Friday, 3 July 2015

National Agriculture Market (NAM)

Why in news?
Govt approved the setting up of an online national agriculture market that will provide more options to farmers for selling their produce 

What is the current practice in agriculture marketing?

  • Currently, the Agriculture Produce Market Committee (APMC) Acts in different states permit the first sale of crops (i.e from farmer to mandi, second would be from mandi to retailer)— after harvesting by farmers — to take place only in regulated market yards or mandis.
  • Most crops produced by farmers today, barring milk(generally sold to co-operatives like Amul or Verka) and sugarcane(sold to only mill of the area), can be sold only in market yards (mandis) controlled by these institutions
  • Farmers product sale restricted only to traders or commission agents licensed to operate in the area under a particular APMC. 
  • In most cases, multiple licences (farmers get Mandi Licence) are required to trade in different mandis within the same state.
  • Moreover, food processors or retailers cannot buy directly from the mandis; for that, one needs a licence from the APMC that is seldom granted or itself sells at a premium. 
  • And every purchase compulsorily made through the mandis attracts fees payable both to the APMC and the authorised commission agent, or arhatiya, facilitating the transaction.

Details of NAM:

  • NAM online trading portal  -  a virtual marketplace allowing farmers to offer their crop to buyers anywhere in the country, as opposed to only traders and arhatiyas at the local mandi. 
  • Millers, retailers or traders sitting in other states can, likewise, use the platform to bid for produce normally brought to mandis where they have no operating licence.
  • Example: This virtual marketplace will allow a farmer from, say, Narsinghpur in Madhya Pradesh to sell his chana to a dal miller in Delhi who may be willing to pay a higher price. The miller, too, benefits by virtue of not having to be physically present in Narsinghpur or being forced to depend on traders in that APMC area,
  • Small Farmers’ Agribusiness Consortium (SFAC) has been designated the lead agency for developing the NAM e-platform 
  • The APMC concerned will, continue to earn the mandi fee on the transaction even if it does not happen in that particular market yard - highly criticised
    • The portal will provide an integrated platform for transferring the money to the accounts of farmers and the APMC after ensuring delivery of the produce to the buyer
Analysis:
  • Monopoly of APMC will end
  • APMC will continue to collect fees on each transaction, even when it is online. The only justification for such a levy — in return for providing a trading platform and facilities for loading, unloading, grading or weighing — does not exist in this case. [maybe for avoiding a conflict]
  • potential game changer. 
  • WHAT MIGHT FOLLOW: LIKELY IMPACT:
    • As farmers and producers organisations start to realise the benefits of supplying directly to large processors or retailers — including new-age online grocers — state governments are bound to come under political pressure to dismantle the monopoly enjoyed by APMCs. 
    • APMCs will then have to shape up to  survive — by offering superior infrastructure and services that will attract farmers and buyers. 


[Sources: PIB, Economic Times, Indian Express]

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