Aspirant Academy

Economy

Agricultural Marketing

Agriculture: Productivity, Land Reforms, Finance, Marketing, Food Security, Food Processing

Paper I · Unit 2 Section 6 of 11 0 PYQs 26 min
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Agricultural Marketing

5.1 APMC System and Its Problems

The Agricultural Produce Market Committee (APMC) system, established by state laws (most states passed APMC Acts in 1960s–70s), mandates that farmers sell produce only in regulated government markets (mandis) through licensed traders. This was designed to protect farmers from exploitation but became a source of systemic inefficiency.

Problems with APMC:

  1. Monopsony power of licensed traders — cartel-like behaviour in price setting
  2. High market fees and commission: 2–8% of produce value
  3. Restricted geographic mobility — farmers cannot sell outside their district mandi
  4. No competition from private buyers, retail chains, or processors
  5. Limited price discovery; opaque and manipulated auction systems

5.2 Marketing Reforms

e-NAM (Electronic National Agriculture Market)

  • Launched: April 14, 2016 by PM Modi
  • Online price discovery across mandis; buyers bid remotely from anywhere
  • Coverage: 1,361 mandis in 23 states/UTs (by March 2024)
  • Integrated with FPO (Farmer Producer Organisation) online module for collective selling
  • Cumulative trade: Rs 3.07 lakh crore (April 2016 to March 2024)

Agricultural Reforms 2020 — Farm Bills (Later Repealed)

The three farm laws were passed in September 2020 and repealed in November 2021 following large-scale farmer protests. They would have allowed APMC bypass, contract farming, and deregulation of essential commodities — reforms that remain highly contentious.

Model Agricultural Land Leasing Act (2016)

  • NITI Aayog recommended legalising land leasing to allow small farmers to aggregate land
  • Only a few states have implemented this recommendation so far

Farmer Producer Organisations (FPOs)

  • 10,000 new FPOs announced by GoI; budget: Rs 6,866 crore (2020–27)
  • FPOs aggregate small farmers' produce for collective marketing, negotiation, and input procurement
  • Implementing agencies: NABARD and SFAC (Small Farmers' Agribusiness Consortium)
  • 3+ crore farmer members enrolled in FPOs (2024)

Price Support Scheme (PSS)

  • Government procures oilseeds and pulses at MSP when market prices fall below MSP
  • Implemented by NAFED (National Agricultural Co-operative Marketing Federation)