The Gujarat government’s recent approval of the Gujarat Agricultural Produce Markets (Amendment) Ordinance 2020, which breaks the monopoly of state-run Agricultural Produce Market Committees (APMCs) and allows private entities to establish their own market committees or sub-market yards, has made headlines. Here are some of the main points about this important change which holds implications for farmers, private entities and markets in Gujarat.
Restrictions on Jurisdiction
The ordinance has imposed limitations on the jurisdiction of APMCs, confining them to the physical boundaries of their respective marketing yards. This means, they can only levy cess on transactions that occur within the boundary walls of their marketing yard. Prior to this amendment, an APMC could wield jurisdiction over an entire taluka, and often more than one. Farmers and traders from specific talukas were obliged to sell their produce to their local APMCs. Additionally, APMCs could impose a cess on any transaction that occurred within or outside the marketing yard of the APMC.
Opening Opportunities for Private Markets
The amendment has paved the way for establishment of private markets. Private individuals can now convert existing storages or warehouses into a sub-market yard or a private market that can compete with the APMCs. Furthermore, farmers have been given the opportunity to set up their own private markets. To safeguard smaller APMCs from potential negative competition from these private markets, the state government intends to implement a rule that prevents the creation of a private market within a five-kilometer radius of a pre-existing APMC. To further protect them, the government will collect a 20% cess from private players and reroute 14% back to the APMCs.
Unified Single Trading Licence
The ordinance has introduced a unified single trading licence for traders. This will allow traders to partake in trading activities anywhere in the state, and attract farmers based on the quality of their produce and competitive prices, without being constrained by place and area jurisdiction. To facilitate this, amendments have been made to allow the setting up of portals for e-markets.
Expanding Grievance Redressal
The director of an APMC and the Gujarat State Agriculture marketing board will take over the grievance redressal process which was solely managed by the APMC up until now.
Expected Benefits to Farmers
The entry of private entities into the market is expected to stimulate competition and ensure that farmers receive their due remuneration for their produce. Unlike previously, where APMCs had the power to form a cartel and decide the prices offered to farmers, farmers will not be limited to selling to a particular APMC and can opt for the best deal available to them.
APMC’s Viewpoint
From the perspective of the APMCs, this ordinance curtails their monopoly and permits the entry of private players. The ordinance will also impact their revenues as they will be unable to collect cess on transactions that occur outside the physical confines of the marketing yards. To put things into perspective, last year, of the ₹2.5 crore earned as market fees, ₹1.5 crore came from transactions conducted outside the marketing yard. With the enactment of this ordinance, this source of revenue stands to be lost.
About Agricultural Produce Market Committee (APMC)
An APMC is a statutory market committee constituted by a State Government concerning trade in certain agricultural or horticultural products or livestock, under the Agricultural Produce Market Committee Act issued by that state government. Its main objectives include ensuring transparency in pricing systems and transactions in the market area, providing market-led extension services to farmers, and promoting public-private partnerships in managing agricultural markets.