National Agricultural Market – A Harbinger of Change

  The Government realises the importance of agricultural sector for the growth and development of the nation’s economy.  With nearly 58 per cent of its people continuing to depend upon agriculture for their livelihood, the critical role of the sector cannot be gain said.  Agriculture sector is also highly vulnerable to the vicissitudes of nature that impact the crop enterprise at its production stage.  Further, the sector is also exposed to the current weaknesses of the agricultural marketing system.  The annual income of a farmer depends upon both yield and the price that his produce fetches.  While the Government has rolled out large number of programmes to improve yield levels on a sustainable basis, it recognises the need for creating a competitive market structure in the country that will generate marketing efficiency.  Only when the market is integrated over space and time, can market efficiency be realised.

            The Department of Agriculture & Cooperation in the Union Government’s Ministry of Agriculture is keen to increase the net returns of the farmer.  Hence, its emphasis is on creating an unified market, that is well integrated across the nation.Following successive Budget announcements of 2014 and 2015 on setting up an “Agri-Tech Infrastructure Fund” and on ‘Unified National Agriculture Market’ respectively, the Department of Agriculture & Cooperation has formulated the Central Sector scheme for Promotion of National Agriculture Market through Agri-Tech Infrastructure Fund (ATIF) through provision of the common e-platform.

            Integration of agri-markets across the country through the e-platform is seen as an important measure for overcoming the challenges posed by the present agri-marketing system namely – fragmentation of State into multiple market areas, each administered by separate APMC, multiple levy of mandi fees, requirement for multiple license for trading in different APMCs, licensing barriers leading to conditions of monopoly, poor quality of infrastructure and low use of technology, information asymmetry, opaque process for price discovery, high level of market charges, movement controls, etc.  The need to unify the markets both at State and National level is, therefore, clearly the requirement of time, in order to provide better price to farmers, improve supply chain, reduce wastages and create a unified national market.

              The Scheme envisages implementation of the National Agriculture Market by the Department of Agriculture & Cooperation through Small Farmers Agribusiness Consortium (SFAC) by creation of a common electronic platform deployable in selected regulated markets across the country.  A budgetary provision of Rs.200 crores has been made to be spent over the next three years (2015-16 to 2017-18).

            An appropriate and common e-market platform will be set up, that would be deployable in selected 585 regulated wholesale markets in States/UTs desirous of joining the e-platform.  SFAC will implement the national e-platform in 3 phases covering 250, 200 and 135 mandis during 2015-16, 2016-17 and 2017-18 respectively.  The DAC will meet expenses on software and its customisation for the States & UTs and provide it free of cost to them.  DAC will also give grant as one time fixed cost subject to the ceiling of Rs.30.00 lakhs per Mandi (other than for the private mandis) for related equipment / infrastructure in 585 regulated mandis, for installation of the e-market platform.  Provisions are also being made for establishing soil testing laboratories in the Mandis. Big private mandis will also be allowed access to the e-platform for purposes of price discovery.  However they will not be supported with any funds for equipment / infrastructure.

            For integration with the e-platform the States/UTs will need to undertake prior reforms in respect of (i) a single license to be valid across the State, (ii) single point levy of market fee and (iii) provision for electronic auction as a mode for price discovery. Only those States/UTs that have completed these three pre-requisites will be eligible for assistance under the scheme.

            The e-marketing platform should promote reform of the agricultural marketing sector and apart from promoting free flow of agri commodities across the country should result in greater farmer satisfaction as the prospects for marketing of his produce would be significantly enhanced.   He will have improved access to market related information and better price discovery through a more efficient,  transparent and competitive marketing platform which gives him access to a greater number of buyers within the State and from outside, through transparent auction processes. It would also increase his access to markets through warehouse based sales and thus obviate the need to transport his produce to the mandi.

            The Department has drawn up a detailed road map for implementation and has covered substantive ground by now. Realising the complexity of the issue, the department has set up an Expert Group under the chairmanship of Shri Ashok Gulati, the former Chairman of Commission on Agricultural Costs & Prices (CACP).  Further, SFAC which has been tasked to lead the responsibility has appointed a Transaction Consultant through a transparent process of selection.  The processing of selecting a service provider is underway and is targeted to finalize agreement between the Transaction Consultant and Service Provider by mid-October this year.  Soon thereafter, the work on promoting the National Market will gain speed.

         The Central Government also realizes that active participation of the State Governments is a pre-requisite for successful implementation of the scheme.  After having studied the e-auction platform of Karnataka, which has taken a lead in this regard, the Hon’ble Minister for Agriculture, Shri Radha Mohan Singh personally led a team of 23 Ministers and officers in-charge of agricultural marketing in the States and UTs to APMC, Hubballi in Karnataka.  The visit on 10th and 11th of July, 2015 has generated a lot of interest among the States and Union Territories.  The Government is committed to and is confident of making ‘National Agricultural Market’ a reality.  When it happens, it is expected to serve the interest of the farmers and the agricultural sector, by creating greater wealth at macro level and higher income at farmer’s level.

January 3, 2016

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