Lesson-30 Regulated Agricultural Markets


As seen in the previous chapter, there are numerous agents involved in marketing of agricultural products. Though they serve the very important purpose of moving agricultural produce from farmer to consumer, they are accused of amassing huge margin in the process. Government has to take into consider all the stakeholders in the process, viz, producers, consumers as well other market functionaries. Therefore, the government intervenes in the process of marketing through various ways. Forms of government intervention in agricultural marketing system consist of framing rules and regulation, promote infrastructure development, administration of prices and influence supply and demand. We will discuss these issues in this lesson.


Though agricultural marketing is a State subject, the Government of India has an important role to play in laying down general policy framework, framing of quality standards, conducting survey and research studies and in providing guidance, technical and financial support to the State Governments. The Central Government is aided and advised by two organisations under its control, namely, the Directorate of Marketing and Inspection (DMI) and the National Institute of Agricultural Marketing (NIAM), Jaipur.

Directorate of Marketing and Inspection: It is an attached office of the Ministry and is headed by the Agricultural Marketing Adviser to the Government of India.

The main functions are;

  • Rendering Advice on Statutory Regulation,

  • Development and management of agricultural produce markets to the States/Union Territories;

  • Promotion of grading and standardization of agricultural and allied products under the Agricultural Produce (Grading & Marketing) Act. 1937;

  • Market Research, survey and Planning;

  • Training of personnel in agricultural marketing;

  • Administration of Cold Storage Order, 1980 (except regulatory functions) and

  • Meat Food Products Order, 1973.

National Institute of Agricultural Marketing (NIAM) has started functioning at Jaipur (Rajasthan) with effect from 8th August, 1988. The objectives of NIAM are,

  • To augment the agricultural marketing infrastructure of the country through programmes of teaching, research and consultancy services;

  • To design and conduct training courses appropriate to the specific identified needs of the personnel and enterprises and institutions that they serve;

  • To undertake research to demonstrate and replicate better management techniques in the field of agricultural marketing; to provide consultancy services for formulating investment projects and for problem solving advice; and

  • To offer educational programmes in agricultural marketing for implementing the existing facilities.


Under the traditional system of marketing of the agricultural products, producer-sellers incurred a high marketing cost, and suffered from unauthorized deductions of marketing charges and the prevalence of various malpractices. To improve marketing conditions and with a view to creating fair competitive conditions, the increase in the bargaining power of producer-sellers was considered to be the most important prerequisite of orderly marketing. Most of the defects and malpractices under, the then existing marketing system of agricultural products have been more or less removed by the exercise of public control over markets, i.e., by the establishment of regulated markets in country.

Definition of regulated market

A regulated market is one which aims at the elimination of the unhealthy and unscrupulous practices, reducing marketing charges and providing facilities to producer-sellers in the market. Any legislative measure designed to regulate the marketing of agricultural produce in order to establish, improve and enforce standard marketing practices and charges may be termed as one which aims at the establishment of regulated markets. Regulated markets have been established by State Governments and rules and regulations have been framed for the conduct of their business. The establishment of regulated market is not intended at creating an alternative marketing system. The basic objective has been to create conditions for efficient performance of the private trade, through facilitating free and informal competition. In regulated markets, the farmer is able to sell his marketed surplus in the presence of several buyers through open and competitive bidding. The legislation for the establishment of regulated markets does not make it compulsory for the farmer to sell his produce in the regulated market make it compulsory for the farmer to sell his produce in the regulated market yard. Instead, voluntary action on the part of the farmers to take advantage of such a market is assumed. The basic philosophy of the establishment regulated markets is the elimination of malpractices in the system and assignment of dominating power to the farmers or their representatives in the function of the markets.

30.3.1    Objectives of regulated markets     

The specific objectives of regulated markets are:

  1. To prevent the exploitation of farmers by overcoming the handicaps in the marketing of their products

  2. To make the marketing system most effective and efficient so that farmers may get better prices for their produce, and the goods are made available to consumers at reasonable prices

  3. To provide incentive prices to farmers for inducing them to increase the production both in quantitative and qualitative terms and

  4. To promote an orderly marketing of agricultural produce by improving the infrastructural facilities.

30.3.2    Important features of regulated markets

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 market and sub market yard, if any, under the principle regulated market. The meaning of these terms is explained in the following paragraph.

1. Market area: The area from which the produce naturally and abundantly flows to a commercial centre, i.e., the market, and which assures adequate business and income to the market committee

2. Principle assembling market: It is the main market which is declared as a principal market yard on the basis of transactions and income generated for the market committee

3. Sub market yard: It is sub yard of the principle assembling market. This is a small market and does not generate sufficient income to declare as a principal assembling market

4. Market yard: This is a specified portion of the market area where the sale, purchase, storage and processing of any of the specified agricultural commodities are carried out.

30.4     MODEL ACT: The State Agricultural Produce Marketing (Development & Regulation Act, 2003) 9th September 2003

Salient Features

  1. The title of the Act is changed to highlight the objective of development of agricultural marketing in addition to its regulation under the Act. Accordingly, the Preamble of the Act is redrafted to provide for development of efficient marketing system, promotion of agri-processing and agricultural exports and to lay down procedures and systems for putting in place an effective infrastructure for the marketing of agricultural produce.

  2. Legal persons, growers and local authorities are permitted to apply for the establishment of new markets for agricultural produce in any area. Under the existing law, markets are set up at the initiative of State Governments alone. Consequently, in a market area, more than one market can be established by private persons, farmers and consumers.

  3. There will be no compulsion on the growers to sell their produce through existing markets administered by the Agricultural Produce Market Committee (APMC). However, agriculturist who does not bring his produce to the market area for sale will not be eligible for election to the APMC.

  4. Separate provision is made for notification of “Special Markets‟ or “Special Commodities Markets‟ in any market area for specified agricultural commodities to be operated in addition to existing markets.

  5. 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
    • Publicizing data on arrivals and rates of agricultural produce brought into the market area for sale ; and
    • Setup and promote public private partnership in the management of agricultural markets.

  6. Provision made for the appointment of Chief Executive Officer of the Market Committee from among the professionals drawn from open market.

  7. 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 and to provide for indemnity to producers‟ title/ possession over his land from any claim arising out of the agreement.

  8. Model specification of contract farming agreements provided in the Addendum to the model law.

  9. Provision made for direct sale of farm produce to contract farming sponsor from farmers‟ field without the necessity of routing it through notified markets.

  10. 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.

  11. Licensing of market functionaries is dispensed with and a time bound procedure for registration is laid down. Registration for market functionaries provided to operate in one or more than one market areas.

  12. Commission agency in any transaction relating to notified agricultural produce involving an agriculturist is prohibited and there will be no deduction towards commission from the sale proceeds payable to agriculturist seller.

  13. Provision made for the purchase of agricultural produce through private yards or directly from agriculturists in one or more than one market area.

  14. Provision made for the establishment of consumers‟/ farmers‟ market to facilitate direct sale of agricultural produce to consumers.

  15. Provision made for resolving of disputes, if any, arising between private market/ consumer market and Market Committee.

  16. State Governments conferred power to exempt any agricultural produce brought for sale in market area, from payment of market fee.

  17. Market Committees permitted to use its funds among others to create facilities like grading, standardization and quality certification; to create infrastructure on its own or through public private partnership for post harvest handling of agricultural produce and development of modern marketing system.

  18. For the Chairmanship of State Agricultural Marketing Board, two options provided namely Minister incharge of Agricultural Marketing as ex-officio or alternatively to be elected by the Chairman/ members of Market Committees.

  19. Funds of the State Agricultural Marketing Board permitted to be utilized for promoting either on its own or through public private partnership, for the following:

    (i)   Setting up of a separate marketing extension cell in the Board to provide market-led extension services to farmers;

    (ii) Promoting grading, standardization and quality certification of notified agricultural produce and for the purpose to set up a separate Agricultural Produce Marketing Standards Bureau.

  20. The State Agricultural Marketing Board made specifically responsible for:

  • market survey, research, grading, standardization, quality certification, etc.;

  • Development of quality testing and communication infrastructure.

  • Development of media, cyber and long distance infrastructure relevant to marketing of agricultural and allied commodities

Last modified: Wednesday, 9 October 2013, 9:35 AM