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LATEST NEWS UPDATES | Want to help farmers, remove middlemen? Scrap the law governing agri markets -Ila Patnaik and Shubho Roy

Want to help farmers, remove middlemen? Scrap the law governing agri markets -Ila Patnaik and Shubho Roy

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published Published on Feb 24, 2019   modified Modified on Feb 24, 2019
-ThePrint.in

Model APMC laws suffer from the same economic problem as the old ones. We should repeal APMC laws and not replace them.


Although India’s Agricultural Produce Marketing Committee legislation was enacted with the noble intention of increasing farmers’ income, it has had the opposite effect over the years. It has restrained farm income. The failure arises from the basic structure of the legislation, which creates the incentives for middlemen to collude against the farmer.

History

The Agricultural Produce Marketing Committee (APMC) laws go back to the founding of the Republic in the 1950s. The government’s intent and justification behind setting up the APMCs, as seen in promotional videos from that era, was to protect farmers from commission agents – the middlemen. The idea was that these markets would be fair, more efficient, and offer better remuneration to the farmers. Since markets are a state subject under the Constitution, the states had to enact APMC laws. Most states have enacted and amended them from time to time.

The Act empowers the government to declare certain areas as market areas – the entire geographical area over which a market set up under the APMC law has a ‘monopoly’ on. This designated market is run by a committee of elected traders and farmers (from the area), with some representatives from the government. The committee then sets up a market yard with storage facilities where the trading of agricultural goods takes place. There may be sub-yards set up too, and these are covered by the same rules that govern the yards. All traders who buy agricultural goods are required to get licences from the market committee. To fund itself, the committee charges fees on all trade that takes place within the market area.

The original idea behind creation of APMC laws – to bring the traders under one roof for easy monitoring and prevent them from cheating the farmers – seems lost now. The law almost achieves precisely the opposite of its intended objective. To understand how the APMC ends up harming the farmers, let’s take a look at the law and the economics behind it.

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ThePrint.in, 22 February, 2019, https://theprint.in/opinion/want-to-help-farmers-remove-middlemen-scrap-the-law-governing-agri-markets/196348/


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