How to Start a Commission Agent (Arhtiya) Business in an Indian Mandi

The commission agent (Arhtiya) acts as the crucial bridge between farmers bringing their produce to the APMC market and the wholesale buyers or retailers. While it is a highly profitable, cash-flowing business, starting an Arhtiya firm requires navigating APMC regulations, building farmer trust, and deploying significant working capital.

Step 1: The APMC License

You cannot legally operate as a commission agent inside a regulated market yard without an APMC license. The process varies by state, but generally requires:

• Applying to the local Agricultural Produce Market Committee.
• Providing proof of a shop or godown space within or near the mandi.
• Submitting a bank guarantee or security deposit (often between ₹1 Lakh to ₹5 Lakhs depending on the market tier).

Step 2: Working Capital (The Advance System)

The primary reason farmers come to a specific Arhtiya is financial support. Commission agents frequently provide cash advances (credit) to farmers for seeds, fertilizers, and personal needs months before the harvest. When the farmer brings the crop to sell, the advance is deducted from the final settlement (patti). You must have sufficient working capital to float these advances.

Step 3: Managing the Daily Auction

Mandi trading is fast and chaotic. Produce arrives between 3 AM and 6 AM. The open auction happens quickly. As the Arhtiya, you record the winning bidder and the rate. Immediately after the auction, two things must happen:

1. The buyer must be billed (Sale Invoice).
2. The farmer must be paid (Sale Patti), minus your commission (typically 4-8%), APMC cess, hamali, and any previous advances.

Step 4: Adopt Mandi Software from Day One

Many new agents start with paper bahis and quickly lose track of farmer advances, buyer outstanding balances, and crate inventory. Modern agents start with a digital Mandi ERP like MandiGrow.

MandiGrow handles lot tracking, auto-calculates commission, generates instant farmer pattis in local languages (Hindi, Telugu, Marathi), and maintains a live Khata for every party. It ensures you never lose money due to a calculation error in the chaos of the morning auction.

Equip your new mandi business for success. Try MandiGrow at MandiGrow.com.