(Probable Question: How the electronic-National Agriculture Market (e-NAM) has assisted in solving the problem of highly fragmented agricultural market in India? What are the challenges faced by e-NAM?)
Agricultural market in India is highly fragmented. With each farmer confined to a single mandi in many products in many states, we currently have thousands of markets across which no arbitrage takes place. This represents a huge inefficiency in the system.
Launched in April 2016, electronic-National Agricultural Market (e-NAM) is an important initiative in this direction. The initiative aims to unify mandis across the nation into a single national market through electronic trading whereby a buyer located anywhere in India would be able to place an order in any mandi in India.
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.
Challenges faced by e-NAM
Though it currently covers more than 400 markets and is to be extended to 585 mandis by the end of 2017-18 and progress has been made in smoothing out transactions within participating mandis, cross-mandi purchases are few and far between. Even in Karnataka, which has pioneered the idea, with rare exceptions, sales within a mandi are confined to buyers who are physically present. Buyers show a strong preference for physical inspection of grain over quality assessment through assaying while farmers are reported to fear that assaying reduces the price of their produce.
What necessary measures need to been taken:
- Third party assaying and quality certification mechanisms – This would increase cross-mandi purchases by instilling trust between both the buyers and the farmers.
- Efficient dispute settlement mechanism.
- Systems for forwarding goods to buyers.
- Digital infrastructure to enable the national market.
- Encouragement of Farmer Producer Organisation.
Source: NITI AAYOG Three Year Action Agenda, 2017-18 to 2019-20.