Insights into Editorial: Creating a National Agriculture Market(NAM)
National Agriculture Market (NAM):
National Agriculture Market (NAM) is a pan-India electronic trading portal which networks the existing APMC mandis to create a unified national market for agricultural commodities.
Single National Agriculture Market (NAM) in the country, with a view to enable farmers to get a better price and for consumers to pay a lower price for agri-produce, a win-win situation at both ends of agri-value chains.
Advantages of NAM Portal:
The NAM Portal provides a single window service for all APMC related information and services. This includes commodity arrivals & prices, buy & sell trade offers, provision to respond to trade offers, among other services. While material flow (agriculture produce) continue to happen through mandis, an online market reduces transaction costs and information asymmetry.
Agriculture marketing is administered by the States as per their agri-marketing regulations, under which, the State is divided into several market areas, each of which is administered by a separate Agricultural Produce Marketing Committee (APMC) which imposes its own marketing regulation.
NAM: A Game Changer for Market:
- Almost 40 per cent of all fruits and vegetables are lost annually in India between the grower and the consumer mainly due to lack of storage facilities, a weak transportation system and bad roads.
- Climate change is expected to make the situation worse.
- States alone cannot revamp the agricultural marketing sector, primarily due to paucity of funds and technology.
NAM addresses these challenges by creating a unified market through online trading platform, both, at State and National level.
It promotes uniformity, streamlining of procedures across the integrated markets, removes information asymmetry between buyers and sellers and promotes real time price discovery, based on actual demand and supply, promotes transparency in auction process, and access to a nationwide market for the farmer, with prices commensurate with quality of his produce and online payment and availability of better quality produce and at more reasonable prices to the consumer.
Agri-Market reforms in the Past:
Some reforms in domestic agri-markets were attempted, when a model Agricultural Produce Marketing (Regulation) Committees (APMC) Act 2003 was suggested to states. As many as 22 states have adopted it in some form, yet it failed to transform the agri-marketing structure in India.
The system kept suffering from highly fragmented markets with insufficient infrastructure; levies and intermediation fees remained high and uneven across states; APMC licensees monopolized trade, leading to rent-seeking and lower share of farmers in the selling price.
Why market integration is important?
- The country’s food production has increased tremendously from just 51 million tonnes in 1950-51 to about 252 million tonnes in 2014-15. However, farm income did not grow much. This was also highlighted by the National Commission on Farmers (NCF) headed by MS Swaminathan.
- Recent incidents of farmers reportedly dumping their bumper produce of tomatoes and onions and emptying cans of milk into drains is evidence of it. Had the markets been integrated, the surplus produce would have been transferred to deficit regions.
- The seasonal spike in prices of perishable commodities that pushes up the food inflation cannot be addressed without market reforms.
- Production and marketing should march together in order to benefit farmers and consumers. Farmers need to be empowered to decide when, where, to whom and at what price to sell.
The Government came out with the APLM 2017, or the Agricultural Produce and Livestock Marketing (Promotion and Facilitation) Act.
It shifted the focus from regulation (under APMC), to promotion and facilitation (under APLM), setting the right tone for agri-marketing reforms.
Ashok Dalwai Committee Report:
The Dalwai Committee on Doubling Farmers’ Income has pointed out that the share of farmers in consumer’s price is very low; it generally varies from 15 to 40 per cent. Studies conducted by the International Food Policy Research Institute and World Bank have confirmed this. The dominant role of middlemen among others is primarily responsible for farmers not realising a reasonable price for their produce, lowering farm income and profitability. This was recognised by the 12th Plan’s Working Group on Agriculture Marketing (2011).
The agriculture markets are crowded with middlemen and commission agents. As pointed out by Ramesh Chand, in Punjab, there are as many as 22,000 commission agents and innumerable middlemen in each market. According to Ashok Gulati, former chairman of the Commission for Agricultural Costs and Prices, commission agents in Delhi charge exorbitant fees ranging from 6 per cent to 15 per cent.
As per the Dalwai Committee Report 2017-18, there are close to 29,547 marketing points. Of these, 22% or 6,615, are regulated markets under the APMC and 22,932 are regional periodical markets (RPMs).
Out of these 6,615 markets, the NAM scheme aimed to bring 585 markets (i.e. 9%) on its e-market platform by the end of financial year 2017-18. As on March 2018, all targeted mandis, i.e., 585 that are in 16 states and 2 UTs, (Chandigarh and Puducherry), have been integrated with the NAM-platform.
But, these 585 mandis brought only 90.5 lakh farmers onto the platform, which is less than 7% of the 14 crore Indian farmers.
But, the value is only about 2% of India’s total value of agricultural output.
As per the Department of agriculture cooperation and farmers welfare, most of the reported transactions are intra-mandi. Inter-mandi and inter-state trading on the platform are minimal.
What this means is that the states on e-NAM have not been able to provide farmers with better price discovery in other mandis of the same state or across states. The department also acknowledges that e-payment facility is not available in most mandis, and that there is no competitive bidding reported in these states.
This clearly implies that the monopoly of the APMCs continues unabated even in the 18 states/UTs, and the aim of creating a truly unified NAM with an efficient price discovery mechanism is still a far-fetched dream.
Therefore, the following steps are taken in a concerted manner:
- Unyielding focus on agri-market reforms starting with basics of assaying, sorting, and grading facilities for primary produce as per nationally recognised and accepted standards;
- Creating suitable infrastructure at mandi-level (like godowns, cold storages, and driers) to maintain those standards;
- Bringing uniformity in commissions and fee structures that together do not go beyond, say 2%, of the value of produce; and
- Evolving a national integrated dispute resolution mechanism to tackle cases where the quality of goods delivered varies from what is shown and bid for on the electronic platform.
This would require significant investments, and changes in state APMC Acts. This is feasible, provided PM Modi takes a lead and presses for it, bringing uniformity in agri-marketing rules and infrastructure in all the states. Roping in the private sector for investments would create jobs and promote efficient agri-value chains.
The real challenge is to change the nature of the market – a single unified pan-India market. We need to devise a set procurement model along with the States but we also need to link it to the public distribution system. With better prices, what is also important is better access to the market. States need to support some of the reforms and be a part of the e-NAM initiative.
e-NAM could help to break this logjam – it is a virtual market.
- All the markets will be linked through the platform
- Infrastructure facilities like quality testing
- Storage facilities if the produce are not sold at that time
- Can get a loan even on the produce stored
- Can choose where he sells his products, in a different state where he might get better returns
The Agriculture ministry will have to strengthen e-NAM platform with new and user-friendly features by rolling out MIS Dashboard for better analysis, BHIM payment facility by traders, mobile payment facility by traders, enhanced features on Mobile App such as gate entry and payment through mobile, integration of farmer’s database, eLearning module in e-NAM website etc.
To double farmers’ income by 2022 and that farmers should become part of mainstream development. The objective was to bring more transparency and competition and provide remunerative prices to farmers. Keeping in view the need of making marketing of commodities easier for farmers.