A Amarender Reddy
A unified, efficient market platform integrated with major mandis of the country, coupled with the onboarding of service providers and stakeholders of the agricultural commodity value chain, has the potential to boost farmers’ income by ensuring better crop prices through a transparent price discovery and quality certification. Such a platform like e-NAM can equally benefit the service providers, traders and others.
THE Indian agricultural marketing system has largely remained unorganised and fragmented over the decades. The majority of the smallholder farmers still sell their produce immediately after harvesting — without grading and quality testing — to meet their urgent cash requirements, thereby losing the bargaining power for getting a remunerative price for their produce. Further, with limited or no information, particularly on market preferences for quality and specific variety of commodities, farmers across the country are producing different varieties of each crop of varying quality, making the price discovery process of agricultural commodities even more complex.
An electronic national agricultural market can eliminate fragmentation by unifying mandis across the country, while facilitating a transparent price discovery. Such a market can also help in the dissemination of real-time information not only about prices and arrivals but also regarding the market preference for specific quality and variety of produce. Such details help farmers take informed decisions on production and empowers them to bargain for better prices.
In the wake of trade liberalisation following the economic reforms of 1991 and the agreements under the aegis of the World Trade Organisation, Indian agricultural markets are increasingly influenced by global factors. India’s international trade, both imports and exports, in agricultural commodities has increased significantly during the past two decades or so. As a result, Indian agricultural commodities are increasingly exposed to global price trends and volatilities. A unified electronic trade platform can equip Indian farmers and other stakeholders with the necessary information to align domestic production and supply of commodities with the emerging domestic as well as global demand scenarios.
Post-Independence, the majority of the states enacted the Agricultural Produce Marketing Regulation Act and constituted Agricultural Produce Market Committees (APMCs). Although the APMCs have helped in regulating wholesale markets, the process has led to fragmentation of markets and lack of transparency in price discovery. In this regard, the Model APMC Act (2003) was circulated among the states for amendment. But it witnessed limited adoption.
With the advent of the Internet and the revolution in information and communication technology (ICT), online trading platforms or electronic markets came into existence in the early 2000s. The first electronic agricultural commodities market, Rashtriya e-Market Services Ltd (ReMS), was launched in 2014, connecting mandis in Karnataka with a public-private partnership between the state government and NCDEX e-Markets Limited.
Benefits of E-NAM
Subsequently, with the goal of having ‘one nation, one market’, the national agricultural market (e-NAM) was rolled out in 2016 with the Small Farmers Agribusiness Consortium as the lead agency for its implementation. It is a unified electronic market for agricultural commodities that aims to connect all APMC mandis in the country. The launch of the Platform of Platforms (PoP) with a mobile application under e-NAM in July 2022 has facilitated the integration of a wide range of service providers, including transportation, sorting, grading, warehousing, fin-tech, etc., in the agricultural commodity value chain. The onboarding of major service providers in the value chain on e-NAM can potentially enhance the ease of access to their services for farmers.
As per data on the e-NAM dashboard, 1,361 APMC mandis, accounting for nearly 20% of the total 6,946 regulated APMC mandis in the country, were covered under the e-NAM network as on July 31, 2023. The e-NAM platform is made interoperable with ReMS, enabling the farmers to sell their produce on either of the two platforms, thereby expanding their access to markets.
There are a number of challenges that are constraining the progressive use of e-NAM by various stakeholders across the value chain. Most important among them, particularly for small farmers and traders, is the lack of awareness and knowhow of the working of the e-NAM platform and its usage for trading. Ensuring the quality of the produce is particularly crucial for trading in electronic markets. But the majority of the mandis lack adequate market infrastructure for quality testing and certification. Many of them do not have the required grading and standardisation facilities that can help in fetching a better price for the farmers.
Some mandis are also not adequately equipped with basic facilities such as electricity, Internet access and trained personnel to use the infrastructure.
The Way Forward
In order to ensure the success of the e-NAM initiative, it is imperative to address a major challenge — the establishment of adequate market infrastructure facilities, including weighing bridges, storage, grading and standardisation, quality testing and certification in all major mandis. The establishment of such market infrastructure can be promoted either through public-private partnerships or by incentivising the FPOs (farmer producer organisations), thereby helping farmers integrate into the commodity value chain. Such infrastructure and establishments can also help in generating rural non-farm employment opportunities.
Thus, a unified, efficient market platform integrated with major mandis of the country, coupled with the onboarding of service providers and stakeholders of the agricultural commodity value chain, has the potential to boost farmers’ income by ensuring better crop prices through a transparent price discovery and quality certification. Such a platform can equally benefit the service providers, traders and others.
Tulsi Lingareddy is a consultant economist, financial markets and sustainable agriculture.
The article was first published in The Tribune as Need to maximise benefits of e-NAM platform on December 11, 2023.
Disclaimer: All views expressed in the article belong solely to the author and not necessarily to the organisation.
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Acknowledgement: This article was posted by Aasthaba Jadeja , a research intern at IMPRI.