APMCs set-up under the state Acts have impede the development of agriculture and cause foodinflation

Q.There is also a point of view that Agriculture Produce Market Committees (APMCs) set-up under the State Acts have not only impeded the development of agriculture, but also have been the cause of food inflation in India. Critically examine. 

Ans. The APMCs set-up under the State Acts aimed to make the agro marketing system efficient and to promote agri-processing and agricultural export. However, it is alleged that the APMCs are not only impeding the development of agriculture, but also have been the cause of food inflation in India. 

• APMC boards are administered by bureaucrats. The APMC bodies have lost the democratic nature and have become the centres of political power. 

•  The state level statutes have so far unable to address the key issues such as expansion and modernisation of marketing facilities, improvement in marketing information communication and linking small producers with efficient marketing channels.

• The less transparent APMC regulated markets are unlikely to attract much private investment in modern marketing infrastructure. Different traders may form a cartel which may decrease the auction price and hence affected the interest of the farmers. 

• The APMC Act mandates the purchase and sale of agricultural commodities in government-regulated mandis and the journey of a commodity from farm to fork involves multiple levels of transportation and handling expenses, agents' commission and mandi taxes - all increasing the final price of the farm produce by upto 20%.

• Nearly 5 to 40% of food is wasted depending upon the perishability of the item. Thus, the farmer's farm gate price is suppressed while retail price is inflated. The major chunk of this difference is appropriated by intermediaries, leading to low net realization to farmers and demand for hikes in support prices.

• Arbitrarily raising MSPs of cereals vis-a-vis non-cereal food items such as eggs, milk,pulses, fruit and vegetables increases the relative price gap between the two categories. This discourages the production of non-cereal food items even if the demand for them is rising at a faster rate than that for cereals.