AMPC Act: Recently news that is the front headline of the newspaper is that ” The Karnataka government’s step of amending the Agricultural Produce Marketing Committee Act is an effort to dilute the spirit of the State’s intervention in safeguarding the interests of farmers so that they do not fall into the large trap of debt .
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Agricultural marketing is a market which has to undergo a series of exchanges or transfers from one person to another before it reaches the consumer. There are some factors on which selling on any agricultural like the demand of the product at that time, availability of storage, etc. We can either sold the product directly in the market or it may be stored locally for the time being. There are time when processing needs to be done because consumers want it, or sometimes to conserve the quality of that product. In various points of different markets like primary, secondary or terminal markets, the distribution system has to match the supply with the existing demand by whole selling and retailing.
What is AMPC Act in India?
Agricultural Produce Market Committee act in India
Current APMC System
When India got Independence, it was a moneylenders or trader in villages which mainly controls the whole distribution system of agriculture commodities this leads to the farmers being trapped into a perpetual debt instead of getting any profit. In order to overcome this problem, different state enacted their APMC acts to set up Agricultural Markets. In other words, An Agricultural Produce Market Committee (APMC) is a marketing board which is generally established by a state government in India to ensure farmers are safeguarded from exploitation by large retailers and does not fall into the trap of debt, as well as ensuring the farm to retail price spread does not reach excessively high levels.
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APMC Act Features
a) As per this act, The state is divided into different markets based on geography and many other principal or sub markets established in various parts of the state. When once a particular area is declared a market area and falls under the jurisdiction of that particular area Market Committee, no other person or agency is allowed freely to carry on wholesale marketing activities.
b) These markets which are managed by the Market Committees are constituted by the State Governments. Market Committee constitutes of 10-20 members who are either elected or nominated by govt but elections are rare.
c) It is the responsibility of market committee to authorize various commission agents or traders to carry out various procurement and distribution activities related to agriculture produce. In other words, license raj is prevalent in today’s liberalized India as traders had to take license before carrying out any activity.
APMC System Flaws:
• This leads to Monopoly because of the following reasons given below:
1. It is the responsibility of the Market committee authorize many commission agents or traders in market area to undertaken various activities in APMCs.
2. Farmer can only sell their agriculture produce only to these commission agents either through personal relations or through process of auctions.
3. Agents may come together and and form cartels to procure produce not above a specified price, ultimately increase their own profits while reducing the farmer’s one.
4. The wholesalers and retailers are only eligible to buy agriculture produce from only these agents or traders. Again they adopt the technique of cartelization to sell the produce to wholesalers.
5. Due to this farmers got lesser price for their produce and end consumer had to pay more money to buy the similar produce which might not be case if APMC situation was not present.