e-Agri Markets during COVID-19 Pandemic

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Covid-19 Pandemic in India has led to mass reverse migration of labour from the urban centres to their rural roots. Since announcement of the unavoidable first phase of lock-down on Mar 23 2020, by the honourable Prime Minister of India, the economic activities came to a standstill. Most industrial centres and the states that provided jobs to the rural migrants could not support them anymore. Extension of lock-down after the first phase of 21 days led to un-anticipated hardships for the migrant labourers.

India could not escape the grim global reality where job losses have become commonplace.  The pandemic reminded the days of the great depression – a severe worldwide recession that took place mostly during the 1930s, beginning in the United States from 1929, to last a decade till 1939. It was the longest, deepest, and most widespread recession of the 20th century. The event is cited as an example of how intensely the global economy can decline.

Most vibrant metropolitan cities like Mumbai, Chennai, Delhi-NCR, Kolkata, Bangalore, Hyderabad, Ahmedabad and the states like Punjab and Haryana, which provide jobs to the migrants, could not support them due to the lock-down.

Importance of Indian Agriculture during Covid-19 Pandemic

Amidst the doom and gloom scenario, Agriculture has emerged as a sector of hope and support.  India could ensure food safety and security because the agriculturist produced enough food-grains and we had a workable mechanism to ensure food distribution.

India’s agriculture economy is estimated US$ 400 Billion- the second largest in the world. We are amongst the top five producers in most of the commodities. Our burgeoning population, with ever increasing middle class, provides a ready market for our agricultural products within the country. Globally, India is one of the most sought after consumption destination for agricultural produce. Our agricultural import bill is second only to petroleum products. We have a great opportunity to substitute imports of agricultural produce by competitively increasing our production.

Marketing of the agricultural produce has taken the centre stage in the efforts of the Government to ensure better prices to the farmers and consumers. There is still a significant gap between the prices received by the producers and the prices paid by the consumers. This is the key reason for the focus on agricultural marketing in the country.

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Reforms in Agriculture Markets (APMC markets) since 2000

In last two decades of the 21st century, the Government brought in various reforms in APMC markets in the country. The government modified APMC acts from time to time to progressively include the demands of the farmers and corporates. However, it was in 2014 that the Government announced its ambitious National Agriculture Markets (NAM) program. Rechristened as eNational Agriculture Market (eNAM), the program was launched on Apr 14, 2016 by the honourable Prime Minister of India. The initiative has progressed ahead since its inception and now covers 1000 markets. Aimed to create unified agriculture markets in India, eNAM has now embraced the “integrated markets” route to create a National  Agriculture Markets (NAM)

The idea of eNAM came from the successful execution of “one state one market” as part of its agri-market reforms by the state government of Karnataka. The state executed this program by Rashtriya eMarkets Services (ReMS)- an equal joint venture company under public private partnership (PPP) with NCDEX eMarkets Limited (NeML). According to a research report by Mr. Ramesh Chand, Member, Niti Aayog, the initiative contributed increase in farmers’ income by up to 38%.

ReMS is now fully integrated with the state of Telangana and eNational Agriculture Markets (eNAM). ReMS, an eAgri-Market platform, remains the only example of state-wide market reforms through an e-market company in the country. It integrates the agri-markets, where one state recognizes the other state market functionaries, through harmonious laws which seem to be the way forward.

Reforms in Agriculture Markets post Covid19

Agriculture market reforms over last two decades have been partially successful. After its focus to create an efficient regulated agri-market structure through eNational Agriculture Market (eNAM), between 2014 to 2019, the Government seems to have realized that regulated agriculture produce markets like APMCs cannot be the only way farmers can sell his/her produce. A seamless market access for the producers still remains an impediment.

E-trading has emerged as a key tool for enhancing efficiencies in the agriculture value chain. In the recent GOI announcements, e-trading has been given its due importance.

Key reforms announced by the Government include:

 

  1. Enactment of a new Central Law that does not restrict farmers from selling to anyone without an APMC license. This new central law overrides existing state laws.

 

  1. Amendments to Essential Commodities Act to remove stock limits on exporters, processors or other value chain participants except in exceptional circumstances like famine, national calamity etc.; and deregulate commodities like cereals, edible oil, oilseeds, pulses, onion and potato.

 

Conclusion

The Government is likely to come out with detailed guidelines on its reforms that has e-trading of Agricultural produce at its centre.

The fact remains that the country does not have enough mandis/ APMCs across all regions –a key reason why farmers’ sell their produce outside. The administrative barriers are likely to come down after the reforms are implemented.

The announced reforms show the commitment of the Government to increase farmers’ income by enabling initiatives beyond Price Support Scheme (PSS), PM-KISAN a direct benefit transfer scheme of farmers and a host of other activities like reforming allied sectors like Dairy, Fisheries and Poultry.

While reforms by the Government are a welcome step, more needs to be done to remove the impediments that reduce farmer’s income in consumer’s price. Larger structural conditions that significantly weaken their engagement terms in agricultural markets are likely to be addressed by regulatory intervention.

These are not only a result of vested interests and monopolistic interests, but are rooted in the agriculture value chain. However, we need decentralised, location-specific intervention and focused investment led by well-functioning agricultural institutions.

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