Modi sarkar's e-market initiative a game changer for farm sector

The National Agriculture Market (NAM), a recent policy initiative of the Narendra Modi government, is expected to bring about greater security for farmers and better returns for their produce.

It also makes for good policymaking by the government, which is nearing the completion of two years in office, at a time when the agriculture sector in India is facing distress in terms of rising cost of production, lack of water availability, access to credit and timely return of farm produce.

It attempts to build upon an integrated, uniform platform of 585 regulated wholesale markets for farmers by offering them good returns on their produce in order to increase their income and restore confidence in agriculture.

Earlier government measures like the Pradhan Mantri Jan Dhan Yojana (PMJDY) and Atal Pension Yojana (APY) have been able to broaden the benefit of the social security net and financial inclusion for the poor.

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In similar terms, the NAM works on the basis of creating an integrated common digital market platform for the agricultural produce. The idea has found its initial reflection in the Budget speech of finance minister Arun Jaitley, where he announced the setting up of "Unified Agriculture Marketing Scheme" for the benefit of farmers.

Jaitley said during his speech: "Twelve states have already amended their APMC (Agriculture Produce Market Committee) Acts and are ready to come on board." 

The NAM draws upon the idea of bringing structural changes in the way the first selling of crops - after harvesting - takes place in India under state-level APMC laws.

In the current scenario, a farmer has to sell his produce in the nearby mandis, with no option but to sell the products to licensed traders, under the concerned jurisdiction of APMC.

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The proposed NAM offers a two way solution to the problem of both traders and farmers. While earlier, traders had to avail of new licensing rights to operate in other mandis, farmers were also left with less mobility in terms of looking for traders for their produce. In addition, state mandis are not well-integrated and there are substantial transaction costs attached while moving farm produce within the state.

In an attempt to reform the existing APMC structure, it envisages a provision of electronic trading and single licence mode for sale through NAM in a local mandi. It also proposes an online trading portal, which seeks to improve the physical infrastructure of mandis, offering buyers mobility as they can participate in local trading while sitting outside.

In any case, the online trading platform would be a turning point as it will allow local traders to bid for the produce. Also traders sitting on the platform from other states can do the same. Thus the farmer may choose to accept either the local offer or the offer online, depending on the amount of benefit he is expected to derive.

This will also reduce the role of intermediaries and will make the process more open and fair to the traders, farmers and food processors. However, at the initial level, farmers will have the choice to sell their produce within the state but this will expand gradually with time.

Moreover, it also seeks to introduce quality benchmarks in the agricultural trading market of the country. As the reading goes, it calls for application of uniform quality standards for the testing of farm produce in order to build a well informed market for traders as well. This will contribute to bring transparency in marketing and policymakers will have a better idea of real time availability and quality of crops.

In addition, some crops like onions and potatoes are often subject to differential pricing in various states and development of a unified market can bring price parity among them.

The proposed NAM will witness participation of 21 mandis across eight states. This includes five from Telangana, five from Uttar Pradesh, three from Gujarat, two from Haryana, two from Himachal Pradesh, two from Jharkhand, one from Madhya Pradesh and one from Rajasthan.

The platform will begin by trading in 25 crops, including wheat, maize, pulses, oilseeds, potatoes, onions and spices. According to the government, it seeks to integrate 200 markets in NAM by September 2016, followed by integration of 200 more regulated markets by March 2017 and the remaining 185 markets by March 2018. Thus it aims for complete integration of regulated state markets under the online platform within two years of its formal launch.

To sum up, the proposed NAM is going to be a game changer for agricultural marketing in India and forms a key component of the Modi government's agenda to reform the farm sector corresponding to the introduction of the new Fasal Bima Yojana and Soil Health Card scheme in order to realise its goal of more crop per drop.

At last, it aims to address the problems of agriculture which necessitates a holistic and scientific approach.