Role of Government and Other

Agencies in Strengthening
Commodity Markets
 Model State Agricultural Produce
Marketing Act,2003
• The Central Government has enacted Model Act for Agricultural
Marketing which the state governments may adopt entirely or modify
to suit state needs.

• Agricultural Marketing is the key activity in which delivering farm

product from farmers to the final consumers is done.
• The National Commission on Agriculture defined agricultural
marketing as a process which starts with a decision to produce a
saleable farm commodity, and it involves all aspects of market
structure of system, both functional and institutional, based on
technical and economic considerations and includes pre- and post-
harvest operations, assembling, grading, storage, transportation and
distribution.
Role of Agricultural Marketing in India
The need
• Strong Physical Infrastructure

• Favourable Regulatory System

• Competitive Environment

• Institutional Infrastructure
Some Facts
• 1960-70: – The Agricultural Produce Marketing (Regulation) Act
brought radical changes and significant improvement in almost all
aspects of marketing of farm produce.

• Appointment of an Expert Committee in 2000: – Found stringent

controls on the storage and movement of several agricultural
commodities and these restrictions were acting as a disincentive to
farmers, trade and industries.
• Inter-ministerial task force 2001: – Suggested various reforms relating
to agricultural marketing system as well as in policies and programs
for development.

• Model act called the State Agricultural Produce Marketing

(Development and Regulation) Act, 2003 – Provides for establishment
of Private Markets/ yards, Direct Purchase Centers,
Consumer/Farmers Markets for direct sale and promotion of Public
Private Partnership and effective infrastructure.
• The present policy framework for intervention in agricultural markets
and prices can be broadly grouped under three categories –

(a) regulatory measures;

(b) market infrastructure and institutions; and

(c) agricultural price policy.

Model APMC ACT,2003
1. Under the model APMC Act, the private sector and cooperatives can be
licensed to set up markets.
2. The model act also provides for contract farming and direct marketing by
the private players.
3. Except for few states, all the States and UTs have either fully or partly
adopted the model APMC Act.
4. As a result of the model act, the proportion of private trade and contract
farming had increased manifold in some part of the country.
5. However, The Model Act, so far, has not succeeded in persuading the
private sector or cooperatives to set up agricultural marketing infrastructure
as an alternative to the state-owned mandi system.
• Union Government had prepared a Model APMC Act in 2003. As of
2014 some 16 states have adopted this Model Act. The salient
features of this act are as follows:

• Objectives of APMC Act

1. To provide for development of efficient marketing system,
2. Promotion of agri-processing and agricultural exports
3. Lay down procedures and systems for putting in place an effective
infrastructure for the marketing of agricultural produce.
Role of Marketing Committee Under the Act
1. Ensuring complete transparency in pricing system and transactions taking
place in market area;
2. Providing market-led extension services to farmers;
3. Ensuring payment for agricultural produce sold by farmers on the same day;
4. Promoting agricultural processing including activities for value addition in
agricultural produce; and
5. Publicizing data on arrivals and rates of agricultural produce brought into
the market area for sale.
6. Setup and promote public private partnership in the management of
agricultural markets.
The Act provides for instruments like licences, permits, regulations and
orders for

•(a) price control,

•(b) storage,

•(c) stocking limits,

•(d) movement of produce,

• (e) distribution,

• (f) disposal,

• (g) sale,

• (h) compulsory purchase by the government, and

• (i) sale (levy) to the government.

Problems Faced
• Too many intermediaries, resulting in high cost of goods and services;
• Inadequate infrastructure for storage, sorting, grading, and post-harvest
management;
• Private sector unwilling to invest in logistics or infrastructure under
prevailing conditions;
• Price-setting mechanism not transparent;
• Ill-equipped and untrained mandi staff;
• Market information not easily accessible; and
• Essential Commodities Act (ECA) impedes free movement, storage and
transport of produce.