Long way to go

e-NAM's success depends on APMC reforms

The government’s agricultural marketing initiative to create a seamless pan-Indian electronically linked national agriculture market (e-NAM) has taken close to three years to carry out its first inter-state trade deal in agri-products. Though 585 mandis operated by Agricultural Produce Marketing Committees (APMCs) in 16 states and two Union Territories have been linked with e-NAM, its platform has been used so far only to transact business within the same mandis or, in some cases, between the mandis of the same states. This had denied the farmers the opportunity to earn a higher income by selling their produce at the best prices available anywhere in the country — the prime objective of launching the unified farm market in April 2016. The agriculture ministry, while announcing the initiation of inter-state sale between parties in Uttarakhand and Uttar Pradesh and subsequently between Telangana and Andhra Pradesh through the e-NAM portal, described it as an inflexion point in cross-country agricultural marketing. However, the optimism seems largely misplaced. A good deal of spade work and agri-marketing reforms need to be carried out by the states before farm commodities can be traded freely across the country.

The pre-requisites for the success of e-NAM were clearly spelt out in the proposal for establishing a common agricultural market for the country. Unfortunately, most of these are yet to be fulfilled by the states by suitably amending their agri-marketing laws. The foremost among these pre-conditions is a single trading licence valid throughout the country and a single-point payment of mandi charges by harmonising the marketing levies of all the states. Only a handful of states have agreed to recognise the trading licences issued by other states. In many cases, the trading licences are merely mandi-specific. As a result, even within the states, online inter-mandi transactions are permitted only in 10 states. Besides, most states are unwilling to alter market levies because that would entail loss of revenue. There is also no uniformity in the quality standards of farm goods in different states. Moreover, not many mandis have put in place appropriate sorting, grading and assaying (quality testing) facilities that would enable informed bidding by buyers. Nor do they have proper warehouses for the safe upkeep of the sold items.

A fundamental flaw in the conceptualisation of e-NAM is that it mandates the business to be conducted only through the APMC markets’ electronic platforms. These markets are known for their inefficiencies and malpractices, which may tend to creep into e-marketing as well. Besides, the APMC mandis are dominated by middlemen, who are quite capable of manipulating even online trading in the absence of an effective market regulator. The APMC monopoly over the marketing of all the agricultural produce needs to end to ensure fair price discovery. Online trading through the e-NAM platform should be permitted from any public or private sector market that meets the necessary conditions. Only then can the farmers benefit from e-NAM’s online trading.