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Decoding National Agriculture Market

The initiative aims to interconnect all the physical markets or mandis online to enable buyers situated anywhere in the country to trade in agri-commodities at any of the local mandis

Prime Minister Narendra Modi is launching the National Agriculture Market (NAM), an e-market platform on April 14. It is a major initiative of the NDA government, which aims to ultimately interconnect all the physical markets or mandis on an online platform to enable buyers situated anywhere in the country to trade in agri-commodities at any of the local mandis. Through NAM, the government is looking to stabilize the prices of agri products, provide better returns to the farmers and help local mandis become even better in their services and act as one-stop payment destination for the collection of taxes and levies.

But how will NAM work and what will happen to the current mandi system?

State of Mandis

Currently, the agricultural produce market committees (APMCs) regulate all of around 600-odd mandis. However, this has limited the scope of trading in agricultural produce at each of the mandis say located in a single state. Mandis are actually the first point of sale where farmers bring his produce. Proximity of mandis to where the farmlands are also limits the farmers in getting a fair price because mandis in any state are not integrated. If the farmer wants to move his produce to another mandi where he believes he will get a better price for his produce, the cost of transportation alone is a big hindrance. Then as per the current laws, separate licenses are required for each of the mandis located in a state for, another hindrance to the farmer for getting a better price for his produce. Then the current system also limits the free movement of agri-products across state lines.

As a result, the mandi system has led to a highly fragmented agri-market places which the government believes is harming the farmers.

In comes the NAM.

What happens under NAM?

The electronic back-end, software, implementation, roll out and maintenance of NAM will be the responsibility of the Agriculture Ministry at the Center. Each Mandis are free to join the NAM platform. When they do, they get access to the entire e-facilities required to get their Mandis on the e-marketplace.

On April 14, the NAM will be launched across 21 mandis located in 8 states. Uttar Pradesh and Telangana each have 5 mandis come on board the NAM platform. Then three mandis in Gujrat, two each in Himachal Pradesh and Jharkhand are also on board from the first day and so are the single mandis of Madhya Pradesh and Rajasthan. But this is just the beginning.

The grand plan of the Agriculture Ministry is to integrate the balance 585 mandis by March 2018 in a phase wise manner. So by September this year, NAM will add 200 mandis. By March 2017 another 200 are scheduled to be added and the balance in the next 12 months.

Benefits of NAM

According to the material prepared by the Agriculture Ministry, NAM will increase the choice of mandis to a farmer. NAM will allow bot local traders and those based elsewhere in the country to bid for the farmers produce. The farmer will then have the choice to pick the best price offered, which may be by his local mandi trader or someone based far away in another mandi. In any event the transaction will be on the books of the local mandi and they will continue to earn the transaction fee.

As more mandis join the NAM platform, the volume of business will go up significantly thereby not only increasing revenue for the local mandis but offering the better prices for any local produce so that the farmer will benefit and so will his local Mandi. Integration of all major mandis into NAM e-platform would ensure common procedures for issue of licenses, levy of fee and movement of produce. As per the documents on NAM, the expectations from NAM are very high. But most of all NAM is envisaged to bring in stability in the prices of agri produce. "NAM will also facilitate the emergence of integrated value chains in major agricultural commodities across the country and help promote scientific storage and movement of agri goods," the official document said.

Legal Issues

In order to implement NAM, around 14 states have already amended their respective APMC Acts making provisions for e-trading. These are Andhra Pradesh, Chhattisgarh, Gujarat, Jharkhand, Haryana, Himachal Pradesh, Karnataka, Rajasthan, Sikkim, Goa, Madhya Pradesh, Mizoram, Telangana and Uttarakhand. Other states are expected to do so over a period of next one to two years.

The 21 mandis to come online on the NAM platform would offer trading in chana, castor seed, paddy, wheat, maize, onion, mustard and tamarind. However, fruits and vegetables, where there often are prices fluctuations, are yet to be included in the NAM platform. This is because while a number of states have amended their APMC Acts, they are slow in making changes to their respective law for allowing the trading of fruits and vegetables through the NAM e-trading platform. But the situation is expected to improve in coming months says the Agriculture Ministry.

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agriculture e-commerce commodities rural india