Previously, we have discovered how fragmented, unorganized, procedurally ill, technologically archaic and fragile (in terms of infrastructure) India’s agricultural market system remains. This is, certainly, one of the most important and decisive factors behind the overall distress farming faces today.
In 2016, an online trading platform named National Agriculture Market or eNAM was launched by the government which basically facilitates farmers, traders and buyers with online trading in commodities. Without a doubt, it must be admitted that such a system is the need of the hour. It is going to help in better price discovery for farmers and provide facilities for smooth marketing of their produce.
There is no denying the fact that the intention of the government has always been to provide farmers with better price for their produce, thereby assuring them of a secure livelihood. The point, however, is that least efforts have been taken to ensure successful implementation on the ground.
There are about 2,477 principal regulated markets (APMCs) and 4,843 sub-market yards regulated by respective APMCs in India. However, roughly 1,000 APMC mandis have been connected to eNAM so far, which raises a pertinent question: Why it is taking too much time to get existing markets integrated with the portal?
If observed carefully, it can be seen that most of the large APMC markets have not been integrated with the portal. Take Azadpur mandi of Delhi or Vashi market of Mumbai, for example. Recently, APMC Vashi Market went online but only due to the social distancing factor.
The reason behind this slow integration is the fact that there is huge resistance for online trading both from the government and other stakeholders involved in the process, including intermediaries with powerful backgrounds. Talking about state governments, since market fee is a huge source of revenue for them, most of the states have been reluctant in introducing eNAM in their respective states from the beginning.
The fundamental flaw with online trading lies in the fact that intermediaries have been understood as villains, and the new system aims to completely eliminate intermediaries from farm-to-fork chain.
Undoubtedly, existence of intermediaries has been one of the factors behind farmers’ low income, but it is unrealistic for the government to ignore the role they play in the entire chain from availing credits to farmers till marketing of their produce. Some even consider them as “Necessary Evils”. Their role in collecting farm produce, saving logistics cost, making prompt payments to farmers, sorting, packing and branding of produce can’t be ignored. The networking is so intricately organized that sometimes even farmers themselves become intermediaries.
Majority of the states have made respective changes in their APMC acts to get markets integrated with eNAM, but the sad part is that the traders still fail to provide a competitive price to the farmers for their agricultural produce in their state. There is no evidence till date suggesting that the new online system has increased farmers’ income significantly in any of the region of India.
Just making a portal and asking marketing boards to join the same doesn’t solve the challenges of market fragmentation, multi-level taxation and license issues in APMCs. The Telegraph reported that eNAM has not been successful in dealing with existing problems of APMCs like scrappy supply and market chain, scarcity of covered and open auction platforms, common drying yards, grading facilities and electronic weighbridges, lack of accurate and timely market information system, and so on.
In short, we don’t have the infrastructure ready which can support such a highly ambitious initiative. The fact is that we have just made the design of rocket on software but still don’t have the fuel ready.
Going online from offline is not as easy as it seems. We have already seen the chaos created by the implementation of GST. It is to be noted that farmers are much more backward than businesspeople, big or small.
There are numerous factors to be taken into account before such a huge transformation takes place. There are vested interests involved of every stakeholder in the chain. Making the trading online doesn’t ensure all the levies (discussed in part II of this series) are phased out immediately or gradually.
It is unrealistic to think that technologically-driven environment will run without collecting appropriate user fees/cess/taxes at various ends of the supply chain. Considering the low digital illiteracy in rural areas, it will require computer centres with high speed connectivity to be set up, which are easily accessible to farmers. Who will bear the cost of running such centres?
Ensuring that old commissioning agents are not replaced by new agents and the market actually works as per the desired process is hard, and largely dependent on the people who are getting affected by it and those who are responsible for its implementation at the official level.
Moreover, e-auctioning that this electronic portal is about, is tough, indeed. It is not going to be easy for the buyers or traders to assess the quality of food grains sold by producers on the portal itself. We need to understand there is a difference between huge amounts of food grain transported and a small Amazon parcel that we can return if we find that the quality is not good enough.
Even if the model becomes successful at small level, which is highly unlikely, taking it to inter-state level requires extraordinary efforts in terms of infrastructural development. If a paddy producer from Odisha wants to sell their produce to a buyer from Gujarat, I am unable to understand who will bear the transportation cost? And, if the slightest of that cost is incurred by the farmer, the model is a complete failure, and the entire purpose of providing them assured income gets defeated.
Also, inter-state trade may work for cereals and coarse grains, but not for perishable items. Let’s get back to the reality. The reality is that our storage infrastructure is so weak that preservation of food grains in the existing system remains a gigantic challenge. Unfortunately, the policies of government (to be discussed in next part) are nothing but a half-baked cake which can only cause indigestion to the farmers.
You can also Part I of the series, and Part II of the series. Next part is available here.