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Indian Economic Policy

Notes Salient features of amendments in States’ APMC Acts
In order to guide the states in the implementation of suggested reforms, central government drafted
a ‘Model Act on Agricultural Marketing’ which inter-alia provided for the establishment of direct
purchase centers and farmers’ markets for direct sale to consumers. ‘The Model Act’ and the suggested
reforms were discussed at the National Conference of State Agriculture Ministers held on 7th January
2004 at New Delhi and on 19th November, 2004 at Bangalore. The states were requested to complete
the process of amendment to the APMC Act within 2-3 months time. So far a number of states have
either amended their respective APMC Acts in tune with APMC Model Act or have started the process
for foe same. Some states have even notified the new legislation. In some other states process of
amendment have initiated or is about to be initiated.
In most states the APMC Act prohibits transactions outside the mandis. Even in states that allow
transactions outside the mandi, the Act states that while procurement may be direct, companies need
to Pay a mandi tax.
The Model APMC Act, sought to amend the APMC Act to permit private and corporate bodies to
establish a marketing network for agriculture produce.
States such as Madhya Pradesh, Rajasthan and Uttar Pradesh had amended their respective APMC
Acts at the first instance. Many other states have either amended their APMC Acts in tune with
Model APMC Act or are making efforts to amend their respective state APMC Acts. The intentions of
Model APMC Act prepared by the government of India and being imposed are clear from the following
points :
1. The monopoly of Government regulated wholesale markets has prevented development of a
competitive marketing system in the country, providing no help to farmers in direct marketing,
organized retailing, a smooth raw ‘material supply to agro-processing industries and adoption
of innovative marketing system and technologies.
2. Inter-Ministerial Task Force On Agricultural Marketing Reform, set up by the Ministry has
suggested promotion of new and competitive agricultural markets in private and cooperative
sectors to encourage direct marketing and contract farming programmes, facilitate industries
and large trading companies to undertake procurement of agricultural commodities directly
from the farmer’s fields and to establish effective linkages between the farm production and
retail chains.
3. If agricultural markets are to be developed in private and cooperative sectors and to be provided
a level competitive environment vis-a-vis regulated markets, the existing framework of state APMC
Act will have to undergo a change. The state has to facilitate varying models of ownership of
markets. Working of existing government regulated markets also needs to be professionalized by
promoting public private partnership in their management. Appropriate legal framework is also
required to promote direct marketing and contract farming arrangements as alternative marketing
mechanism. Therefore, there is a need to formulate a new model law for agricultural market.
4. Provision made for the appointment of Chief Executive Officer of the market committee from
among the professionals drawn from open market (Section- 36).
5. Provision made for the purchase of agricultural produce through private yards, directly from
agriculturists in one or more than one market area. (Section-45) Adoption of the Model APMC
Act in place of the earlier APMC Acts of different states is expected to bring some unfavourable
impact on the farmers, traders and agriculture at large.
Self-Assessment

1. Choose the correct option:
(i) The choice between high markups and high volume is part of which of the following retailer
marketing decisions?
(a) Target market decisions (b) Product assortment and services decisions
(c) Pricing decisions (d) Promotion decisions

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