National Agricultural Market: The Road Ahead

eNAM

Initiated with the noble aim of empowering farmers to market their own produce efficiently, and in the process double their income by 2022, on 14th April 2016, Government of India launched National Agricultural Market (NAM), which was later renamed as Electronic National Agricultural Market (e-NAM).

e-NAM was adapted from Karnataka’s State Agricultural Market (SAM) model in July 2015 when the Hon. Minister of Agriculture and Farmers Welfare, Government of India, Shri Radha Mohan Singh announced that the key elements of the Karnataka model would be adopted at the national level.

Popularly known as the “Karnataka Model”, Karnataka became the first state in India to successfully create a SAM by leveraging the Unified Market Platform (UMP) of Rashtriya eMarket Services Pvt. Ltd. (ReMS). A joint venture company of the Government of Karnataka and NCDEX e Markets Ltd. (NeML), ReMS was formed as a public-private partnership (PPP) initiative and was successful in creating a SAM in Karnataka by cohesively interlinking 164 APMCs in the state and seamlessly facilitating inter-mandi and inter-state trade for 92 agri-commodities that has benefited over 5.2 million farmers.

While corporate initiatives like e-Choupal had leveraged Information Communication Technology (ICT) for buying agricultural produce online through Sanchalaks (Coordinators) from villages, there was no initiative to reform regulated Agricultural Produce Market Committees (APMCs) or Mandis till Karnataka model was established.

Taking a cue from Karnataka’s UMP and adapting various elements from the state’s Agricultural Market Reforms Committee (AMRC), e-NAM has hurriedly scaled up its operations to cover 585 APMCs by March 31, 2018. However, for truly deepening the impact of such market reform initiatives, much more needs to be done.

As seen in our previous post, one of the primary impediments for e-NAM’s growth is that at present e-NAM has adopted a siloed approach with limited interoperability. For it to bring significant efficiencies in agricultural markets, the following needs to be done on priority:

1. Make It Interoperable With SAM and Corporate Portals

As e-NAM is a five-year scheme, the principles of its interoperability with other markets like APMCs, Karnataka’s SAM platforms like UMP, Corporate Portals like e-Choupal needs to be established. Once the principles of interoperability are established, the operational arrangements – including risks and rewards, need to be firmly rooted through effective pilots in order to enhance smallholder farmers’ income by bringing their produce to APMC markets.

Further, the interoperability protocol should allow multiple platforms to co-exist to ensure that there is a fair competition in the market that would lead to better services. A cue can be taken from the SMART order routing mechanism between Stock Exchanges like NSE and BSE where the best (highest bidding) order wins. For example, if a farmer uploads his (price) quotes on any given market, the best bid from e-NAM/ReMS-UMP/e-Choupal would be the winning bidder.

In one of our earlier blog post, we had provided the below 5 simple suggestions to ensure that everyone is on the same page when it comes to the concept of interoperability:

Interoperability Infographic

2. Leverage Commodity Derivative Markets

For more than 15 years, Commodity Exchanges in India have provided an effective hedging platform for commodity trading. A vibrant National Agricultural Market can provide benchmark prices to settle the futures contracts on the delivery day and market prices discovered through open market platforms like e-NAM, Karnataka’s SAM, etc. can provide these benchmark prices.

Such a collaborative mechanism would definitely help both the Government and the farmers hedge their risks in the market.

 3. Use Data Science To Create Meaningful Data

Once the market becomes dynamic and interoperable, price and crop arrival data should be analysed and converted into meaningful data points from varied perspectives that will help not only the Government but also farmers, processors, and traders.

To Sum It Up

Building a market is a painstaking process that takes years to come to fruition. Agricultural markets in India have a lot of room to further improve their operational efficiencies and initiatives like e-Choupal, Karnataka’s SAM, e-NAM, etc. could surely act as catalysts in achieving this.

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