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Indian Libertarians

Abolish the APMCs

smehra Sunday July 27, 2014

Imagine, being a farmer, if I (as a private citizen) come to your farm land and impose an order that states that you shall only sell your farm produce to me and to me only - that would be considered a criminal act. In fact that would be considered slavery. Yet this is exactly what APMCs do, on behalf of the state, and get away with it. APMCs have turned the farmers of this country into slaves.

Let us look at the ‘official’ intent of APMCs: to facilitate farmers to sell their produce and get reasonable prices. Yet its clauses that force farmers to sell only through APMCs do the reverse. How is it exploiting the farmer if another private citizen offers higher profit margin than what the farmer gets through APMCs? How is stopping this trade beneficial to the farmer? It can’t be. We must conclude that APMCs are not a mechanism for collective bargaining for farmers (as it tries to proclaim) but a mechanism of price control and exploitation. Yet it is surprising how we have allowed the state to get away with this narrative and accepted that APMCs are required to protect the farmers, when the farmers themselves are against it.

Exploitative bodies like APMCs have both short term and long term destructive effects. Short term effect is of course the loss of profit for a farmer. Long term effects are interesting:

 

  • With farming no longer being a ‘for profit’ venture, the farming activity tends to decline. The artificially low prices of farm produce are ‘signalling’ the farmers that his labour is needed elsewhere and that country is surplus in food, when its not. These false signals force farmers to leave farming and come to urban areas for jobs.
  • Farmer now has to decide what to do with its land. Here too we find the claws of the state interfering in his development. With artificially increased cost of setting up workplaces and industries in the form of licenses and fees, farmers become more eager to sell their land at a low price to an industrialist who can afford these licenses. Due to ‘land use’ laws and ‘land acquisition’ laws (which just like the APMCs control the price and buyer of land) the price the farmer receives for the land is too low.
  • Due to these restrictions mentioned, many farmers continue to live in slavery and earn bare minimum to sustain themselves. These laws make it hard to farm, hard to use their land of other purposes and hard to sell their land for a fair price.
  • With monopolies given to chosen traders, they will not be subjected to market competition. These traders can therefore hoard food because it would be more profitable to do so.

And then we wonder why there are so many farmer suicides. APMCs are mafia organizations set up with dual motive of price control (by the state) and guaranteed profits (by the traders foreign and local).

APMCs must be abolished, not amended, not subjected to FDI (foreign exploiters are hardly better than domestic) and certainly not ‘democratized’. APMCs cause harm even without the expected corruption in the government departments. We should let the farmer sell his produce to whomever he wants and at whatever price he wants. Without profit motive the produce will drop and ultimately the consumers sitting in urban areas will start to feel the effect when the government can no longer subsidise food and the ‘Right to Food’ law won't be worth the paper it was written on. In India many people go hungry, why should farmers not be in demand?