Commodity Analysis

e-NAM — a long way to go

Rajalakshmi Nirmal | Updated on January 16, 2018 Published on October 22, 2016

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Waiting for a good price: Farmers at the Adoni mandi await traders to pick up their produce - Photo: Rajalakshmi Nirmal   -  BusinessLine

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The electronic-National Agriculture Market is a sound idea but implementation is at a nascent stage

Farmers in Telangana staged a protest last Monday, demanding discontinuation of the electronic-national agriculture market (e-NAM) platform and restoration of the previous platform provided by NCDEX e-Markets.

It followed the failure of the software to accommodate the heavy volumes of the peak season arrivals, beginning with maize and soyabean.

The Agriculture Produce Marketing Committee (APMC) in Nizamabad, which was using the e-platform provided by NCDEX e-Markets under the mandi modernisation programme, recently moved to e-NAM after the State’s order.

But on October 15, 1and subsequently on October 17, the new system failed as the server could not handle the high volumes. About 15,000-plus bags of maize and 7,000-plus bags of soyabean arrived at the mandi on that day.

Even as the Centre is glad that it has linked over 250 markets under e-NAM since its launch in April and targets covering 585 markets by March 2018, there are many missing links in the new system which, unless fixed, may see it fail.

There are today 2,477 regulated agriculture markets (or APMCs) and 4,843 sub-yards regulated by the respective APMCs. Of these, only 250 have been enrolled under e-NAM and 150 of these under the e-platform of NCDEX e-Markets (in JV with Rashtriya e-Market Services).

Since April 2016, when the Centre introduced e-NAM, only 17 States and one Union Territory have modified their APMC to bring in e-mandis and only 10 of these have some of their mandis enrolled for e-NAM.

States including Punjab, Maharashtra and Tamil Nadu, which are key producers of pulses and grains, are still out of e-NAM (in the existing form, the state APMC Acts restrict farmers from selling their produce outside the APMC in their district).

Also, even mandis that have enrolled for e-NAM are now not entirely an online market. The way the e-NAM mandis function is different from what was originally envisioned by the Centre. Much of the trade that happens through this platform in different States is largely the MSP procurement by the government, say market participants. The farmer is still only a price taker.

How it was envisioned

The framework the Centre envisaged for e-NAM was one where there would be a common national market for agricultural commodities. This market would enable farmers to reach out to buyers across the country. A Twitter post from the Agriculture Ministry envisioned the framework thus: When a farmer enters the mandi, he will be registered and assigned a commission agent. Then, the farmer will leave his produce with the quality control laboratory which will do assaying and fix the price for the commodity. The bid is then loaded on to the website and buyers from across the country get to see it. Interested buyers then make the payment for the lot they selected through NEFT to e-NAM which will, in turn, transfer it to the farmer after deducting a transaction fee.

The farmer gets the invoice from the commission agent and leaves the mandi and the buyer picks up the commodity from wherever it is by his own means. This sounds good. But then, there is no elaboration on many critical aspects: If assaying has to be done, who will appoint the quality officers? Will it be the State or the Centre? How much time will assaying take and till then where will these commodities be stored? Who will then bear the warehousing charge?

In markets where e-NAM is live at present, it is at an elementary stage. MS Muniya, the Secretary of Mandsore APMC in Madhya Pradesh, says, “Twenty mandis in MP have moved to e-NAM. But, only gate entry is happening, auction is still on an open outcry system…we are still in the process of understanding how the system can be made to work. There is internet connectivity problem. Now, we manually enter the transactions on the system, bidding is not online….”

Enquiries at a few more mandis in Telangana and other States which are enrolled under e-NAM show that the situation is the same. It starts with a gate slip being issued to the farmer at the entry. But after that, no assaying done. Traders manually examine the stock that comes to the mandi and make a quote. And, post-completion of a trade, the farmer is paid cash by the commission agent or the trader. There is no system in place to capture bank details of farmers so as to do a direct bank credit.

The infrastructure support needed to make the e-platform a national market is not available in most mandis. The recent instance of the e-NAM software failure during auction hours at the Nizamabad APMC shows the incapacity of the system to accommodate heavy volumes. As the peak arrivals season for crops, including maize and soyabean, starts from next week, it is going to be a stress test for the new system.

NCDEX e-Markets operates its platform on the same lines as e-NAM but, with the difference that in the markets where it operates, there has been training of the various participants from the mandi and the software has been re-worked with small details right from the font size and display from the various participants and has evolved over a long period of time.

The implementing agency for e-NAM is the Small Farmers’ Agribusiness Consortium (SFAC). The software is from Nagarjuna Fertilisers and Chemicals.

Farmers have no say

The objective of launching e-NAM was to give farmers more say in fixing the price. But in the current structure, the platform doesn’t warrant that. The whole process begins with the trader’s bid, rather than from asking price of the farmer.

The farmer will get the freedom to sell only if he moves away from the commission agents and traders.

Presently, small and marginal farmers depend on these middlemen for their financial needs and pledge their produce with them even before the harvest.

Ram, CEO of Samarth Kisan, a farmer producer company which links over 6,000 farmers in Madhya Pradesh, highlights another issue.

For the benefits of the new system to reach the marginal farmers, there should be facilities for sorting, grading and stocking at the mandis, he says.

“Now, traders buy the produce from the farmers at a very low price, then they do the sorting and grading and sell it to the big companies for good money…”

The macro problem is the resistance shown by the implementing agencies and States, says Pravesh Sharma, former MD of SFAC.

“The expansion has not gone the way it was originally designed. The main reason for that is there is a lot of resistance from the States as well as APMC committees who are supposed to facilitate the expansion of e-NAM. It is a new concept and it has to be sold to people. It has to be explained through awareness campaigns and focused group discussions, so that there is clarity, in the minds of the farmers and traders, of the benefits that accrue through trading on e-NAM.

“I don’t believe that it has been done sufficiently or enthusiastically. Even when the APMC Act was introduced in the 1970s, most States resisted it for several years and they did not want to have regulated markets. It took the government of India several years of persuasion to get the States to pass the APMC Act. Now, for the new market reform again, there is resistance, and, I think it will take at least two years for this idea to get embedded. But the two years have to be spent very aggressively selling the idea in different channels through different stakeholders and also addressing their concerns…”

The fear of the APMCs is pointless as the e-NAM structure incorporates the mandi fees of the particular APMC into its transaction cost, which will be passed on to the APMC in any case. So, it is totally revenue-neutral in terms of the APMCs’ revenue.

Published on October 22, 2016

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