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Agricultural Produce Marketing Committee Act: All You Need to Know

Agricultural Produce Marketing Committee Act: All You Need to Know

Agriculture

Vakilsearch Staff

Vakilsearch Staff

29 Nov 2022, 12:23 — 9 min read

Agricultural produce wholesale is governed by the Agricultural Produce Marketing Acts of various state governments. The Agricultural Produce Marketing Committee (APMC) Act empowers state governments to notify commodities, designate markets and market zones where regulated commerce occurs, and establish APMCs that are accountable for market functioning. A whole state is partitioned and declared a market region, with markets regulated by Market Committees formed by state governments.

Objectives of the Agricultural Produce Marketing Act

  • Creating an effective marketing system
  • Promotion of agricultural processing and exports
  • Specify procedures and systems for establishing an effective infrastructure for agricultural produce marketing.

New Markets Establishment

All marketplaces are developed as a result of initiatives taken by state governments. The APMC Act also allows legal people such as individuals, organisations, corporations, growers, and local governments to apply for the formation of new agricultural markets in a specific area. In addition to this regulation, private persons, farmers, and customers may open many markets in a given market region.

Having said that, growers are not required to sell their products through current marketplaces managed by APMC. Farmers who fail to deliver their produce to the market area for sale are ineligible for election to the APMC.

In addition to the existing markets, the Act includes distinct procedures for the notification of ‘Special Markets’ or ‘Special Commodities Markets’ in any market region for the operation of certain agricultural commodities.

Responsibilities of Marketing Committees

The Market Committees’ tasks under the APMC Act are as follows:

  • To ensure total transparency in the price structure and market transactions
  • Farmers will benefit from market-driven extension programmes
  • To assure payment for agricultural commodities sold by farmers on the same day
  • Agricultural process, including value-added operations in agricultural produce, should be promoted
  • To make available information about agricultural commodity arrivals and rates brought into the market area for sale
  • Creating and promoting public-private partnerships for agricultural market management.

Contract Farming

The APMC has established a new idea called contract farming, in which processing/marketing enterprises agree to do is provide application support at predetermined prices. Among the provisions are the following:

  • All contract farming sponsors are required to register
  • Maintaining a record of contract farming agreements
  • Resolution of Disputes
  • Market fee exemption for crops covered by contract farming agreements
  • Indemnifying producers’ land title/possession from any claim originating from such arrangements
  • These regulations allow farmers to sell farm produce straight from their fields to contract farming sponsors without first going through designated markets.

Direct Marketing

Farmers may sift, grade, and market their products directly at the farm gate thanks to direct marketing. Farmers can exclude marketplaces that lack all the essential facilities and services that contribute to efficient markets in this manner. Apni Mandis in Punjab and Haryana, Rythu Bazaar in Andhra Pradesh, and Uzhavar Santhai in Tamil Nadu have all tried the direct marketing strategy.

The following are some of the benefits of digital marketing in APMC:

  • Contact wholesalers or traders and meet their special requirements.
  • Profit from low pricing in a timely manner.
  • Reduce marketing costs.
  • Removal of an overly long chain of intermediates
  • Consumer price reductions
  • Higher crop prices will assist crop farmers.


Future Contracts and ‘Negotiable Warehouse Receipts’ in Agriculture

A futures contract is an agreement between two parties to buy and sell a certain item in a preset volume and at a specified price at a future date. As a result, these contracts are used for risk management, price discovery, and trading. This trade attracts extensive examination by market analysts in order to forecast future trends in demand and supply, which yields a wealth of important data for manufacturers and producers. Farmers will benefit greatly from this since they will be able to discern future patterns and manage their production accordingly. Similarly, farmers can sell their products in advance in the futures market, and purchasers can buy in the futures market.

Futures trading in all agricultural commodities was permitted in 2003, and the Warehousing (development and Regulation) Act of 2007 was passed in 2007. This resulted in the formation of the ‘Warehousing Development and Regulating Authority’ (WDRA).

The WDRA pioneered the notion of a ‘Negotiable Warehouse Receipt.’ Farmers can deposit their produce in WDRA-certified warehouses around India and receive a receipt (Negotiable Warehouse Receipt) indicating the quantity, type, category, and so on of crop.

Farmers can use this receipt to get loans, make payments, or settle any other form of claim. This receipt will be acknowledged by any ‘certified warehouse’ in India, and the holder of this receipt will be able to obtain the quantity specified on it. The Negotiable Warehouse Receipts (NWR) system is intended to help farmers not only obtain better financing and prevent distress sales, but also to protect financial institutions by lowering risks associated with credit extension to farmers.

Market Yard Private Investments

The Act aims to entice private investment in order to build market yards and a post-harvest value network that includes cold stores, warehouses, and logistical infrastructure. These measures, however, are for high-value and perishable commodities such as vegetables, fruits, and livestock products, which contribute significantly to food inflation.

 

Some of the other clauses are as follows:

  • Implementing a single market charge levy
  • Resolving disagreements between the private/consumer market and the Market Committee
  • State governments are authorised to exempt agricultural products brought for sale in the market area from payment of the market fee.
  • Market Committee with the authority to build infrastructure either on its own or through public-private collaboration.

Establishment of Market Committee

A Market Committee with jurisdiction over the whole market area would be established for each market area. The Market Committee acts as a corporate body under another name provided by the State Government or the Director. The committee has a common seal and may sue or be sued in its corporate identity or under this Act to acquire, hold, lease, sell, or otherwise transfer any property, as well as to do all other actions required for the purpose for which it was founded. Without the previous consent of the Director/Managing Director, no immovable property may be bought or transferred by sale, lease, or otherwise.

Acquisition of Land for Marketing Committee

If the Board or Market Committee is unable to acquire property within the market area, it may request that the State Government acquire such land in accordance with the provisions of the Land Acquisition Act, 1894, after paying the compensation specified in the Act. Once a recommendation has been made by the Market Committee, it may not be withdrawn unless authorised by the State Government.

Without the approval of the State Government, the Board or the Market Committee does not transfer or convert any land purchased for this purpose.The properties used for market yard, submarket, other Board purposes are not considered to be under the jurisdiction of the Municipal Corporation, Municipal Council, Notified Area, Gram Panchayat, or Special Area Development Authority.

Other provisions include:

  • Implementing a single market fee
  • Resolving disputes between the marketplace and the Market Committee
  • State governments have the authority to exempt agricultural items brought to the market area for sale from payment of the market fee
  • Market Committee has the authority to construct infrastructure on its own or through a public-private collaboration.

 

Also read: How technology can make sustainability attainable for farmers

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