Severely criticising the operations of agricultural produce market committees (APMC), the Survey said their revenues were not just hidden from scrutiny but also positions in the market committee at the state level and market board, which supervised the market committees, were occupied by politically influential persons. “They enjoy a cosy relationship with the licensed commission agents who wield power by exercising monopoly power within the notified area, at times by forming cartels. The resistance to reforming APMCs is perceived to be emanating from these factors,” it said.
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Though the need for setting up a national market was emphasised in the last Budget and the Centre had taken steps to encourage states to develop farmer markets in towns to enable farmers to sell their produce directly, the Survey said, “More steps may have to be taken and incremental moves may need to be considered to get the states on board.”
Markets in the agricultural products are regulated under the Agriculture Produce Market Committee Act enacted by state governments. There are 2,477 principal regulated markets based on geography, called agriculture produce market committee and 4,843 sub-market yards regulated by the respective APMCs in India.
“Effectively, India has not one, not 29 but thousands of agriculture markets,” the survey pointed out, while highlighting that multiplicity of fees and tax had a cascading impact on the prices of a commodity when it passes through the supply chain. For instance, these charges could be as high as 14.5 per cent in Andhra Pradesh, excluding state value-added tax and close to 10 per cent in Odisha and Punjab.
Besides, section 42 in the model Act provides for market fee to be levied on the buyer. The incidence of this fee falls on the selling farmer since the buyer discounts their bids to the extent of the fee or commission charged by the APMC and the commission agents even though the legislation bars such a fee on the sellers.
The Survey said the principal objective of food management was to ensure food security through timely and efficient procurement and distribution of foodgrain, besides affordable and stable prices. The pricing instruments used are minimum support price and central issue price. But price support “effectively operates primarily in wheat and rice and that, too, in selected states” creating incentive structures highly skewed in favour of the two grains.