E-NAM: Sowing of seeds for future

Context:

National Agri-Market is slowly transforming the way India trades in Agri-Products.

Background:

APMRA during 1960-70: – The Agricultural Produce Marketing (Regulation) Act brought radical changes and significant improvement in almost all aspects of marketing of farm produce.

Appointment of an Expert Committee in 2000: – Found stringent controls on the storage and movement of several agricultural commodities and these restrictions were acting as a disincentive to farmers, trade and industries.

Inter-ministerial task force 2001: – Suggested various reforms relating to agricultural marketing system as well as in policies and programs for development.

Model act called the State Agricultural Produce Marketing (Development and Regulation) Act, 2003 – Provides for establishment of Private Markets/ yards, Direct Purchase Centers, Consumer/Farmers Markets for direct sale and promotion of Public Private Partnership and effective infrastructure.

E-NAM in 2016 – E-NAM is an online trading platform for agricultural commodities to address the issues associated with forward linkages.

Why we needed eNAM?

Growth Rate:  – Since 1991 reforms, growth rates of output in agriculture and non-agriculture sectors has risen sharply.

Less Price incentive: – Less incentive to the farmers due to Inefficient and low scale multiple middlemen. And due to fragmented market Multiple licenses were required to trade in different market areas in the same state.

Reforms: – No major reform in the agricultural market has been implemented Since Agricultural Produce Marketing (Regulation) Act (APMRA) during 1960s and 1970s.

International obligations: – External liberalization post 1995 World Trade Organization (WTO) agreement exposed Indian agriculture to international competition, which necessitated internal liberalization of agriculture trade to improve domestic competitiveness.

What is e-NAM:

Electronic National Agriculture Market (E-NAM) is envisioned as a unified national electronic market bringing interconnectivity to markers across the country.

The NAM Portal provides a single window service for all APMC related information and services.

While material flow (agriculture produce) continue to happen through Mandis, an online market reduces transaction costs and information asymmetry.

How will e-NAM operate?

It is a software platform available to each Mandi, where farmers can trade directly on their own or through registered commission agents.

The diagram outlay the functioning of e-NAM model.

Objectives of E-NAM:

• Transparent sale transactions and price discovery initially in regulated markets.
• Liberal licensing of traders / buyers and commission agents by State authorities.
• One license for a trader valid across all markets in the State.
• Harmonization of quality standards of agricultural produce and provision for assaying infrastructure in every market to enable informed bidding.
• Single point levy of market fees.
• Provision of Soil Testing Laboratories in/ or near the selected Mandi.

Benefits sought through e-NAM:

To Farmers

• The farmer will have the freedom to take his produce to any market that gives him better price
• Lack of transparency in price and fee under APMC Act, the e-NAM platform will increase competition and information flow to poor farmers.

To Traders

• In NAM, a single licence is required to operate across the state.
• Local traders will get access to the larger national market.

To Buyers/Exporters

• Allow private players to buy directly from farmers so far not allowed under APMC – shorten the supply chain and efficiency gains will be transferred to both farmers and consumers in terms of fair price

To Investors

• Private investment can flow-in to improve infrastructure in cold storage, warehouses, logistics, packaging etc. which will reduce wastage of perishables and create employment.
• e-NAM is expected to address the supply-side reforms in agriculture market
• Provide an opportunity with increase in investments in cold chain, and discourage hoarding leading to lower food inflation.

Impact of e-NAM on Ground:

• SFAC, Small Farmers Agri-business Consortium, is the implementing agency for eNAM.
• 585 out of 2500 major APMCs in the country have been linked to eNAM.
• Pre-fixing of prices by trade cartels has come down significantly.
• Computerized weighing has eliminated the chances of falsifying weight calculations.
• Agri-commodities now have standardized quality parameters.
• States like Andhra Pradesh, Telangana and Chhattisgarh have achieved a significant success in e-NAM implementation.

Some recent Government steps:

• SFAC is running awareness programs.
• Training modules are designed in local language and explained with Audio-visual content to farmers and traders.
• Connecting over 22,000 GrAMS- local farmers market, with e-NAM.
• Bringing FPOs (Farmer Producer Organisation) to trade on e-NAM platform, to increase their bargaining strength.
• Connecting warehouses, under WDRA, to e-NAM. It will reduce wastage.

Challenges remaining:

Operational Obstacles

• The panel also found significant variation in the arrival data of AGMARKNET and e-NAM
• Transformational complexities and to low digital literacy.
• Delays in online payments.
• Political commitment at state level.
• Resistance from traders and commission agents.
• Farmers fear of taking the produce to online bidding due to their low quality.
• Auctions, at some places, are done off-line and data being entered later on portal making a right price discovery a distant dream.

Structural Obstacles:

• Poor internet connectivity, especially in rural areas.
• Most Mandis still have only basic machines for assaying commodities (moisture meter and weighing machine).
• Legal barriers to entry of organised and modern capital and investments into agricultural marketing.
• High rate of market fee, commission charges, cess and taxes and development charges by state government.

Best Practice:

  Andhra Pradesh has successfully linked many of its Mandis with E-NAM. It adopted twin strategy in its implementation. First, strong political commitment- confronting traders and commission agents, and demonstrating farmers the ultimate benefits of eNAM.

Similar steps have also been taken by the governments of Telangana and Chhattisgarh.

Unified Market Platform model of Karnataka another exemplary model which has the farmers in the state.

Way forward:

• Efforts need to be made for inter-state trade in Agri-produce.
• States can issue unified licence to traders, making trading possible from any part of the country.
• Artificial Intelligence can be used to upgrading assaying process.
• Introducing bill discounting scheme to eliminate resistance for online payment.
• Changing types of commodity mix require scientific warehouses where temperature can be controlled.

Though e-NAM will improve competitiveness in market through larger participation of buyers and more transparent system of bidding, it should not be considered a panacea for all deficiencies in agricultural markets.