• Lack of Market information
• Absence of Common trade language
3
COSAMB Meeting
Production Trends
Production of Foodgrains
(Million Tonnes)
Production of Fruit and Vegetables
(Million Tonnes)
270
160.00
257.44
250
244.78
140.00
134.1
128.45
120.00
100.00
234.47
149.61
146.55
129.08
109.05
114.99
88.62
230.78
80.00
230
74.88
68.47
59.56
60.00
65.59
212.85
218.11
217.28
210
208.60
77.52
58.74
40.00
44.00
20.00
0.00
190
Production
COSAMB Meeting
71.52
Fruit
Vegetables
4
Agricultural Marketing Scenario
Strength
• Large Consumer Base
• Wide network of markets across the State through APMCs
• Rise in household income- enhanced demand for high value foods and
FMCG products
Weakness
• High Post-harvest wastages and Transportation cost
• Multiple intermediaries-Low price realization by farmers
• Lack of adequate Scientific Storage facilities near to Farm
• Fragmented Supply Chains and High marketing Cost
Opportunities
• Globalization provides better farming and value addition opportunity
• Government investment policy conducive for private investment
• Specialized Schemes leading to capital formation and enhancing
productivity and farm income
COSAMB Meeting
5
High Post-harvest Losses
COSAMB Meeting
Source: ICAR Study, 2010
6
Mandi Charges (incl. of purchase tax, market fees,
arthia commission etc) in various States
(as percentage of MSP)
State/UT
Bihar
Purchase/
sales Tax/
Trade Tax/
VAT
1.0+3.0
Market
fee
Arthia
Commission
Other
charges
Total
-
2.0
-
6.0
Gujarat
-
1.0
2.0
-
3.0
Haryana
4.0
2.0
2.5
2.0(RD Cess)
10.5
Madhya
Pradesh
Punjab
4.0
2.0
2.0
8.2
5.0
2.0
2.5
-
1.6
2.0
0.2 (Nirashrit
Shulk)
5.0 (RD Cess
@2% + ID
fee @3%)
-
4.0
2.5
2.0
-
8.5
4.0
2.5
-
-
6.5
Rajasthan
Uttar
Pradesh
Uttarakhand
COSAMB Meeting
Source: Price Policy for Rabi crops, the Marketing season- 2012-13
14.5
3.6
7
How to Safeguard Small Producers?
• Present Agricultural Marketing -Three main
Components (GMM):
 Statutory charges (6 to 12 per cent);
 Net margins of intermediates (6-20 per cent); and
 Real cost of performing marketing functions (68 to 88 per cent).
Reduction in real cost of marketing require increasing scale of operations and
technological change in the marketing system.
 Small farmers with low marketed surplus cannot do it. The organized sector is
coming up in a big way and their role is important.
 Need for an institutional revolution to enable the producer organizations with
professional management to emerge in the scene.
Can we think of farmers’ corporations /Producers’ Companies to emerge in
production as well as processing and marketing of agricultural commodities?
Implications of this form of institutional set up in agricultural marketing need
critical examination and serious debate.
COSAMB Meeting
(Source: Prof.S.S. Acharya Paper)
8
Review of APMC Act
• Initial Regulatory Framework:
• Agriculture Marketing- a State subject- regulated
through respective State APMC Act
• 27States and 1 UT have APMC Act
• Major Objectives of APMC Act:
 Development of Market Infrastructure
 Open Auction for price discovery
 Fair Value for farmer’s produce
 Standardized Charges
 Prompt payment to farmer
 Dispute Settlement
COSAMB Meeting
9
Progress of Regulation of Markets
8000
7000
6052
6217
1980
1990
7127
7139
7157
7246
2000
2009
2010
2011
6000
5000
4000
2481
3000
2000
1000
73
286
1940
1950
715
0
1960
1970
Number of Markets
COSAMB Meeting
10
Density of Regulated markets
12000
11215
Need of markets within
80 sq.kms.
10000
7096
8000
6000
4000
1160
2000
304
347
397
473
156
596
731
350
496
794
103
130
398
963
0
Area covered by each market(Sq.Km.)
COSAMB Meeting
11
Status of Cold Storages (31.12.2009)
Numbers of Cold Storages
Capacity in ‘000 tonnes
107
140
356
937
2341
4885
Private
COSAMB Meeting
Cooperative
Publc
Private
Cooperative
Publc
12
Establishment of Market Committee
• Responsibility of enforcement of provisions of the Act rests
with Market Committee
• Except Tamil Nadu(One Committee for all markets in the
District) all State Acts provide for constitution of separate
Market Committee
• In Maharashtra separate Market Committee for Greater
Mumbai
• The number and constituents of the membership of the
Market Committee differ with other Committees of State
• TN Act permits Co-operative Marketing Societies to
establish a market after observing certain formalities
• It is, therefore, necessary to have a Taluk level Market
Committee with uniform pattern in all the States/UTs
COSAMB Meeting
13
Election of Members of Committee
• In most of the States provision of direct
election of non-official members
• In Himachal Pradesh, the members are
appointed by the Board out of the Panel
maintained (given by the concerned District
Commissioners)
• There should be indirect election of members
from amongst the Panchayat members
(already elected through direct election) to
save wasteful expenditure
COSAMB Meeting
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Composition of APMCs (%)
Name of the
State/UT
Uttar
Pradesh
West Bengal
Assam
Gujarat
Rajasthan
Orissa
Delhi
Producers/
Agriculturist
52.28
Licensees / Cooperatives Local
Cooperative
Authority
14.28
4.77
4.77
State Govt.
MLA/ MP
9.52
-
50.00
46.05
47.70
46.68
47.05
42.88
16.70
20.00
23.55
13.33
23.55
14.28
5.55
6.66
11.76
13.33
5.88
7.14
5.55
6.66
5.88
26.66
11.76
7.14
11.10
6.66
11.76
11.76
14.28
6.66
-
Goa
46.70
20.00
6.66
13.32
13.32
5.55
5.55
6.66
Lic. W/man Metro7.14
Coun. 7.14
-
Madhya
Pradesh
Tripura
Maharashtra
Tamil Nadu
Punjab
Andhra
Pradesh
Karnataka
Upto
7.00
50.00
55.55
60.00
52.94
66.65
15.00
5.00
-
5.00
5.00
-
-
8.50
16.70
20.00
35.30
16.70
8.50
5.55
5.88
5.55
16.50
11.10
5.55
16.50
11.10
20.00
5.88
5.55
-
-
-
52.96
5.88
11.76
5.88
5.88
Haryana
SC/ST/BC
represented
Meghalaya
Arunachal
Pradesh
Nagaland
58.34
25.00
8.33
-
8.33
SC/T
11.76
-
Taluk Dev/ Board 5.88
-
38.48
22.22
23.07
22.22
15.38
11.11
7.67
-
54.55
One SC/ST
18.18
9.90
-
7.69
National
Samity 44.45
18.18
-
COSAMB Meeting
Financial
Institution
-
SWC/
CWC
14.28
FCI/
-
-
-
-
-
15
Numerical strength of Market Committees
No. of persons as stipulated in market States/Union Territories
legislation
8-20
Madhya Pradesh
COSAMB Meeting
14-21
Uttar Pradesh
15-18
West Bengal
9 or 16
Punjab (Without representation of cooperatives)
10 or 17
Punjab (With representation of cooperative)
11 or 19
Haryana (Without representation of cooperatives)
12 or 20
Haryana (with cooperative representative)
9-16
Himachal Pradesh
9
Arunachal Pradesh
11
Nagaland
12
Tripura
13
Meghalaya
14
Delhi
15
Tamil Nadu, Assam, Rajasthan, Goa.
17
Gujarat, Orissa, Karnataka
18
Maharashtra
16
Commodity Coverage
• Commodities included in the Schedule or declared as such by
the Government Notification
• In Andhra Pradesh, Tamil Nadu, U.P., Maharashtra, Gujarat,
Rajasthan, Odisha, Punjab and Chandigarh regulation is
specified in the Schedule
• Except Andhra Pradesh and Tamil Nadu all the Acts provides
for inclusion as well as deletion of any agricultural produce
from the list of notified commodities
• Manner of Notification as well as commodity coverage also
vary from State to State
• No provision exists for livestock inPunjab, Chandigarh,
HP, MP and Tamil Nadu
COSAMB Meeting
17
Realization of Market Fee By APMCs
Sl.
No.
Rate of market Names of States/Uts
fee
1
Below 1%
2
1 % to below Andhra Pradesh, Assam, Delhi,
2%
Himachal Pradesh, Karnataka,
Madhya
Pradesh,
Uttar
Pradesh, Orissa, Tamil Nadu,
Meghalaya,
Nagaland,
Rajasthan
and
parts
of
Maharashtra.
3
2%
COSAMB Meeting
Remarks
Gujarat, Pondicherry, Goa, Maharashtra – Rs.0.75
Tripura, Parts of Maharashtra –100
& Kerala
Only Malabar hills
districts under MCCM
Act, 1933 in Kerala.
FCI & State Coop.
Exempted in Assam.
Meghalaya
&
Nagaland Collection of
fee not yet introduced.
In Orissa 3% for
animal
husbandry
products.
Punjab, Haryana, West Bengal, Punjab
Arunachal Pradesh
Timber.
1%
for
18
Contribution of income of APMCs to SAMB
Sl.
No.
Percentage contribution to Name (s) of States/U.T.
the Board
1
Upto 5%
Karnataka & Orissa
2
Upto 10%
Andhra Pradesh, Uttar Pradesh, Rajasthan
and Maharashtra
3
Upto 20%
West Bengal, Tripura, Delhi
4
Upto 30%
Assam and Meghalaya
5
Upto 50%
Madhya Pradesh and Arunachal Pradesh
7
Upto 10-40%
Punjab – Slab system depending upon income
of APMC.
8
Upto 20-30%
Haryana – Slab system depending upon income
of APMC.
COSAMB Meeting
19
Settlement of disputes in various States
Sl.
No.
Channel for settlement of disputes
1
Secretary
Arbitrator Dispute sub-committee Gujarat, Delhi, Andhra
Pradesh, Bihar, Uttar
Pradesh, Orissa, Tripura,
Punjab and Chandigarh.
2
Secretary
Arbitrator
3
Secretary
Arbitrator Board constituted for Maharashtra
settlement of disputes
4
Arbitrator
Umpire
5
Secretary
Arbitrator Empire dispute
Committee
COSAMB Meeting
States/UT
West Bengal
Dispute Sub-Committee Rajasthan
Sub- Himachal Pradesh
20
Present APMC Act -Issues
• Issues and Concerns:
•
•
•
•
•
•
•
•
•
•
Traders can not buy outside Market Yard-add to cost
Market Density Low – Long travel
Infrastructural facilities inadequate in markets
Rural Periodic Markets not properly developed
Bureaucratic management- lost original purpose
Congestion in market yards
Several Malpractices continue
Barrier to entry-Strong associations, License linked to shops
Market fee not used for development in some cases
APMCs emerged as monopoly
COSAMB Meeting
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Need for reform in Agricultural Marketing
Necessary to :
Empower producers with market information to
undertake market-driven production.
Provide Multiple Choice and
Marketing Channels to farmers.
competitive
Attract Large Scale investments needed for
building Post-Harvest infrastructure.
22
Model Act, 2003- Salient Features
Establishment of Market in Private
and
Cooperative sector
Promotion of Direct Marketing and Contract
Farming
Establishment of Farmer/Consumer Markets
Single point licensing & Single Point levy of
market fee/cess
Setting up of Special Commodity Markets/
Promotion of e-trading
Professional management of APMCs
COSAMB Meeting
23
Progress of Market Reforms
Progress of Market Reforms (31.07.2012)
State provide for
Reform
3%
States not yet
reformed
14%
Reforming States
46%
No APMC Act in
States
20%
Partial Reforming
States
17%
COSAMB Meeting
24
Provisions of Model Act Adopted (con..)
Area of Reforms
States adopted the suggested area of market reforms
Setting up of Special Markets and Special Andhra Pradesh, Gujarat, Maharashtra, Karnataka, Nagaland,
Commodity Market
Sikkim, Tamil Nadu Tripura, Jharkhand and Uttarakhand
To promote and encourage e-trading,
Gujarat, H.P., Karnataka, Nagaland, Sikkim, Mizoram,
Goa,
Maharashtra (under Rule 5 license granted to Commodity
Exchanges registered under FMC), Uttarakhand and Rajasthan
Registration of Contract Farming
Andhra Pradesh, Arunachal Pradesh, Assam, Goa, Himachal
Pradesh, Karnataka, Haryana, Maharashtra, Madhya Pradesh,
Mizoram, Nagaland, Odisha, Rajasthan, Chhattisgarh, Sikkim,
Tripura and Jharkhand and Uttarakhand
Andhra Pradesh, Arunachal Pradesh, Assam, Chhattisgarh, Gujarat,
Goa, Karnataka,
Haryana, Madhya Pradesh, Mizoram,
Maharashtra, Nagaland, Orissa, Rajasthan, Sikkim, Tripura and
Jharkhand and Uttarakhand
Arunachal Pradesh, Assam, Goa, Haryana, Maharashtra, Mizoram,
Nagaland, Odisha, Rajasthan, Sikkim, Tripura , Jharkhand, Andhra
Pradesh, Karnataka and Uttarakhand
contract farming agreement recorded
with the prescribed officer.
No title, rights, ownership or possession
shall be transferred or alienated or vest
in the contract farming sponsor or his
successor or his agent as a consequence
arising out of contract farming
agreement.
COSAMB Meeting
25
Provisions of Model Act Adopted
Area of Reforms
States adopted the suggested area of market reforms
Dispute settlement mechanism
Andhra Pradesh, Arunachal Pradesh, Assam, Chhattisgarh, Gujarat, Goa,
Karnataka, Haryana, Madhya Pradesh, Mizoram, Maharashtra, Nagaland,
Ordisha, Rajasthan, Sikkim, Tripura and Jharkhand; Himachal Pradesh
and Uttarakhand
Arunachal Pradesh, Goa, Karnataka (Reduced by 30%), Maharashtra,
Mizoram, Nagaland, Orissa, Rajasthan,
Sikkim, Tripura, Punjab
(exempted under the Rules), Chandigarh (exempted under the Rules) and
Uttarakhand
Chhattisgarh, Gujarat, Goa, Himachal Pradesh, Madhya Pradesh,
Mizoram, Karnataka, Nagaland, Sikkim, UT of Chandigarh, Punjab,
Jharkhand, Rajasthan and Uttarakhand
Andhra Pradesh, Arunachal Pradesh, Assam, Gujarat, Goa, Himachal
Pradesh, Karnataka,
Madhya Pradesh ( only direct purchase),
Maharashtra, Mizoram, Nagaland, Orissa (excluding for paddy / rice),
Rajasthan, Sikkim, Tripura, Punjab (not for direct purchase), Chandigarh
(not for direct purchase), Jharkhand and Uttarakhand
Arunachal Pradesh, Assam, Gujarat, Goa, Himachal Pradesh, Karnataka,
Madhya Pradesh (under bye-laws), Mizoram. Maharashtra, Nagaland,
Rajasthan, Sikkim, Tripura, Punjab (only enabling provision), UT of
Chandigarh (only enabling provision), Jharkhand and Uttarkhand
Exemption of Market Fee on the sales to
the contract farming sponsors taking
place outside the market yard under the
contract farming agreement
Single point levy of market fee
Establishment of private market yard
and direct purchase from farmers
Establishment of consumer / farmer
market
COSAMB Meeting
26
Initiatives Taken by States
 Common License for Direct procurement from farmers has been provided
by Maharashtra (23), MP (8), Rajasthan (1) and Karnataka(249)
 License for Direct marketing has been provided by Andhra Pradesh(171),
Gujarat(21),
Haryana(37),
Himachal
Pradesh(12)
Karnataka(9),
Maharashtra(107), Odisha(46), Punjab(26), Rajasthan (76) and Tamil
Nadu(179).
 License for Private Markets – Andhra Pradesh(2), Rajasthan(2),
Gujarat(13), Tamil Nadu(6) and Karnataka(3)
 License for Spot Exchange has been granted by Gujarat, Maharashtra,
Karnataka, Orissa, Rajasthan and Madhya Pradesh
 M.P.,Uttarakhand and West Bengal have waived market fee on sale of fruit
& vegetables.
 Government of Haryana introduced E-license to commission agents
Smart Card based electronic records for farmers and Digital Mandi system.
27
COSAMB Meeting
Need for Future Action
• State Governments to expedite amendment of
Act/Rules on the lines of Model Act/Rules
• COSAMB may pursue member States to complete the
Reform process
• Initiatives for Private Markets/infrastructure
development in Reformed States
• Long term Policy stability to attract investment
• Organize farmers into Groups/Co-operatives
/Producer Companies
• Promote barrier free National Market
COSAMB Meeting
28
Thank You
COSAMB Meeting
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