Regulated Market

2. Agricultural Marketing is a process which starts with a decision to produce a
saleable farm product and involves all aspects of market structure or system,
both functional and institutional, based on technical and economic consideration
uptoconsumption.
Forms of government intervention in agricultural marketing system consists of
framing rules and regulation, promote infrastructure development,
administration of prices and influence supply and demand. The remedial
measuresfor the problems of marketing areclassifiedintothe following types:
1. Reduction andregulation of marketcharges
2. Organisationof cooperativemarketing
3. Governmentlegislations

4. Under the traditional system of marketing of the agricultural products,
producer-sellers incurred a high marketing cost, and suffered from unauthorized
deductionsof marketingchargesandthe prevalenceof variousmalpractices.
To improve marketing conditions and with a view to creating fair competitive
conditions, the increase in the bargaining power of producer-sellers was
consideredto be the mostimportant prerequisiteof orderlymarketing.
Most of the defects and malpractices under, the existing marketing system of
agricultural products have been more or less removed by the exercise of public
controlovermarkets, i.e., by the establishmentof regulatedmarketsin country.

5. Though the market regulation scheme has been implemented in the country, its
benefitsto the differentclassesarenot uniform.
Studies have pointed out that it has a high benefit-cost ratio. Nevertheless, the
fact remains that many improvements are needed to make it deliver goods in an
efficient manner.
It is a socio-economic reform. There is, therefore, a need for bringing home its
advantagesto the cultivatorsandmarketfunctionaries.
To make farmers conscious of their rights in the management and control of
the market is a sinequanonof the successof the scheme.

6. Farmers should not submit meekly to the practices of market functionaries
whenthesearecontraryto theirinterest.
Market functionaries, too, should be convinced that the market regulation
scheme has not been designed to eliminate them but to bring to book those
unscrupulous traders who defame the entire trading community by their anti-
socialanddubiousactivities.
It is with the co-operation of all these agencies – producers, consumers and
market middlemen – that the market regulation scheme can make the marketing
systemof agriculturalproducean efficientsystem.

7. Regulation of primary wholesale markets was taken up as an institutional
innovation and construction of well laid out market yard was considered as an
essential requirementof effectiveimplementation of the regulation programme.
As the programme was a development-cum-legal measure, it took considerable
time to extend it on a wider scale. The market regulation brought its impact in
terms of providing higher prices, better returns, reduction of market charges and
providing amenities at the time of sale of the produce to the farmers in the vicinity
of 7161 regulated marketsestablished in the country.

8. The benefits of the regulated markets to the farmers varied in these market areas
according to the extent of infrastructural facilitiesexistingin them.
Roughly 55 % of the cereals & 90 % of the commercial crops are traded in these
markets. These markets are also financially sound as they earn revenue at the rate of
0.5 % (Gujarat) to 4 % (Punjab)of the value of producetransacted.

11. Under the provisions of the Agricultural Produce Market Act, the State Government gives its intention
to bring a particular area under regulation by notifying market areas, market yard, main assembling
marketandsubmarketyard.
1. Market Area: The area from which the produce naturally and abundantly flows to a commercial
centre,i.e., themarketwhichassuresadequatebusinessandincometothemarketcommittee.
2. Principle Assembling Market: It is the main market which is declared as a principal market yard on
the basis of transactions and incomegeneratedfor themarketcommittee.
3. Sub Market Yard: It is sub yard of the principle assembling market. This is a small market and does
notgeneratesufficientincometodeclareasa principalassemblingmarket.
4. Market Yard: This is a specified portion of the market area where the sale, purchase, storage and
processingof anyof thespecifiedagricultural commoditiesarecarriedout.

13. The main Act for market regulation, “Agricultural Produce Market Regulation Act” is
implemented by the State Governments. A network of more than 7100 regulated markets &
about 28000 Rural Primary Markets services the marketing system of the country.
The objectives of market regulation initially were to ensure correct weighment, prompt
payment to the farmers for their produce. However, the markets originally meant for
protecting the farmers from the exploitation by middlemen.
Under the APMC Regulation, no exporter or processor could buy directly from the farmers.
Only State Govt. could set up markets, thereby preventing the private sector from setting
up markets and investing in marketing infrastructure.
The increasing focus on liberalization, privatisation and globalisation is both a challenge and
an opportunity for our farmers. However, in order to enable our farmers to reap the
external opportunities, effective internal reforms in the agricultural marketing system of the
country are necessary.

14. Since 2003, Govt. of India has initiated a number of reforms in Agricultural Marketing.
As a major initiative, the Govt. prepared a Model Act called Agricultural Produce
Marketing (Regulation & Development) Act, 2003.
All the States/UTs have agreed to amend their respective State APMR Acts in the line
of the Model Act to bring about requisite reforms in the sector. The Main features of
the Model Act are setting up markets in the private/co-op sector, rationalization of
market fees, promotion of contract farming, direct marketing and grading and
standardization including setting up of a Grading and Standardization Bureau in each
State/U.T.
The states have amended their Acts in respect of 3 aspects, i.e. contract farming, direct
marketing, setting up of private markets only.
It is time the States should go beyond the 3 areas of reforms and should adopt other
areas of reforms such as setting up of Bureau of Standards and Grading at State level,
promotion of marketing extension and setting up of responsive market information
system etc.

15. A Warehouse Development and Regulation Authority has been set up. This is entrusted
with the task of negotiable warehouse receipt in the agriculture sector. This will act
towards saving the farmers from distress sale of their produce
A Food Safety Regulatory Authority has been set up to look after the food safety and
quality issues.
Launching of the Infrastructure Scheme (AIGS Scheme/Agricultural Innovations Grants
Scheme) and the Rural Godown Scheme has helped attracting private investment to
agricultural marketing sector.
Market Research Information Scheme of Government of India has been successful in
disseminating price and arrival related information from almost all the wholesale
markets of the country.
The Terminal Market Scheme of the Government has the potential to promote setting
up of a chain of markets through the country in PPP/Public-Private Partnership mode.

21. However these regulated markets are also full of problems on account of a number of
reasons.Theseare:
 The benefits of regulation in a market vary directly in proportion to the availability
or creation of market infrastructural facilities in them. Out of 7161 regulated
markets, a higher level of infrastructural facilities has been created only in 2354
main yardsandlower levelof infrastructuralfacilitiesexistsin 4807 sub-yards.
 Further, there are 27,294 periodic markets in the rural areas where farmers and rural
people congregate periodically to sell their surpluses. In the rural markets, only 15
% are reported to have physical infrastructural facilities so far. Thus, there is need
for extension of marketregulation in all the rural markets.

22.  The management of these rural markets of the country is in the hands of local
bodies. The management as well as the market conditions for sale in these rural
marketsarefarfromsatisfactory.
 Emphasis in most of the regulated markets has remained mainly on the
construction activities (roads, yards and building) and on collection of market fees.
Adequate emphasis has not been given to the effective implementation of the
provisionsof marketregulation in real sense.

23.  Several weaknesses and malpractices are still reported in the working of the
regulated markets. The important ones are heavy physical losses of quantity of
produce during unloading, cleaning, sieving, loading and transportation; excess
weighment; and considerable wastage of time of the farmers in waiting for their turn
of auctionor weighment on accountof congestion in the markets.
 Bureaucratization in the management of the regulated market exist in most states
which resulted in continuation of several malpractices. More than 80 % market
committeeshavebeensuperseded andaremanagedby administrators.
 Most of the regulated markets do not have qualified staff to manage. Further, due to
heterogeneity in provisions of different state marketing Acts, the movement of
agriculturalproducein the country is not smooth.

24.  Most producers refrain from bringing their commodities to these regulated
markets as they report that there is no additional benefit to them by selling in
regulatedmarkets.
 The regulated markets have indirectly led to the monopolization of trade by way
of granting licenses to different types of market middlemen; which in turn are not
allowing others to enter in the business in market yards. This way, they are able to
chargeselfdeterminedratesfromsellersfor providing a particular marketservice.