Union Agriculture Minister Radha Mohan Singh said that agriculture market in India needs to be modernized and reformed for the larger benefit of farmers, the trading community and consumers. He said that the second Green Revolution can only take off with a marketing revolution.
Addressing agriculture minister from states, he said that compared to several countries, India incurs too much wastage of its farm produce due to inefficient and antiquated marketing practices. “We believe that without reforming the agricultural marketing practices we will not be able to deliver the true value of the farmer’s produce to him, thus depriving him of incentives to invest in technologies for higher productivity and production,” Singh said.
Lauding efforts of Karnataka in modernising the APMC, he said the overwhelming response is indeed an indication and recognition of the importance of Agri-marketing in encouraging and supporting the farmer. “It also reflects our readiness and enthusiasm to adopt the latest technologies to transform this sector,” Union Agriculture Minister said.
Ministers from 23 states and union territories today gathered at Hubli to observe the live functioning of the electronic trading in APMCs introduced by Government of Karnataka. Recently, Union Cabinet approved the establishment of the National Agriculture Market (NAM) which is envisaged as a pan-India electronic trading portal which seeks to network the existing APMC and other market yards to create a unified national market for agricultural commodities.
NAM is a “virtual” market but it has a physical market (mandi) at the back end. NAM is proposed to be achieved through the setting up of a common e platform to which initially 585 APMCs selected by the states will be linked. “The Central Government will provide the software free of cost to the states and in addition grant of up to Rs. 30 lakhs per mandi as a one time measure for related equipment and infrastructure. This is only a beginning and the idea is to initiate the states so that they can experience the benefits of the e platform and be encouraged enough to take it forward from there,” Singh assured the states.
In order to promote genuine price discovery, it is proposed to provide the private mandis also with access to the software. In addition the states will be encouraged to set up soil testing laboratories in the mandis so that farmer can meet his needs holistically at the mandi itself.
It is widely accepted that the NAM will facilitate the emergence of a common national market for agricultural commodities. Current APMC regulated market yards limit the scope of trading in agricultural commodities at the first point of sale in the local mandi. Even one State is not a unified agricultural market. There are transaction costs on moving produce from one market area to another within the same State. Multiple licences are necessary to trade in different market areas in the same State. All this has led to a highly fragmented and high-cost agricultural economy, which prevents economies of scale and seamless movement of agri goods across district and State borders. NAM seeks to address and reverse this process of fragmentation of markets, by lowering intermediation costs, wastage and prices for the final consumer. It builds on the strength of the local mandi and allows it to offer its produce at the national level.
NAM is envisaged as a win-win solution for all stakeholders. For the farmers, NAM promises more options for sale at his nearest mandi. For the local trader in the mandi, NAM offers the opportunity to access a larger national market for secondary trading. Bulk buyers, processors, exporters etc. benefit from being able to participate directly in trading at the local mandi level through the NAM platform, thereby reducing their intermediation costs. The gradual integration of all the major mandis in the States into NAM will ensure common procedures for issue of licences, levy of fee and movement of produce.
“ In a period of 5-7 years we can expect significant benefits through higher returns to farmers, lower transaction costs to buyers and stable prices and availability to consumers,” Union Agriculture Minister said. The NAM will also facilitate the emergence of value chains in major agricultural commodities across the country and help to promote scientific storage and movement of agri goods, he added.
States expressed their willingness to learn from Karnatak experience. Government of Karnataka quickly established a Special Purpose Vehicle (SPV), Rashtriya e Market Services Pvt. Ltd. (ReMS) as a joint venture company with NCDEX Spot Exchange Ltd to implement trading of agricultural produce on e-platform.