Agricultural Produce Market Committees (APMCs) and Mandi System

An Agricultural Produce Market Committee (APMC) is a body set up by a state government to run a regulated market, called a mandi, for farm produce. Farmers bring their crops to the mandi, licensed traders bid for them in an open auction, the produce is weighed, and the farmer is paid. The APMC makes the rules for this trade and collects a small fee on it. Most farm produce in India that is sold in organised wholesale markets passes through such mandis.

Why does the mandi system exist?

Before regulated markets, a farmer usually sold to the village moneylender or a local trader. The farmer often owed money to the same trader, so he could not bargain. Traders used wrong weights, made unfair cuts from the payment ("deductions") and delayed payment. A regulated market was meant to fix this. It brings many buyers to one place, so the price is set by open bidding. It also makes sure that weighing is fair and that the farmer is paid on time.

Where did it come from?

The idea is more than a century old.

• India's first regulated market was the Karanja cotton market, set up in 1886 under the Hyderabad Residency Order in the Berar region. The British wanted a steady supply of clean, cheap cotton for mills in Manchester.
• The Royal Commission on Agriculture (1928) pointed out high marketing costs, unfair deductions and malpractices. It recommended regulated markets across the country.
• In 1938, the Government of India sent a Model Bill to the provinces, but little happened before Independence.
• During the 1960s and 1970s, most states passed their own Agricultural Produce Markets Regulation (APMR) Acts, commonly called APMC Acts. Each Act divided the state into "market areas", and each market area got its own APMC.

Who has the power to make these laws?

Under the Constitution, "markets and fairs" is Entry 28 of the State List (List II) in the Seventh Schedule, and "agriculture" is Entry 14 of the State List. So agricultural marketing is mainly a state subject. The Centre cannot directly change state APMC Acts. It can only suggest model laws that states may choose to adopt. This is why reforms move at different speeds in different states.

How does a mandi work?

Think of a mandi like a big, supervised auction hall for crops.

1. The state notifies a market area and the list of farm products (for example wheat, onion, cotton) that will be regulated there.
2. The farmer brings produce to the mandi yard. It is cleaned, graded and put up for sale.
3. Licensed traders bid in an open auction. Only people with an APMC licence can buy.
4. Commission agents (called arhtiyas in north India) often act between the farmer and trader. They arrange the sale and payment and take a commission.
5. The produce is weighed on approved scales, and the buyer pays the farmer.
6. The APMC collects a market fee from the buyer and uses it to build and run the mandi (sheds, roads, weighbridges, offices).

Key facts and numbers

• India has roughly 7,000 regulated markets (7,190 as of March 2014 as per a committee of state ministers).
• One regulated market serves, on average, an area of about 400 to 500 sq km. Government replies have given figures of about 406 sq km and 496 sq km. The National Commission on Farmers (2006) (chaired by M.S. Swaminathan) suggested a market within about 5 km of every farmer, which works out to about 80 sq km per market.
• Bihar repealed its APMC Act in 2006. Kerala never had an APMC Act. Manipur also has no APMC markets.

How have the rules been reformed?

• Model APMC Act, 2003: suggested that states allow private markets, direct buying from farmers by companies, contract farming and farmer-consumer markets.
• e-NAM (National Agriculture Market), 14 April 2016: an online trading platform that links mandis across states, so a buyer in one place can bid for produce in another. It is run by the Small Farmers' Agribusiness Consortium (SFAC) under the Ministry of Agriculture and Farmers' Welfare. As per a 2026 government release, 1,656 mandis from 23 States and 4 UTs have joined it.
• Model APLM Act, 2017 (Agricultural Produce and Livestock Marketing (Promotion and Facilitation) Act): a newer model law that also covers livestock. It allows the whole state to be one market area, private markets and warehouses declared as markets, and a single trading licence.
• Gramin Agricultural Markets (GrAMs), Budget 2018-19: a plan to upgrade about 22,000 rural haats (weekly village markets) so farmers can sell close to home, kept outside APMC rules and linked to e-NAM.
• Farm laws of 2020: In September 2020, Parliament passed three farm laws. One of them, the Farmers' Produce Trade and Commerce (Promotion and Facilitation) Act, allowed trade outside mandi yards with no state market fee. The Supreme Court stayed the laws on 12 January 2021, and Parliament repealed all three through the Farm Laws Repeal Act, 2021 (passed 29 November 2021).
• Draft National Policy Framework on Agricultural Marketing (2024): released by the Union Agriculture Ministry for public comments. It suggests private wholesale markets, a single licence and single-point market fee, direct buying at the farm gate, and declaring warehouses, silos and cold storages as "deemed markets".

India's position and Indian examples

States differ a lot. Punjab and Haryana have a dense mandi network and strong government buying of wheat and rice at MSP, so most farmers there sell through mandis. In Bihar, after the 2006 repeal, farmers sell mostly to private traders; studies have found that the repeal did not by itself bring better prices, because private markets with good facilities did not grow enough to replace mandis. This shows that removing rules is not enough: markets also need investment.

Commonly confused concepts

• APMC mandi vs e-NAM: The APMC is the physical market and its rule-making body. e-NAM is an online platform that connects APMC mandis. It does not replace them.
• Regulated market vs rural haat: A regulated market works under the APMC Act with licences and fees. A rural haat is an informal weekly village market, often without such rules.
• Mandi price vs MSP: The mandi price is set by open bidding. The Minimum Support Price (MSP) is a price fixed by the Centre on the advice of the Commission for Agricultural Costs and Prices (CACP), at which government agencies buy certain crops. MSP buying often happens inside mandis, but the two are different things.
• APMC (the committee) vs the APMC Act: The Act is the state law. The committee is the body set up under that law for each market area.

Issues, criticism and the way forward

• Too few markets: At 400 to 500 sq km per market against an 80 sq km norm, many small farmers live far from a mandi. They end up selling to local traders at lower prices.
• Trader and agent control: In many mandis, the number of licensed traders is small. Critics say this lets a few traders control prices, and commission charges add to costs.
• Multiple fees and fragmented markets: Each state has its own fees and licences, so trade across state lines is costly. This works against the idea of "one nation, one market".
• Weak facilities: Many mandis lack proper storage, grading and cold chains, which leads to post-harvest losses.
• Federal concerns: Since markets are a state subject, central moves to change marketing rules raise questions about Centre-state balance, as seen during the 2020 farm laws debate.
• Way forward suggested by experts and official drafts: more and better-equipped markets, wider use of e-NAM, a single licence and single fee, warehouses as deemed markets, and stronger FPOs that can sell directly to big buyers or trade on e-NAM themselves.

Concepts to Know

• Regulated market: A market where buying and selling follow rules set by law, such as licensed traders, open auction, fair weighing and prompt payment.
• Market fee: A small charge, usually a percentage of the sale value, that the APMC collects on every sale to run and improve the mandi.
• Commission agent (arhtiya): A middleman in the mandi who arranges the sale between farmer and trader, sometimes also gives loans to farmers, and earns a commission.
• Model Act: A sample law drafted by the Centre that states can copy or adapt. It has no force until a state passes its own law.
• Seventh Schedule: The part of the Constitution that divides law-making powers between the Centre (Union List), the states (State List) and both (Concurrent List).
• Deemed market: A place, like a warehouse or cold storage, that the law treats as a market, so produce can be sold there directly.