Farmers’ Produce Trading and Commerce Act 2020

What is Agriculture Produce Market Regulation (APMC) acts?

• From the 1960s, there have been concerted efforts to bring all wholesale markets for agricultural produce in various states under the Agriculture Produce Market Regulation (APMC) acts.
• All states, except Kerala, Jammu and Kashmir and Manipur, enacted such laws.
• The APMC Acts mandated that the sale/purchase of agricultural commodities is carried out in a specified market area, and, producer-sellers or traders pay the requisite market fee, user charges, levies and commissions for the commission agents (arhtiyas).
• These charges were levied irrespective of whether the sale took place inside APMC premises or outside it and the charges varied widely across states and commodities.

How effective were APMC acts in achieving its sated objectives?

• In the initial years, APMC acts helped remove malpractices and freed the farmers from the exploitative power of middlemen and mercantile capital.
• Later, market facilities did not keep pace with the increase in output and regulation did not allow farmers to sell outside APMC markets.
• The farmers were left with no choice but to seek the help of middlemen. Due to poor market infrastructure, more produce is sold outside markets than in APMC mandis.
• The net result was a system of interlocked transactions that robs farmers of their choice to decide to whom and where to sell, subjecting them to exploitation by middlemen.
• Over time, APMC markets have been turned from infrastructure services to a source of revenue generation.
• In several states, commission charges were increased without any improvement in the services.
• And to avoid any protests from farmers against these high charges, most of these were required to be paid by buyers like the FCI.
• This not only results in a heavy burden on the Centre but also increases the logistics cost for domestic produce and reduces trade competitiveness.

Need for Farmers’ Produce Trading and Commerce Act 2020?

• The reforms in market regulation remained slow even after successive governments at the Centre made repeated attempts to persuade the states to make appropriate changes in their APMC acts.
• Finally, the centre used the constitutional route to address long-pending issues of market reforms by introducing Farmers’ Produce Trading and Commerce Act 2020.

Significance of FPTC Act

• The FPTC Act gives farmers the freedom to sell and buy farm produce at any place in the country either from APMC markets or outside the mandated area like the sale of milk.
• The Act promote e-commerce in agriculture trade by allowing transactions on electronic platforms.
• Excessive and unjustified charges levied under the APMC acts will be reduced.The FPTC Act will only put pressure on APMC markets to become competitive.
• It is expected to bring down market charges and commissions to 2 per cent or less to enable APMC mandis to compete with sales outside their premises.

The states , in farmers’ welfare should keep mandi charges below a reasonable level of 1.5 per cent to ensure the co-existence of APMC mandis and private channels permitted under the new Act in a true competitive spirit.