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APMC act forces the farmer to sell their agricultural produce only to middlemen approved by the government in authorized mandis. These middlemen often exploit the farmer by offering to buy his produce at low remuneration which fails to cover even his cost of production. Farmer fails to even recover even his input costs of production and is forced to take up livelihood activities other than cultivation. This diversion of agricultural land for non-farm use adversely affects the production of food grains thereby causing scarcity of food grains in certain regions of the country. Even when there is glut production in other regions, the APMC Act prevents the farmer from selling his produce in mandis of areas facing shortage of food grain.
The APMC Act has thus been a cause of food inflation and distress selling. The wastage of perishable agricultural produce due to lack of cold storage facilities further compounds the problem. APMC Act renders agriculture as an avocation un-remunerative and thus has prevented gross capital formation by private sector.
The market restrictions imposed by the APMC Act has dissuaded private sector from indulging in gross capital formation because of which post-harvest losses are high and value additive food processing sector is missing. If agricultural sector is to be commercialized, then policy reforms need to encourage private investment in agriculture oriented infrastructure facilities such as cold storage facilities and temperature controlled warehouses.
Inability of APMC Act in aiding the market discovery of prices has been the main cause of socio-economic distress faced by the agrarian community in India. The poor farmer is often unable to realize the true value of his produce by selling in adjacent district which is experiencing food scarcity due to the APMC Act. He is therefore left at the mercy of unscrupulous middlemen who force him to sell his produce at cheap rates. The farmer being unable to recover his input costs of production, falls in a debt trap and is eventually forced to end his life. APMC Act has outlived its benefits and needs to be reformed to overcome its shortcomings as deliberated so far.
In order to ensure market discovery of prices, it is essential that APMC Act is repealed to connect buyers with sellers on a pan India basis so as to prevent food inflation on account of scarcity in one part of the country while other regions experience glut production. The e- NAM initiative will convert the whole country into a single market from the point of view of a farmer and enable him to sell his produce to the best bidder. He will thus be able to recover his input costs of production as well as make reasonable profits thereby safeguarding the socio-economic fabric of rural India.
The real time information on e-NAM will make agricultural sector a remunerative industry and thus attract private investors, which may further give a fillip to the food processing industry. This would also encourage the farmers thereby raising farm productivity levels.The e-NAM initiative will also end the monopoly of unscrupulous middlemen who deliberately hoarded food grains to make supernormal profits by selling at exorbitant prices.
By: Abhinav ProfileResourcesReport error
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