Reboot e-NAM

The electronic agriculture market remains largely on paper

Prime Minister Narendra Modi’s advice to chief secretaries of states during a conference earlier this week to focus on the electronic national agricultural market (e-NAM) is well timed, considering that inept marketing is a major snag in ensuring reasonable prices to farmers. The e-NAM, meant to serve as a seamless, transparent and all-India market for agricultural products, has failed to take off a year after its launch amid great fanfare. Though over 400 of the country’s 585 main mandis have been equipped with e-trading facilities, hardly 4 per cent of the total wholesale agricultural business has actually been transacted through them in the past year. The bulk of this e-trade, too, is either within the same mandis or within the same states. Thus, the main objective of providing a wider buyer base to farmers to sell their produce at the best price available anywhere in the country has not been served.

Clearly, the groundwork needed to make the new marketing system workable was neither undertaken before its launch nor is being carried out now. The e-NAM is not supposed to be a parallel marketing structure but essentially a means to leverage the physical infrastructure of the existing mandis to enable sellers and buyers to participate in countrywide trading through the electronic platform. It requires a single licence for traders, a single-point levy of market fees and hassle-free movement of the traded goods across the country. Sadly, none of these basic prerequisites has been met so far. Only a few states have issued some trading licences, which are not valid outside the state boundaries. The process of harmonising mandi charges across states, an essential initial step to facilitate single-point collection of levies, is yet to begin. The much needed mechanism for assessment of the quality of goods and ensuring their timely transportation has also not been put in place. And, at the more fundamental level, the states’ Agricultural Produce Marketing Committee (APMC) Acts have not been amended strictly on the lines of the Centre’s model law to facilitate inter-state transactions in agricultural commodities. Most of the amended laws fall short of allowing private markets, direct sale to bulk buyers or end-users, and capping market fees and middlemen’s commission charges payable by farmers.

The states that have already created mandi-level infrastructure for e-trading should, therefore, lose no time to, first, link all markets within the states with each other and, later, connect them electronically to the main mandis in other states. A true national agricultural market will take shape only when the mandis in the major production and consumption hubs all over the country are linked to a single electronic platform for trading in farm goods. Also, given that not many big buyers will be interested in picking up the small quantities offered by individual farmers, aggregators will be needed to collect the growers’ produce and sell it through the e-NAM platform. Moreover, since spot trading in agricultural products, even if conducted electronically, is not supervised by any regulator, extreme caution will be needed to guard the e-NAM against manipulations by speculators or cartels. Unless such issues are suitably addressed, the e-NAM will not be able to help farmers sell their produce at remunerative prices.