Statsguru: A look at the good and bad of APMCs as new farm laws kick in

APMCs are the central points where farm produce is pooled together (supply) and distributed to other parts (demand) of the country
After DECADES of discussion, India now has new farm laws that open up a parallel market for farmers, where the existing — read old — regulations will not apply. The new central laws bypass the existing Agriculture Produce Market Committees (APMCs) or mandis regulated by state laws.

APMCs are the central points where farm produce is pooled together (supply) and distributed to other parts (demand) of the country. Although this system exists across most states, the importance of mandis varies, and so does government intervention in terms of procurement.

Chart 1 shows that central agencies are procuring rice and wheat more aggressively than ever before. More than a third of both are now under the procurement programme. Farmers leading the protests mostly belong to those states — Punjab and Haryana — where procurement is the highest (chart 2).

It also shows that the government is moving its procurement operation to states other than these two. 

Take a look at Rajasthan and Madhya Pradesh. APMCs are crucial to these operations, as mandi traders are an integral part of the procurement process.

But what about non-staple crops? The story of pulses is not so great. Chart 3 shows that the government buying remains muted.

It is said that farmers are not taxed, but a slew of fees levied by the mandis are ultimately unloaded to the farmer as he offloads the produce there. Chart 4 shows that Punjab and Haryana charge the highest for selling farm produce. After all, they command a staggering 20 per cent of the country’s farm output by value. In other states where farmers are not as rich as they are in Punjab and Haryana are more affected by these fees.

Further, mandis are relatively far from the farm gate in most states, except, again, Punjab and Haryana, reveals chart 5. APMCs also lack the most basic infrastructure that a market yard needs: A third of them do not have toilets even after two decades of a national sanitation programme and half of them do not have proper weighing apparatus, chart 6 shows. Value addition processes such as grading and cold storage are largely absent, with less than one in five mandis having the capability.

All this points to the weaknesses in the existing mandi marketing system. Will the creation of a parallel market undermine APMCs, or will all markets coexist to benefit farmers? Let’s wait and watch.

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