Daily Editorials for UPSC IAS Exam Preparation

Editorial Today – National Agriculture Market

National Agriculture Market

What is 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.
  • 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 and its challenges

  • 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 (including fees).
  • This fragmentation of markets, even within the State, hinders free flow of agri commodities from one market area to another and multiple handling of agri-produce and multiple levels of mandi charges ends up escalating the prices for the consumers without commensurate benefit to the farmer.

Unified Market
NAM addresses these challenges by creating a unified market through online trading platform, both, at State and National level and 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.

Components of NAM:

  • A national e-market platform for transparent sale transactions and price discovery initially in regulated markets. Willing States to accordingly enact suitable provisions in their APMC Act for promotion of e-trading by their State Agricultural Marketing Board/APMC.
  • Liberal licensing of traders / buyers and commission agents by State authorities without any pre-condition of physical presence or possession of shop /premises in the market yard.
  • One license for a trader valid across all markets in the State.
  • Harmonisation of quality standards of agricultural produce and provision for assaying (quality testing) infrastructure in every market to enable informed bidding by buyers. Common tradable parameters have so far been developed for 25 commodities.
  • Single point levy of market fees, i.e on the first wholesale purchase from the farmer.
  • Provision of Soil Testing Laboratories in/ or near the selected mandi to facilitate visiting farmers to access this facility in the mandi itself.

State’s Obligations for Successful Implementation
In order to facilitate both – unification of market and online trading, it is necessary for the States to undertake reforms prior to seeking assistance under the scheme in respect of

(i) a single license to be valid across the State,

(ii) single point levy of market fee and

(iii) provision for electronic auction as a mode for price discovery.

Only those States/UTs that have completed these three pre-requisites will be eligible for assistance under the scheme. The States must ensure that the reforms are carried out both in letter and spirit through appropriate and unambiguous provisions in the APMC Acts and rules. Besides the State Marketing Boards/APMCs must enable the promotion of the e-auction platform. The States will need to ensure that the mandis that are integrated with NAM makes provision for requisite online connectivity, hardware and assaying equipments.

Benefits of NAM
NAM provides a number of benefits to various stakeholders of the system.

  • For farmers, NAM promises more options for selling their produce and competitive returns.
  • For local traders, NAM will provide access to larger national market for secondary trading.
  • For bulk buyers, processers, exporters, NAM will enable direct participation in the local mandi trade, reducing intermediation cost.
  • Stable prices and availability to consumer.
  • For mandis, NAM benefits in terms of reduction in book keeping and reporting system, which are generated automatically; better monitoring and regulation of traders and commission agents; completely transparent system which eliminates any scope of intentional/un-intentional manipulation of tendering / auctioning process; improvement in the market fee collection by means of accounting all the transactions that are taking place in the market; reduction in manpower requirements as tendering / auctioning process takes place through the system; (this system helps to declare the winner for the lots within few seconds even for thousands of lots in the market); analysis and forecasting of the arrivals and prices; availability of the activities of each APMC on the website directly.
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