Lack of trust on the quality of agri commodities traded has resulted into low level of activity on the government’s pet nationwide online trading platform electronic-National Agricultural Mandi (e-NAM), said Acuité Ratings and Research in its latest report.
The share of e-NAM in India’s total food grain distribution stands at only 5.8 per cent on average since its inception in April 2016. This is surprisingly low as against the significant progress that has been witnessed in the implementation of significant digital initiatives namely Jan-Dhan, Aadhar and Mobile (JAM) along with successes in Direct Benefit Transfer (DBT).
“Since there is no standardised methodology for independent assessment across Agricultural Produce Markets Committees (APMCs), a licensed assayer system can be implemented at the central level. Under that system, cultivators can take third party assessment certification from licensed assayers and trade their produce online.
Lack of a pan-India agriculture trading platform has always been a structural gap that has continued to lead to frequent demand-supply mismatches for the farmers, volatile agro-commodity prices and divergent inflationary trends across India.
Buyers, on the other hand, can offer a price based on the certification, obviating the need of physical inspection.
The digital transaction and contract between buyers and sellers based on a standard quality certification and settled through the respective APMC will optimise demand-supply equilibrium and free government machinery of wasteful monetary interventions.
With the rapid penetration of the digital platform pan India, we see a normalisation of agro based commodity prices taking place across states — thereby leading to better management of inflation and consolidated fiscal position. Additionally, the system’s success will also need to be driven by better logistics and better interstate movement of produce, the report said.
“A nationwide reinforcement of the e-NAM system through the appointment of third-party assayers will make it significantly more effective. The successful implementation of a nationwide farm trade market will be more effective in improving farm incomes as compared to the hikes in minimum support prices (MSP) of agricultural commodities or frequent farm loan waivers. Additionally, the government can take steps to facilitate the development of agro-based industries which can augment incomes of rural households significantly,” the report added.
e-NAM is an initiative that can bring about significant efficiencies in the agriculture eco-system and act as a double-edged sword to fight inflation and reduce fiscal burden, if well implemented. This way, the above two primary concerns that are potential spillovers of a consumption multiplier, can be addressed.