Are APMCs market fee collection centres or Market Development Centres?

Protagonists opposing the new farm laws benefit by analysing the role to be played by Agricultural Produce Market Committees (APMCs) either as market development centres or as market fee collection centres. APMCs are levying multiple fees such as (1) market fees of buyers, (2) licensing fee from commission agents mediating between buyers and farmers, (3) small licensing fees from warehousing agents, loading agents, (4) commission agents charge commission fees on transactions between buyers and farmers, as clearly stated in Economic Survey 2014-15. Even though these fees and commissions are to be charged from buyers, research studies indicate that they are in fact charged from farmers in the process of transaction. Farmers are thus exploited in APMC markets as they are paying the fees and commissions.

Are APMCs becoming source of political power ?

Collecting crores of market fees as revenue which are not transparent APMCs are becoming source of political power. Here are a few examples. APMC Vashi, Mumbai collects Rs. 126 crores as income annually by charging market fee of 0.8 % of the value of produce and market commission of 6.5% on perishables such as onion, 8.5% on vegetables, 10% on fruits and 2.75% on non-perishables. APMC Azadpur, Delhi collects Rs. 90 crores as income annually by charging market fee of 1% of value of fruits and vegetables and market commission as 6% of the value of produce. APMC Galla Mandi, Indore is collecting Rs. 60 crores annually as income by charging market fee of 2% on value of commodities and niraashritha shulka of 0.2%. APMC Gultekeri, Pune is collecting income of Rs. 47 crores annually by charging market fee of 1% of value of the produce and market commission charge of 6% of value of produce of perishables and 3% of the value of non-perishables. APMC, Yeshwanthpur, Karnataka is collecting income of Rs. 44 crores annually by charging market fee of 1% of value of produce, 0.5% of value of produce as revolving fund, and market commission charge of 5% of value of fruits and vegetables, 2% of the value of non-perishables. The Government of Karnataka following new farm laws reduced market fee to 1% of the value of produce uniformly on all types of produce. The market fees, market commission charges vary widely from 14.5% in AP to 10% in Punjab and Odisha.

APMC incomes hidden from scrutiny ?

What is crucial to note is that market fee is a tax revenue earned by APMCs not for the State exchequer and does not require approval of State legislature to utilize funds so collected, rendering APMC operations totally hidden from scrutiny. Obviously, magnitude of income generated by each APMC serves as the source of political power and not only influences the interests of elections of farmers, traders and other members to APMC but also the interest of the postings of APMC secretary by the State Marketing Boards to each APMCs.

Rent seeking for posting of officials in APMCs ?

Rent seeking for posting of officials to APMCs cannot be ruled out due to earnest desire of officials to be posted to APMCs which generate higher incomes. Underreporting of arrivals in APMCs can for instance by one of the major sources of rent seeking since there is no way of properly accounting how many truck loads of produce are entering APMCs for transaction. In the largest tender coconut APMC market in Maddur, Karnataka, what percentage of trucks enter the APMC for transaction is any body’s guess. Any farmer, farmer leader, economist who is opposing new farm laws, can easily get convinced that market fee and market commission charged is one of the sources of exploitation of farmers and which comes in the way of development of markets.

New farm laws benefit farmers by eliminating market fees, market commission

Why farmer leaders, economists are opposing new farm laws as they benefit farmers as farmers need not pay market fees, market commission? As the provision to levy market fee, market commission lies with each State, the Government left to the prerogative of each State whether to levy market fee, market commission or not in their APMCs. This provision in the new law respected federalism and the prerogative each State since APMCs are a state subject. Perhaps the new farm laws need to include the provision of zero market fees, market commissions for transaction within and outside APMCs. The Government has already indicated its willingness to amend the new farm laws by including this provision.

Agriculture and infrastructure development tax on petrol and diesel to strengthen APMCs

Given the predicament being faced by farmers facing monsoons and markets, the land revenue is meagre, there is no income of wealth tax on farmers, and obviously the market fees and commissions should be removed, as appropriately indicated by the new farm laws. However, since APMCs may not generate incomes as previously possible, the State Governments need to strengthen APMCs by seeking to utilize a portion of agriculture infrastructure development tax of Rs 2.50 per liter of petrol and Rs 4 per liter of diesel levied by the Government of India.



Views expressed above are the author’s own.


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