Issue BriefsPublished on May 08, 2023
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An intellectual biography of India’s new farm laws

The debate around the economics and administration of farm laws stands frozen by politics. It is, therefore, time for politicians, administrators, economists, policymakers and other concerned citizens to examine the evolution of these laws. The three laws that have been enacted by Parliament attempt to take farmers towards harvesting economic gains; they have thus far been held back by outdated laws, manipulated markets and vested interests-driven corruption. This is aside from macro-factors, such as India moving away from food shortages into an era of surpluses.

As yesterday’s proponents of these reform ideas become today’s opponents of its laws, noise has become the currency of discourse. Confusion mars the economics of farm laws, misinformation drives its politics, bandh and siege have become its instruments of engagement. Worse, false narratives are being created across multiple platforms. Institutions that were not part of the debate — and aren’t — are being picked up, cooked and served as facts in a post-truth world. Any researcher, analyst or journalist studying the laws and the sector for clarity is negotiating misinformation traps. That the three laws are part of agricultural reforms that have taken more than two decades to fructify is bad enough. Worse, lost in the din is the farmer on whose behalf these reforms have been legislated, and protests organised.

This page is for those who wish to engage with the ongoing debate around agricultural laws. It aims to capture debates that have happened at the highest levels of India’s farm sector — politicians, administrators, economists, activists, writers and experts — for those wanting to get a clearer picture. It will help readers and thinkers place their ideological stances in perspective, get a more rounded analysis from the highest echelons of India’s policymaking, across time. It goes beyond politics and ideologies and enables politicians and ideologues to contextualise their stances and ideas. It also shows a policy mirror to them. In other words, this is a brief history of farm politics and agricultural economics, within the context of the current controversy around the recently enacted three laws.

In the process of collating, reading and excepting reports drafted by Parliamentary Standing Committees, expert committees, and task forces, this page can be seen as an intellectual biography of the three farm laws in particular, and the problems of India’s agriculture in general. The reports below have been arranged chronologically, with a link at the end for those who want to delve deeper and understand the nuances of the three laws better. All ideas-reports are linked with one another, but each is adding its own weight and carrying the debate further. Even after the ongoing controversy ends, this list of intellectual material will help scholars understand and negotiate the landscape of India’s agriculture better.

The chronology of, and the clarity on, these laws begins here.


The idea behind this Committee was to call for ideas to promote agricultural growth and benefits from exports and to ensure that a greater share of the ultimate price of the agricultural produce goes to farmers. Within this, agricultural marketing became an important component. This included the development of infrastructure for agricultural marketing, establishing sound linkages between production and marketing, development of market intelligence for the benefit of farmers and consumers, promotion of direct marketing, application of information technology in marketing and encouraging public, private and cooperative sectors to make investments for the development of agricultural marketing.


Some conclusions:

 The Guru Committee made several recommendations, one of which included remodelling the Agriculture Produce Marketing Committees (APMCs).

 Being “corporate bodies” established under State legislations, APMCs are either elected or nominated by the government.

 Although, technically the farmer is free to sell his produce in any mandi he likes, practically he has no liberty to sell his produce in his village or to the retail chain, processor, bulk buyer directly.

 He has to take his produce to a regulated market where the sales and deliveries are effected. This has hampered development of retail supply chains and direct supply to the processing, consuming factories or other bulk purchasers.

 As far as warehousing goes, godowns should be declared as deemed warehouses and no APMC market fee, sales tax, purchase tax, or octroi should be leviable on the goods stored. Similarly, provisions of Essential Commodity Act, Labour Act, Mathadi Act, Shop Establishment Act, or Industrial Disputes Act should not be applicable to these warehouses.

Read the report here.


Under control in agriculture, the task force made seven observations, of which two are around the Essential Commodities Act and APMCs:

 The Essential Commodities Act is a Central Legislation which provides an umbrella under which States are enabled to impose all kinds of restrictions on storage, transport and processing of agricultural produce. These controls have been traditionally justified on the grounds that they are necessary to control hoarding and other types of speculative activity, but the fact is that they do not work in times of genuine scarcity and they are not needed in normal times. Besides, they are typically misused by the lower levels of the administration and become an instrument for harassment and corruption. At a time when European countries have integrated their national markets and regard the resulting large European market as a feature which strengthens their position globally, it is an anomaly that we have laws that actually prevent the development of an integrated national market for agricultural products. After full consideration of this issue, we are of the view that the Essential Commodities Act should be repealed.

 The Ministry of Agriculture in the Central Government, in collaboration with the Planning Commission, should undertake a systematic review of State laws and control orders which impose harmful controls on agriculture and actively seek their repeal. Vested interests and inertia will resist such a move, but we feel that it is an essential step for extending the benefits of economic reforms to agriculture.

 The marketing of agricultural produce, especially fruits and vegetables, is governed by laws that stifle the development of agriculture. The existing laws require that wholesalers must purchase agricultural produce only in regulated mandis controlled by the Agricultural Produce Marketing Committee (APMC). Since most farmers are small farmers, they cannot directly bring vegetables and fruits to the mandis. They typically sell their produce to village commission agents who collect produce on behalf of the market commission agent who sells to wholesalers in the mandi. Although sale in the mandi is supposed to be by open auction to ensure fair pricing, in practice the price is determined in a highly non-transparent manner by negotiations between market commission agents and wholesalers. Lack of transparency is perpetuated by the fact that produce is not graded before it is sold. The prices arrived at in this fashion are declared as the mandi price and the farmer receives the residual price after the commission of the village commission agent and the market commission agent is deducted from the declared market price. Not only is the price determination non-transparent, the large number of middlemen, each of whom charges a commission, squeezes the realisation of the farmer so that the gap between the farm-gate price and the retail price paid by the consumer is very large. Although originally designed to protect farmers’ interests by creating regulated markets, the system has actually created a monopoly situation in which a small group of traders and agents are able to extract huge benefits. It is absolutely essential to liberalise the existing laws and allow competing markets to be set up.

Read the report here.


The RCA Jain Task Force was constituted to look into the Guru Committee recommendations. These included examining legislative reforms, institutional and policy support measures to expand credit, and the creation of marketing infrastructure. This Task Force spanned across ministries and was not restricted to agriculture alone.

Some recommendations:

 All State governments should amend their respective APMC laws to deliver the following:

 Enable private and cooperative sectors to establish and operate (including levy of service charge) agricultural marketing infrastructure and supporting services.

 Direct marketing of agricultural commodities from producing areas and farmers’ fields, without the necessity of going through licensed traders and regulated markets.

 Permitting ‘Contract farming’ programs by processing or marketing firms. The APMC within whose jurisdiction the area covered by contract farming agreement lies, should record the contract farming agreements and act as a protector of producer’s and processor’s interests with due legal support in its jurisdiction. Incidence of taxes by way of market fee, cess, duties, taxes etc. on procurement of agricultural or horticultural produce under the ‘Contract farming’ program should be waived or minimised.

 Promote the forward and futures markets in agricultural commodities.

 Essential to delink minimum support price (MSP) from procurement, particularly if the private sector is to be restored its rightful role in marketing agricultural produce. The alternative policy should allow market forces to determine the price and provide financial support through an insurance programme to farmers for protection of their incomes in falling markets.

Read the report here.


In order to reform APMCs across the country, the Union government drafted the Model APMC Act, 2003.

 The monopoly of [state] government regulated wholesale markets has prevented development of a competitive marketing system in the country, providing no help to farmers in direct marketing, organising retailing, a smooth raw material supply to agro-processing industries and adoption of innovative marketing system and technologies.

 If agricultural markets are to be developed in private and cooperative sectors and to be provided a level competitive environment vis-a-vis regulated markets, the existing framework of State APMC Acts will have to undergo a change.

 Section 14: There will be no compulsion on the growers to sell their produce through existing markets administered by the APMC. However, agriculturists who do not bring his produce to the market area for sale will not be eligible for election to the APMC.

 Sections 26 and 27: The APMC have been made specifically responsible for:

 Ensuring complete transparency in pricing system and transactions taking place in market area;

 Providing market-led extension services to farmers;

 Ensuring payment for agricultural produce sold by farmers on the same day;

 Promoting agricultural processing including activities for value addition in agricultural produce

 Setup and promote public private partnership in the management of agricultural markets.

 Chapter VII: a new Chapter on ‘Contract Farming’ added to provide for:

 Compulsory registration of all contract farming sponsors

 Recording of contract farming agreements

 Resolution of disputes, if any, arising out of such agreement

 Exemption from levy of market fee on produce covered by contract farming agreements

 Provide for indemnity to producers’ title or possession over his land from any claim arising out of the agreement

 Chapter VII: Provision made for direct sale of farm produce to contract farming sponsor from farmers’ field without the necessity of routing it through notified markets

 Section 42: Provision made for imposition of single point levy of market fee on the sale of notified agricultural commodities in any market area and discretion provided to the State Government to fix graded levy of market fee on different types of sales

 Section 50: Provision made for resolving of disputes, if any, arising between private market or consumer market and market committee

Read the model law here.


n order to strengthen and expand the horticulture revolution, the policy focus must be on post-harvest management, processing and marketing. Further, the policy must bridge the disconnection between production and profit:

 Adoption of this strategy would call for immediate amendment to the APMC Act by each State to decentralise the system and permit marketing by other players for achieving the ultimate goal of ensuring better returns to the growers and reasonably good quality products to the consumers.

Read the report here


 States/UTs where there is no APMC Act and hence not requiring reforms: Kerala, Manipur, Andaman & Nicobar Islands, Dadra & Nagar Haveli, Daman & Diu and Lakshadweep

 States/UTs where APMC Act already provides for the reforms: Tamil Nadu

 States/UTs where reforms to APMC Act has been done as suggested: Madhya Pradesh, Himachal Pradesh, Sikkim and Nagaland (Gazette Notification under issues), Andhra Pradesh (ordinance under issue)

 States/UTs where reforms to APMC Act has been done partially: Maharashtra, Rajasthan, Haryana, Punjab, Karnataka, Gujarat and NCT of Delhi

 States/UTs where administrative action is initiated for the reforms: Orissa, Assam, Mizoram, Arunachal Pradesh, Tripura, Chhattisgarh, Meghalaya, J&K, Uttaranchal, Goa, West Bengal, Uttar Pradesh, Pondicherry and Chandigarh

 States/UTs where there is no progress: Bihar and Jharkhand

 It was felt that the reforms in APMC Acts were necessary for creating a nation-wide integration of the agriculture markets, facilitating emergence of agriculture markets in private and cooperative sectors and creating a conducive environment for private sector investment in the market infrastructure.

 The role of the APMCs and the State Agriculture Marketing Boards [SAMBs] needs to change from regulation to development in the changed production and demand environment. The APMCs and SAMBs should be primarily involved in grading, branding and packaging and building up markets for the local products in domestic and even international markets.

 The State Agriculture Produce Marketing Acts need to be amended to provide for, among others, encouraging the private sector or cooperatives to establish markets, develop marketing infrastructure and supporting services, collect charges and allowing marketing without the necessity of going though APMC/licensed traders. Further, the market fee and other charges needs to be rationalised.

 The APMC Act in different States/Union Territories needs to be amended on the lines of the draft of the amended APMC Act circulated by the Government of India. It would encourage private sector investment in development of agricultural marketing.

 Need for review of the Essential Commodities Act and other Acts/Orders concerning storing, marketing and processing etc of the agricultural commodities.

 There is an urgent need to undertake a review of the Essential Commodities Act and other legal instruments covering marketing, storing and processing of agriculture produce; some of these Acts and Orders appear to have outlived their utility.

Read the report here.


The study was undertaken by FAO at the request of the NCF through the Union Ministry of Agriculture to study the possibilities of emergence of a farmer-centric Indian common market catering to both over a billion consumers within the country and consumers abroad. The technical project was initiated to study the possibilities of removal of unnecessary restrictions on the movement of agriculture products both within and between states in India and measures that could be taken for better market integration. Some conclusions:

 The Essential Commodities Act was introduced during a period when India was not selfsufficient in agriculture and controlling the movement and storage practices acted as an efficient check against dishonest business practices. However, given the fact that India has now created a respectable buffer stock of food grains against any disaster, thanks to the operation of the Food Corporation of India, there is scope for re-looking at the actual utility of the provision.

 There is reason to believe that the law has outlived its utility and is only contributing to the rising transaction costs. Although in the last few years both the State and the Central governments have taken number of steps to reduce the rigours of the ECA and the number of commodities covered by it has been drastically cut down, the government still retains the right to bring any commodity under its purview, if need be.

 Out of the 15 commodities still kept in the list, 11 are related to agricultural products. The mere threat of potential Government action keeps the private sector participation in storage, transport and processing at a low level. It also bears consequences on verifications made at the inter-state borders on movement of goods.

 The powers for states to restrict the movement of agricultural products out of their territory granted by the ECA are incompatible with the principle of a single market. They may have served a purpose in helping to preserve local food security but at the cost of reducing food security for India as a whole. For these reasons the provision should gradually be phased out.

 As regards the collection of market fees through the APMC Act, it still continues to be a major hurdle on the free movement of primary agriculture products not only between States but also even within the States from one market area to another. As already stated, it sometimes results in double taxation of the same products. Moreover, its operation creates monopolies of the State Marketing Board/Market Committees in regulating the wholesale market by not allowing direct marketing, often leading to cartelisation of a few brokers or arhtiyas and non-transparency in price setting to the disadvantage of the farmers.

 The monopolistic operation of the market committee also acts as a disincentive to the private sector in setting up processing units for value addition, as they do not have direct linkage with the farmers, which would otherwise help them in getting raw materials of assured quality and quantity. The policy framework should give farmers the liberty to freely market their produce anywhere including direct marketing to processors or other buyers without paying any market fees. However, in case they want the facilities of the market yard, they have to pay a service charge, which should be sufficient to cover the operation costs of the market committee.

 It is therefore recommended that farmers, processor companies or other private operators may be allowed to operate their own wholesale market and charge a suitable fee for the service. This would encourage more investment in setting up infrastructure and create opportunities for providing better and more cost-effective services.

 The reform of APMC would facilitate free movement of agriculture products between different States and from the jurisdiction of one market committee to another. However, as market fee is a major source of income for a number of States, it may result in loss of revenue to some of them. It is felt that in the major cereal producing States like Punjab, Haryana, Western UP and Andhra Pradesh where bulk of food grains are procured by the FCI for the central pool, the loss of market fee may not be significant as the FCI and the State Government agencies are expected to continue their procurement through the existing Mandi structure.

Read the report here.


 The Essential Commodities Act, 1955, and the Control Orders were relevant and issued in situation of demand exceeding the supply. The demand-supply balance and the economic environment have changed in recent years, but the restrictions and controls are continuing and coming in the way of efficient functioning of the marketing system and also the agricultural development in the country.

 The number of essential commodities has been reduced from a high of seventy in 1989 to only fifteen. It would be useful if the remaining agricultural products are also removed from the list of essential commodities. Alternatively, the ECA, 1955, may be put under suspended animation for the present and revived by Government notification if any emergency situation develops, for a limited time, for a specific commodity and in a specified area.

 The Government needs to abolish market fee on primary agricultural commodities altogether and levying of charges for various services like loading, unloading, weighing etc. in the APMC yard and replace it with one consolidated service charge for use of the market infrastructure.

 The State has already amended the APMC Act, thereby facilitating the growth of pro-farmer markets. The transition from existing trade channels like Arhtiyas should be brought about with care, so as to ensure that the new systems of farmers-purchaser linkages are both beneficial and sustainable. Opportunities for assured and remunerative marketing hold the key for Punjab’s agricultural future.

 The APMCs have also generally failed to provide adequate infrastructure at the mandis. The focus of the APMCs has been on regulation and not development of markets for the local products, introducing grading and encouraging local processing etc. The APMCs have also not played any significant role in bringing better market information to the farmers.

 Direct marketing could enable the farmers to sell their produce to the processors or bulk buyers at lower transaction costs and maybe at better prices than what they get from intermediaries or from the wholesale markets. However, the APMC Act in most of the States does not allow direct buying by processing industries, exporters or wholesalers. Although this requirement has been waived on a case-by-case basis in some States under pressure from the industry, the market fee still has to be paid even though the produce may not enter the APMC yard.

 The monopoly of APMCs has meant that the private sector including cooperatives have not been able to contribute in establishing and developing mandis. The provision of the APMC Acts in different States requires modification to create a lawful role for the private sector in the marketing development.

 The Essential Commodities Act and other legal instruments including the State Agriculture Produce Marketing Committee Acts [APMC Acts] relating to marketing, storage and processing of agriculture produce need to be reviewed in order to meet the requirements of modern agriculture and attracting private capital in this sector.

 As regards the collection of market fees through the APMC Act, it still continues to be a major hurdle on the free movement of primary agriculture products not only between States but also even within the States from one market area to another. As already stated, it sometimes results in double taxation of the same products. Moreover, its operation creates monopolies of the State Marketing Board/Market Committees in regulating the wholesale market by not allowing direct marketing, often leading to cartelisation of a few brokers or arhtiyas and non-transparency in price setting to the disadvantage of the farmers.

 The reform of APMC would facilitate free movement of agriculture products between different States and from the jurisdiction of one market committee to another. However, as market fee is a major source of income for a number of States, it may result in loss of revenue to some of them.

Read the report here.


Harmonising the recommendations of the previous three reports, the fourth report of the NCF creates a Draft National Policy for Farmers.

Some recommendations:

 The Essential Commodities Act and other legal instruments including the State Agriculture Produce Marketing Committee Acts [APMC Acts] relating to marketing, storage and processing of agriculture produce need to be reviewed in order to meet the requirements of modern agriculture and attracting private capital in this sector.

 The role of the APMCs/State Agriculture Marketing Boards need to change from regulatory focus to promotion of grading, branding, packaging and development of distant and international markets for the local produce.

 The farmer wants different options for marketing his produce. The State APMC Acts need to be amended to provide for, among others, encouraging the private sector or cooperatives to establish markets, develop marketing infrastructure and supporting services, collect charges, allowing marketing without the necessity of going through APMC/ licensed traders etc.

Read the report here.


This is NCF’s fifth and final report, submitted in two volumes. It deals with some of the key issues confronting our farmers and farming such as the economic survival of farmers with small holdings in a globalised economy, shaping the economic destiny of farmers, strengthening the ecological foundations essential for sustainable agriculture, attracting and retaining youth in farming, and restoring the glory of Indian farmers and farming. It presents an action plan for making hunger history.

Volume 1:

 If we continue the practice of importing large quantities of pulses and oil seeds, without determined action to produce them within the country, dry farming areas will continue to languish in poverty and malnutrition. The linkages between low small farm productivity and the persistence of poverty and malnutrition is very strong. Therefore, the sooner we revise our import policies in relation to pulses and oil seeds and divert our attention to helping the millions of farmers toiling in rain-fed areas to produce more of these essential commodities by assuring them of a support price, the greater will be the possibility of reducing substantially hunger and poverty in the country. Whenever there is a good crop of pulses or oilseeds like the one in mustard this year, farmers suffer due to lack of assured and remunerative marketing opportunities. The interests of the producer-consumer needs greater protection than those of the interests of trader-importers.

 The APMCs and State Agriculture Marketing Boards need to change their role from regulatory to promotional and developmental. These agencies should focus more on developing new markets for the local products. Their entire functioning, management, operations and disposal of surplus need a relook. The need is also to encourage and support the farmer’s cooperatives and private sector to operate the wholesale agriculture produce markets and provide competition to APMCs.

 Development of agro-processing is important to increase farmers’ income and also to create employment. It would, however, be necessary to introduce reforms in the agriculture sector to facilitate greater private corporate sector investments in agro-processing not only in new units but also in modernising the established units. The processing industry requires adequate and continuous availability of raw material for processing. Direct purchase from the growers is not possible under the existing APMC Act in many of the States and hence it has to be either routed through the APMC or the concerned State Govt. has to specifically permit the same.

Read the report here.

Volume 2:

 Farmer of Punjab could not transport surplus wheat outside due to stringent provisions in 9th Schedule of Essential Commodities Act. It had acted to the detriment of interest of the farmers in the past.

 PM in his speech on 15.08.2006, mentioned that farmer must get appropriate remunerative price from the market. This must be implemented.

 Need to give more attention to remunerative prices for the farmers for their produce. APMCs and State Marketing Boards should understand their new developmental role. There was a huge scope of improvement in existing working style of the APMCs.

 Hamal and coolie do not deal with farmers respectfully; rather they insult them. Farmers selling their produce in APMC feel that the traders and management connive and often cheat them. There is need for a greater say of farmers in managing the APMCs and a say particularly in the auction system. The farmer’s interest should be uppermost in the working of the APMCs. Ungraded produce fetches low price. The need is to introduce grading at the farm gate itself.

 NGO should also be permitted to buy agricultural produce directly from the farmers without going through the APMCs.

 Benefits of APMCs have not reached small, marginal and medium farmers.

Read the report here.


Across XIII Chapters and 115 Sections, the Union government drafts the Model APMC Rules, 2007. The Rules come with 26 forms.
The rules detail how Market Committees will function (Chapter V), contract farming done (Chapter VI), and levy of fees and its collection (Chapter VIII).

Read the Rules here.



  • Mandi governance is an area of concern. A greater number of traders must be allowed as agents in the mandis. Anyone who gets better prices and terms outside the Agricultural Produce Marketing Committee (APMC) or at its farm gate should be allowed to do so. For promoting inter-state trade, a commodity for which market fee has been paid once must not be subjected to subsequent market fee in other markets including that for transaction in other states. Only user charges linked to services provided may be levied for subsequent transactions.
  • Perishables could be taken out of the ambit of the APMC Act. The recent episodes of inflation in vegetables and fruits have exposed flaws in our supply chains. The government-regulated mandis sometimes prevent retailers from integrating their enterprises with those of farmers. In view of this, perishables may have to be exempted from this regulation.
  • The role of the agriculture market is to deliver agricultural produce from the farmer to the consumer in the most efficient way. Agriculture markets are regulated in India through the APMC Acts. According to the provisions of the APMC Acts of the states, every APMC is authorised to collect market fees from the buyers/traders in the prescribed manner on the sale of notified agricultural produce. The relatively high incidence of commission charges on agricultural /horticultural produce renders their marketing cost high, which is an undesirable outcome. All this suggests that a single point market fee system is necessary for facilitating free movement of produce, bringing price stabilisation, and reducing price differences between the producer and consumer market segments. Another point to be highlighted is that the cleaning, grading, and packaging of agricultural produce before sale by the farmers have not been popularised by these market committees on a sufficient scale.
  • As the APMC was created to protect the interests of farmers it will be in the fitness of things to give farmers the choice of going to the PMC or not. In the light of this, the need is to pursue further reforms in the state APMC Acts.

Read full chapter here.


This Committee was set up on 2 March 2010 to persuade various States/UTs to implement the reforms in agriculture marketing through adoption of Model APMC Act and Model APMC Rules, suggest further reforms necessary to provide a barrier free national market for the benefit of farmers and consumers and also suggest measures to effectively disseminate
market information and to promote grading, standardisation, packaging, and quality certification of agricultural produce.


Due to the restrictive provisions of the Essential Commodities Act and various Control Orders issued thereunder, private investment in large scale storage and marketing infrastructure including in the areas of contract farming, direct marketing have not been very encouraging. Under the present system, the marketable surplus of one area moves out to consumption centres through a network of middlemen and traders and institutional agencies. Thus, there exists national level physical, though, there is no national level regulation for the same and the existing regulation does not provide for a barrier free market in the country. There are many significant Inter-State barriers to trade, viz. (a) Taxation Related Barriers (variation in rates, applicability of VAT, levy of market fee at multiple point, etc.); (b) Physical Barriers (Essential Commodities Act, Check Posts, APMC Regulations, etc.); and (c) Statutory Barriers relating to licensing and registration of traders, commission agents. Therefore, there is a need to develop a national level single market for agricultural commodities by removing all the existing barriers of licensing, movement and storage.

 In order to regulate and control the supply and distribution of foodgrains from surplus to deficit areas, the Government of India implements Essential Commodities Act to control and regulate production, manufacturing and distribution of essential commodities in the country in the event of short supply. The Act itself does not lay the Rules and Regulations but allows the States to issue Control Orders in the event of malpractices like hoarding and black marketing i.e., “Licensing of Dealers/Retailers for trade in foodgrains”; “Restrictions on movement of foodgrains”; and “Regulation of Storage limits”. Since 1993, the Central Government has decided to treat the entire country as a single food zone, but the States are still imposing such orders and restrict movements now and then.

 State Governments often issue Control Orders promulgated under the Essential Commodities Act, 1955 adversely affecting trading in agricultural commodities such as foodgrains, edible oils, pulses and sugar. These Control Orders broadly relate to licensing of dealers, regulation of stock limits, restrictions on movement of goods and compulsory purchase under the system of levy. Due to the restrictive provisions of the Essential Commodities Act and various Control Orders issued thereunder, private investment in large scale storage and marketing infrastructure including in the areas of contract farming, direct marketing have not been very encouraging.

 Agricultural Produce Marketing Regulation Act and Essential Commodities Act need to be amended to ensure barrier free storage and movement of agricultural commodities across the States as storage and movement are very important marketing functions for maintaining regular supply and distribution of food products in the country from the point of production to the consumption centres. This will help to contain uneven price fluctuations and ensure optimum management of the supply chain.

 The regulation of markets, however, achieved limited success in providing an efficient agricultural marketing system in the country because, over the years, these development-oriented institutions (e.g. the State Agriculture Marketing Boards, APMCs etc.) turned out to be more of revenue generating institutions than facilitating efficient marketing practices to benefit the farmers and other market participants. Apart from the market regulation programme, the Essential Commodities Act and plethora of Orders promulgated under this Act by the Centre and States prevented development of free and competitive marketing system in the country

 Apart from the market regulation programme, the Essential Commodities Act, 1955 (EC Act) and plethora of Control Orders promulgated under this Act by the Centre and States prevented development of free and competitive marketing system in the country. Due to the restrictive provisions of the EC Act and various Control Orders issued thereunder, private investment in large scale storage and marketing has virtually become non-existent. These Control Orders also give rise to inordinate delay in haulage of agricultural produce at the border check points creating artificial barriers on the movement and storage of agricultural commodities and to that extent the formation of common market.

 The regulatory framework needs to undergo a change by providing free hand to private sector to own, operate and manage markets/alternate marketing system with backward and forward linkages. The Government may at best formulate rules of the game for the market players rather than controlling the system. The role of the Government should be that of facilitator only.

 The present Act restricts the farmers from selling their produce to processor/manufacturer/bulk processor outside the market yard as the produce will have to channel through regulated market according to provisions of the APMC Act. In the changed scenario, the producer should be free to enter into direct sale without the involvement of other middlemen outside the market yard in the market area under the relevant provision of the concerned Act. This will facilitate direct marketing between the producers and processing factories with monetary gains to the producer-seller through improving competitiveness and to the consumers by way of reasonable prices.

 Under the present APMC Act, only State Governments are permitted to set up markets. Monopolistic practices and modalities of the State-controlled markets have prevented private investment in the sector. The licensing of traders in the regulated markets has led to the monopoly of the licensed traders acting as a major entry barrier for new entrepreneurs. The traders, commission agents and other functionaries organise themselves into associations, which generally do not allow easy entry of new persons, stifling the very spirit of competitive functioning.

Read the report here.



  • Organised marketing of agricultural commodities has been promoted in the country through a network of regulated markets to ensure reasonable gains to farmers and consumers by creating a market environment conducive for fair play of supply and demand. In order to bring about reforms in the sector, a model Agricultural Produce Marketing (Development and Regulation) (APMC) Act was prepared in 2003. Though the process of market reforms has been initiated by different state governments through amendments in the present APMC Act on the lines of Model Act, many of the states are yet to adopt the Model Act uniformly. It is therefore necessary to complete the process of market reforms early in order to provide farmers an alternative competitive marketing channel for transaction of their agricultural produce at remunerative prices. Development of an agricultural marketing infrastructure is the foremost requirement for the growth of a comprehensive and integrated agricultural marketing system in the country. For the purpose, the Ministry of Agriculture is implementing demand-driven Plan schemes by providing assistance to entrepreneurs in the form of back-ended credit-linked subsidy, viz. the Grameen Bhandaran Yojana and Development/ Strengthening of Agricultural Marketing Infrastructure, Grading and Standardisation.

Read full chapter here.



  • 52: Information asymmetry is a major market barrier. In order to benefit all stakeholders in the agriculture supply chain, and especially to enable farmers to take rational and informed decisions about cropping pattern and marketing strategies, the FMC is implementing the Price Dissemination Scheme. Under this, the futures and spot prices of National Exchanges and the spot prices of AGMARKNET from around 1700 mandis are run on real-time basis on price tickers/boards installed in 267 APMCs, KVKs, and other locations where farmer footfall is high. To increase awareness amongst farmers and other stakeholders and for them to benefit from the price discovery mechanism, there is need to install them in all markets, including farmers markets.
  • 79: On domestic and international marketing, the plethora of government interventions that were used to build a marketing set up have actually served as barriers to trade. Removing market distortions will create greater competition in markets, promote efficiency and growth, and facilitate the creation of a national agriculture market. Thus, while the agricultural market is by itself not fully malleable to becoming a perfectly competitive structure, it can asymptotically approach it. Since agriculture provides the backward linkage to agro-based industries and services, it has to be viewed holistically as a seamless farm-to-fork value chain, comprising farming, wholesaling, warehousing, logistics, processing, and retailing including exports. For establishing a national common market, some reforms are needed:
    • (i) Examine the APMC Act, EC Act, Land Tenancy Act, and any such legally created structures whose provisions are restrictive and create barriers to free trade.
    • (ii) Rigorously pursue alternate marketing initiatives, like direct marketing and contract farming.
    • (iii) Examine inclusion of agri related taxes under the General Goods and Services Tax (GST).
    • (iv) Establish stable trade policy based on tariff interventions instead of non-tariff trade barriers.
    • (v) Develop and initiate competition in the agro-processing sector. Incentivise the private sector to scale up investments.


  • There has been limited success in establishing efficient agricultural marketing practices in India. The monopoly of government-regulated wholesale markets has prevented development of a competitive marketing system in the country. In the context of liberalisation of trade in agricultural commodities and for the domestic farming community to reap the benefits of new global market access opportunities, there is a need to integrate and strengthen the internal agricultural marketing system.
  • Various committees and task forces of the government recommended that control over agricultural markets by the state be eased to facilitate greater participation of the private sector, particularly to stimulate massive investments required for the development of agricultural marketing. The model Agricultural Produce Marketing (Development and Regulation) [APM(DR)] Act of 2003 was circulated to all states for adoption. The reforms have largely focused on addressing some of the concerns within the existing framework of state Agricultural Produce Marketing Committees (APMC). They have however failed to address monopolistic and uncompetitive practices in inter-state trading of agricultural products. The Committee on Agricultural Reforms (2013) noted that, ‘By and large, the APMCs have emerged as some sort of Government sponsored monopolies in supply of marketing services/ facilities, with all drawbacks and inefficiency associated with a monopoly’.
  • Thus, the APMC Act has not achieved the basic objective of setting up a network of physical markets. There are some successful initiatives in direct marketing, such as Apni Mandi in Punjab, Uzhavar Sandhai in Tamil Nadu, Shetkari Bazaar in Maharashtra, Hadaspur Vegetable Market in Pune, Rythu Bazar in Andhra Pradesh, Krushak Bazaar in Odisha, and Kisan Mandi in Rajasthan.
  • Some measures that would facilitate the creation of a barrier-free national market are:
    • (i) Permit sale and purchase of all perishable commodities such as fruits and vegetables, milk and fish in any market. This could later be extended to all agricultural produce.
    • (ii) Exempt market fee on fruits and vegetables and reduce the high incidence of commission charges on agricultural/ horticultural produce.
    • (iii) Taking a cue from the success of direct marketing efforts of states, the APMC/other market infrastructure may be used to organise farmers markets. FPOs/self-help groups (SHGs) can be encouraged to organise farmers markets near urban centres, malls, etc. that have large open spaces. These could be organised every day or on weekends, depending on the concentration of footfalls.
    • (iv) Include ‘facilitating organisation of farmers markets’ under the permitted list of corporate social responsibility (CSR) activities under Companies Act 2013, to encourage companies engaged in agri-allied activities, food processing etc to take up this activity under CSR and also help in setting up supply chain infrastructure. This would be similar to the e-Choupal initiative of ITC Ltd., but under CSR.
    • (v) All the above facilitators can also tie-up a link to the commodity exchanges’ platform to disseminate spot and futures prices of agricultural commodities.

Read full chapter here.



  • Tables 8.1-8.3 convey a sense of the magnitudes and multiplicity of fees arising from the operation of the APMCs. They charge a market fee of buyers, and they charge a licensing fee from the commissioning agents who mediate between buyers and farmers. They also charge small licensing fees from a whole range of functionaries (warehousing agents, loading agents etc.). In addition, commissioning agents charge commission fees on transactions between buyers and farmers.
  • The levies and other market charges imposed by states vary widely. Statutory levies/mandi tax, VAT etc. are a major source of market distortion. Such high level of taxes at the first level of trading have significant cascading effects on the prices as the commodity passes through the supply chain.
  • For rice, listed in Table 8.1, these charges can be as high as 14.5 percent in Andhra Pradesh (excluding the state VAT) and close to 10 percent in Odisha and Punjab. For wheat, too, these charges can be quite high (Table 8.2).
  • Even the model APMC Act (described below) treats the APMC as an arm of the State, and, the market fee, as the tax levied by the State, rather than fee charged for providing services. This is a crucial provision which acts as a major impediment to creating national common market in agricultural commodities. Removal of this provision will pave a way for creating competition and a national common market for agricultural commodities.
  • Moreover, though the market fee is collected just like a tax, the revenue earned by the APMCs does not go to the State exchequer and hence does not require the approval of State legislature to utilise the funds so collected. Thus APMC operations are hidden from scrutiny.


  • The scope of the Essential Commodities Act (EC Act) is much broader than the APMC Act. It empowers the central and state governments concurrently to control production, supply and distribution of certain commodities, including pricing, stock-holding and the period for which the stocks can be kept and to impose duties. The APMC Act on the other hand, controls only the first sale of the agricultural produce. Apart from food-stuffs which are covered under the APMC Act, the commodities covered under the EC Act generally are: drugs, fertilisers, and textiles and coal.


  • Since these State Acts created fragment markets (2477) for agricultural commodities and curtailed the freedom of farmers to sell their produce other than through the commission agents and other functionaries licensed by the APMCs, the Ministry of Agriculture developed a model APMC Act, 2003 and has been pursuing the state governments for over a decade now to modify their respective Acts along the lines of the Model APMC Act, 2003. The Model APMC Act:-
    • (a) provides for direct sale of farm produce to contract farming sponsors;
    • (b) provides for setting up “Special markets” for “specified agricultural commodities” – mostly perishables;
    • (c) permits private persons, farmers and consumers to establish new markets for agricultural produce in any area;
    • (d) requires a single levy of market fee on the sale of notified agricultural commodities in any market area;
    • (e) replaces licensing with registrations of market functionaries which would allow them to operate in one or more different market areas;
    • (f) provides for the establishment of consumers’ and farmers’ markets to facilitate direct sale of agricultural produce to consumers; and
    • (g) provides for the creation of marketing infrastructure from the revenue earned by the APMC.
  • The model APMC Act provides some freedom to the farmers to sell their produce directly to the contract-sponsors or in the market set up by private individuals, consumers or producers. The model APMC Act also increases the competitiveness of the market of agricultural produce by allowing common registration of market intermediaries. Many of the States have partially adopted the provisions of model APMC Acts and amended their APMC Acts. Some of the states have not framed rules to implement the amended provisions, which indicate hesitancy on the part of state governments to liberalise the statutory compulsion on farmers to sell their produce through APMCs. Some states — such as Karnataka — have however adopted changes to create greater competition within state.


  • The provisions of the Model APMC Act do not go far enough to create a national – or even state level common market for agricultural commodities. The reason is that the model APMC Act retains the mandatory requirement of the buyers having to pay APMC charges even when the produce is sold directly outside the APMC area, say, to the contract sponsors or in a market set up by private individuals even though no facility provided by the APMC is used. The relevant provision (No.42) in the model APMC Act is:
    • “Power to levy market fee (single point levy): Every market shall levy market fee (i) on the sale or purchase of notified agricultural produce, whether brought from within the State or from outside the State into the market area.”
  • Though the model APMC Act bars the APMCs and commission agents from deducting the market fee/ commission from the seller, the incidence of these fees/ commission falls on the farmers since buyers would discount their bids to the extent of the fees/ commission charged by the APMC and the Commission agents.
  • Though the model APMC Act provides for setting up of markets by private sector, this provision is not adequate to create competition for APMCs even within the State, since the owner of the private market will have to collect the APMC fees/taxes, for and on behalf of the APMC, from the buyers/sellers in addition to the fee that he wants to charge for providing trading platform and other services, such as loading, unloading, grading, weighing etc.


  • The 2014 budget recognises the need for setting up a national market and stated that the central government will work closely with the state governments to reorient their respective APMC Acts to provide for the establishment of private market yards/private markets. The budget also announced that the state governments will also be encouraged to develop farmers’ markets in towns to enable farmers to sell their produce directly.
  • More steps may have to be taken and incremental moves may need to be considered to get the states on board. For example, first, it may be possible to get all the states to drop fruits and vegetables from the APMC schedule of regulated commodities; this could be followed by cereals, pulse and oil seeds, and then all remaining commodities.
  • State governments should also be specifically persuaded to provide policy support for setting up infrastructure, making available land etc. for alternative or special markets in private sector, since the players in the private sector cannot viably compete with the APMCs in which the initial investment was made by the government on land and other infrastructure. In view of the difficulties in attracting domestic capital for setting up marketing infrastructure, particularly, warehousing, cold storages, reefer vans, laboratories, grading facilities etc. Liberalisation of FDI in retail could create the possibilities for filling in the massive investment and infrastructure deficit which results in supply-chain inefficiencies.


  • If persuasion fails (and it has been tried for a long time since 2003), it may be necessary to see what the centre can do, taking account of the allocation of subjects under the Constitution of India. The Constitution of India does empower the States to enact APMC Acts under some entries in the List II of Seventh Schedule (State List), viz., Entry 14: ‘Agriculture …’, Entry 26: ‘Trade and Commerce within the State ….’ And Entry 28: ‘Markets and fairs’.
  • However, the perception that the Constitution will have to be amended if the centre has to play a decisive role in creating a national market remains open. There are provisions/entries in List III of the Seventh Schedule (Concurrent List) in the Constitution which can be used by the Union to enact legislation for setting up a national common market for specified agricultural commodities, viz., Entry 33 which covers trade and commerce and production, supply and distribution of foodstuffs, including edible oilseeds and oils raw cotton, raw jute etc. Entry 42 in the Union List, viz., ‘Interstate Trade and Commerce’ also allows a role for the union. Once a law is passed by the Parliament to regulate trading in the specified agricultural commodities, it will override the state APMC laws, paving the way for creating a national common market. But this approach could be seen as heavy-handed on the part of the centre and contrary to the new spirit of cooperative federalism.

Read the survey here.




  • (i) The Department of Agriculture (DAC) has issued a comprehensive advisory to states to go beyond the provisions of the Model Act and declare the entire state a single market with one licence valid across the entire state and removing all restrictions on movement of agricultural produce within the state.
  • (ii) In order to promote development of a common national market for agricultural commodities through e-platforms, the department has approved Rs 200 crore for a central-sector scheme for Promotion of National Agricultural Market through Agri-Tech Infrastructure Fund (ATIF) to be implemented during 2014-15 to 2016-17. Under the scheme, it is proposed to utilise the ATIF for migrating towards a national market through implementation of a common e-platform for agri-marketing across all states.
  • (iii) On the request of the central government, a number of state governments have exempted the marketing of fruits and vegetables from the purview of the APMC Act. The NCT of Delhi has taken the initiative in this direction by issuing a notification on 2 September 2014 , ending the regulation of fruits and vegetables outside redefined market yard/ sub-yard area of the APMC, MNI, Azadpur, APMC, Keshopur, and APMC Shahdara. The Small Farmers Agribusiness Consortium (SFAC) has taken the initiative for developing a kisan mandi in Delhi with a view to providing a platform to FPOs for direct sale of their produce to prospective buyers totally obviating or reducing unnecessary layers of intermediation in the process. They plan to scale their activities in other states based on the outcome of the experience of the Delhi kisan mandi.

Read the Survey here.

  • 23: The Indian farmer faces price uncertainties, for his produce in seasons during a year, across years owing to supply and demand fluctuations, speculation and hoarding by traders. The price risks emanating from an inefficient APMC market, are severe for farmers in India since they have very low resilience owing to the perishable nature of produce, inability to hold produce, hedge in surplus/shortage scenarios or to insure against losses.
  • 37: The market risks that arise in agriculture trade, both domestic and international are mainly due to uncertainty in the policies of agricultural trade and market policies pursued by the government from time to time. The agriculture markets under the Agricultural Produce Market Committee (APMC) Act of the State Governments, with around 2,477 principal regulated markets based on geography (the APMCs), and 4,843 submarket yards are regulated by the respective APMCs. The posts in the market committee and the market board – which supervises the market committee are occupied by the politically influential, who enjoy a cosy relationship with the licensed commission agents, who in turn exercise monopoly power, at times by forming cartels. The farmers lose out in the APMC market dynamics.
  • 38: There is need to remove all restrictions on internal trade on agricultural commodities and dismantle fragmented legislations that govern agriculture. At present, there are four legislations in existence/formulation to regulate agriculture markets,
    • Model APMC Act, 2016 to replace the present state legislations on markets,
    • Agricultural Produce Trading (Development and Regulation) Act, 2017,
    • A law that would regulate contract farming and
    • A law/regulation that would regulate e-NAM.
  • 39: Several legislations of the State and Centre ensure that the agricultural markets are fragmented and the benefits to the farmers remain low. The above legislations need to be dismantled and move towards a Common National Agriculture Market as envisaged in the e-NAM initiative.
  • 40: The perishable farm produce needs to be kept outside the purview of present APMC, Act/ proposed Model APMC, Act 2016 as has been stated in the Budget Speech (2017-18), in para 29, by the Finance Minister that, “Market reforms will be undertaken and the States would be urged to denotify perishables from APMC.” This will give opportunity to farmers to sell fruits and vegetables through the government created electronic trading portal and get remunerative prices.


  • 41: The stock limits imposed under ECA, 1955 end up curtailing demand for farm produce and so price. The analysis of the stock limits in select states indicates that a wholesaler is permitted a stock limit of around between 16 to 50 times in urban areas and between 10 and 80 times in other areas than the stock limits for the retailer, which is uniform for the entire year. This sharp difference needs to be rationalised by permitting the maximum limit commencing the sowing period till two months after procurement, to be gradually reduced to a ceiling of half. In the higher ceiling the farmer shall benefit due to higher demand and in the reduced ceiling the consumer shall benefit due to increased offloading. In contrast, requests for enhancing stock limits come when procurement process has commenced or is completed. However, the ideal situation relates to doing away with the stock holding limits along with the ECA, 1955 as envisaged in the ‘Removal of Licensing requirements, Stock limits and Movement Restrictions on Specified Foodstuffs Order, 2016,’ according to which all restrictions on permit/licensing requirements, stock limits and movement restrictions were to be removed.

Read the chapter here.


Chaired by Hukmdev Narayan Yadav, this Standing Committee examined the issue of Weekly Gramin Haats and came up with the following observations and recommendations:

 Under Essential Commodities Act, there is a need to have distinction between genuine service providers and black marketeers/hoarders to encourage investment and better service delivery to the farmers. It is recommended that Contract Farming Sponsors and Direct Marketing licensees may be exempted from the stock limits up to six months of their requirement in the interest of trade and facilitating long term investment.

 The States should amend their APMC Acts on the lines of Model Act and the reforming States may also notify Rules, and States may complete the process early.

 The private markets should be treated at par with the existing APMCs.

 The Committee feel that scarcity of marketing platforms for agriculture produce and mismanagement and corruption in APMC markets have created a situation where farmers are being deprived of fruits of their hard-earned labour leading to low price realisation for farm produce.

 The Committee desires the Government to provide adequate funds and manpower to the DMI (directorate of marketing inspection) in order to complete the survey in minimum possible time. Further, the Committee also desires the Government to hold discussion with the State Governments to keep Gramin Haats out of the ambit of APMC Act.

 The Committee observe that there is urgent need for radical reform in APMC Act in the country, if we intend to provide justice to the farmers. Remunerative pricing for the farmers cannot be ensured unless number of marketing platforms for farm produce are enhanced and functioning of APMC markets is made democratic and transparent. The Committee appreciate efforts of the Government for reforms in APMC market. However, the Committee is surprised to note the lukewarm response of the State Governments towards reforms in APMC market. The Committee is of the view that there is need to involve all the stakeholders especially the State Governments in the process of reforms in the APMC Act. The Committee, therefore, recommends the Government to constitute a Committee of Agriculture Ministers of all States in order to arrive at a consensus and chalk out legal framework for marketing of agriculture Produce in the Country. The Committee is also of the opinion that provisions regarding entry fee and other Cess levied on transaction of agriculture produce should be done away with as it will help to reduce corruption and malpractices prevalent in APMC Markets. The Committee would like the Government to hold discussion with the State Governments to abolish entry fee and other cess in APMC Markets.

 Various factors such as distance to the nearest APMC market, dominance of middleman in APMCs, lack of transportation facilities etc. are the major factors which propel majority of small and marginal farmers to use the services of local middleman or shops to dispose of their surplus agriculture produce much below the Minimum Support Prices (MSP) announced by the Government.

 The Committee notes that Agriculture Produce Market Acts (APMC Act) which were enacted in various State Governments with the objective to ensure an environment for fair play for supply and demand forces thereby resulting in an effective price discovery for farm produce, to regulate market practices and attain transparency in transactions has become hotbed of politics, corruption and monopoly of traders and middleman. The Committee observes that APMC markets across the country are not working in the interest of farmers due to various reasons such as limited numbers of traders in APMCs markets thereby reducing competition, cartelisation of traders, undue deduction in the name of market fee, commission charges etc. The Committee was also informed that provisions of the APMC Acts are not implemented in their true sense. Market fee and
commission charges are legally to be levied on traders, however, the same is collected from farmers by deducting the amount from farmers net proceed.

Read the report here.


Read the laws here:

 The Farmers’ Produce Trade and Commerce (Promotion and Facilitation) Act, 2020.

 The Essential Commodities (Amendment) Act, 2020.

 The Farmers (Empowerment and Protection) Agreement on Price Assurance and Farm Services Act, 2020.


Read a short commentary on the laws

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Gautam Chikermane

Gautam Chikermane

Gautam Chikermane is a Vice President at ORF. His areas of research are economics, politics and foreign policy. A Jefferson Fellow (Fall 2001) at the East-West ...

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