Electronic National Agriculture Market (e-NAM) Platform
- G.S. Paper 3 (Agriculture)
- About e-NAM, scope and implementation
- APMC objectives and issues
Why in news?
- The government is pushing the states to allow farmer producers’ organisations (FPOs) to trade from their premises through the electronic National Agriculture Market (e-NAM) platform, so that farmers get directly connected to traders and processors from across the country.
- If this is achieved, it could be a significant reform in agriculture marketing and may weaken the grip of APMC mandis over trade.
What is the issue?
- The role of FPOs will be very crucial to build a direct link between traders and farmers.
- Out of over 900 FPOs registered under e-NAM, close to 90 have been trading through the e-NAM platform set up at mandis.
- The growth of e-NAM has been slow as many states do not promote it due to pressure from traders and commission agents operating in mandis.
What is e-NAM?
- e-NAM or the e-trading online platform for the National Agriculture Market (NAM) was launched by the Prime Minister on April 2016.
- e – National Agriculture Market (e-NAM) is a pan-India electronic trading portal which nets the prevailing Agricultural Produce Market Committees (APMC) Mandis for making a united national market for agricultural commodities.
- The e-NAM project would operate via the online portal that is linked to the states’ mandis (Wholesale markets).
- All the participating states will be providing the software (Website and Mobile Application) for e-NAM at no cost.
What was the mechanism prior to e-NAM?
- 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.
- This fragmentation of markets, even within the State, hinders free flow of agri commodities from one market area to another without commensurate benefit to the farmer.
- A competent person will be appointed for one year in each sharing mandi in order to enable the seamless and smooth operation of the portal.
- Some key points related to e-NAM are given below:
- Farmers under this scheme will be given ‘farmer helpline services’ 24×7 to help them obtain information about the portal.
- The GOI is offering a grant of Rs.30 lakhs to the participating agriculture mandis.
- Small Farmers’ Agribusiness Consortium (SFAC) is the lead promoter of National Agricultural Market (eNAM).
- SFAC through open tender selects a Partner to develop, operate and maintain the NAM e-platform.
- SFAC which is formulated under the Department of Agriculture, Cooperation & Farmers’ Welfare (DAC&FW).
e-NAM & Its Role in the Agriculture Industry
- The farmers can benefit if they were to find ways for aggregating produce on their own, bypassing the Arhatiya (business representative) and even the local mandi (Marketplace) in the process.
- e – National Agriculture Market (e-NAM) nets the prevailing Agricultural Produce Market Committees (APMC) Mandis for making a united national market for agricultural commodities.
- The e-NAM Portal offers a single-window service for all Agricultural Produce Market Committees related information and services.
Advantages of NAM
- For the farmers, NAM promises more options for sale which would increase his access to markets through warehouse based sales and thus obviate the need to transport his produce to the mandi.
- Bulk buyers, processors, exporters etc. benefit from being able to participate directly in trading at the local mandi / market level through the NAM platform, thereby reducing their intermediation costs.
- For the local trader in the mandi / market, NAM offers the opportunity to access a larger national market for secondary trading.
- The gradual integration of all the major mandis in the States into NAM will ensure common procedures for issue of licences, levy of fee and movement of produce.
Issues with e-NAM
- The huge share of the trade recorded in the e-NAM portal was actually carried out offline and the values were fed into the portal to make it look like genuine online transactions.
- State agricultural departments have been finding it difficult to convince all stakeholders like farmers, traders and commission agents to move to the online platform.
- Lack of technical expertise and internet facility at the State Agricultural Departments has also delayed the setting up of grading/assaying facilities.
- The platform is not fully functional in any State as there are no scientific sorting/grading facilities or quality testing machines.
Focus areas under e-NAM
- e-NAM Implementation
- Informing and trading commodities on e-NAM
- Increasing the involvement of traders on e-NAM
- Aggregate the quantity and value of supplies being traded on e-NAM
- Increasing the figures of bids cited by traders
- Encouraging cashless transactions, e.g. online payments, to farmers
- Promoting inter-market trade between Mandis
- Offering access to Soil Testing Laboratories to farmers
- Accompanying awareness and farmer orientation programs
- Providing elementary amenities and facilities for cleaning, sorting and packing to farmers in the Mandi
- Creating logistics and infrastructure available to encourage inter-market trade on the e-NAM platform
- Undertaking local initiatives and innovative systems to influence greater strength to e-NAM
- Safeguarding transparency and accountability in implementation.
What is Agriculture Produce Market Committee (APMC)?
- The Agricultural Produce Market Committee (APMC) Act regulates mandis (agricultural markets).
- Farmers are compulsorily required to auction their agricultural produce at a mandi.
- Only licensed traders can purchase from the farmers at the mandi.
Issues with APMC
- Agriculture is a state subject. Thus, various states have passed different APMC acts to regulate agricultural markets.
- State APMCs members are elected or nominated by the state government as per the APMC acts. However, often regular elections are not held and APMCs function under bureaucratic control.
- Exploitation by traders by delaying payments to farmers
- The payment made to farmers is as low as one-third to one-fourth of the retail prices of agricultural produce and traders do not give sale slips to farmers to save tax. As a result, farmers do not possess any proof of sale of agricultural produce.
- Double commission of Middleman or trader increases the price of agricultural produce.
- No auction takes place in mandis. Even if an auction is held, traders have formed informal cartels and deliberately keep the prices low.
- No minimum support price (MSP) for other agricultural commodities such as fruits and vegetables, farmers rely on traders for the determination of prices.
- Hoarding of agricultural produce by traders to secure high prices from the retailers.
- Infrastructure development has been slow or negligible in mandis.
- Issue of license to traders by wrong means like buying shops at high prices or bribing. As a result, traders (also called commission agents) exploit farmers to recover their investment.
- In conclusion, we can say that this will turn out beneficial to the farmers when they’re receiving a higher price than before on their produce.
- Larger retail stores can benefit from this and will be attracted to this due to higher profit margins since no intermediaries will be involved.
- The intermediaries that are responsible for the claiming charges that result in higher market price can be put to trial.
- When the local market prices are high, the state government has been seen blocking supplies in order to create an imbalance in Demand and Supply; hence it is critical to ensure that the software being used doesn’t have any loopholes.