ELECTRONIC MARKETS - GAME CHANGERS IN AGRICULTURE

ELECTRONIC  MARKETS - GAME CHANGERS IN AGRICULTURE

Infrastructure:

• The physical infrastructure which includes sheds for lots , commission agent’s offices, farmer welfare facilities, roads etc are very well established and reasonably maintained. If market cess is used to create village infrastructure like roads improvement, weighbridges, transport subsidy, rural go downs etc, it will be more useful to farmers and governments will get positive image.

• Market yard is managed by secretary, Chairman and members (mostly nominated). Wider participation and involvement of farmers, farmer producer companies shall be encouraged.

• Rythu bandhu scheme with go down facilities linking with banking and insurance is made available as facility to farmers. In practice it is not helping real farmers as the banks are not coming forward willingly to finance and even go downs maintenance and security are not up to mark for obvious reasons.

Trade Linkages – Role of Credit:

• APMCs came into existence to help farmers to get better realization by avoiding farm gate distress sales to money lenders who advance and exploit them in prices, grading discounts etc.

• Same money lenders took new avatar as commission agents and operating in mandis with legalized 2% commission from farmers.  They continue to advance loans to farmers @ 24 to 36% interest rate with a condition that sale of produce to happen through them only in the mandi.

• The buyers of cotton, groundnut etc in mandis has their huge establishments near market yards and they mostly act on behalf of mill owners and exporters.  The mill owner’s advance funds to this buyer in mandis, in turn they advance to commission agents and finally reach farmers as credit and the link clearly established with an obligation to sell through the credit link.

APMC operations in actual practise:

• All farmers bring their produce to market yard and hand it over to their commission agent. Commission agent get it cleaned it and makes it as a lot.

• Auction slip with tentative quantity, farmer name, village, commission agent name, unit etc is generated after farmer registration.

• Registered buyers with APMC go around auction halls and inspect the lots. The commission agents prepare lot slips and share them will selective buyers only and not with all buyers. Basically the buyer-commission agent relationship related to finances and established supply chain play vital role in selecting the buyers.

• Buyers quote their rates for each lot and they have the option to increase the rates and  not to decrease once they give the quote.

• Once the bidding process is completed the buyers with highest quote will be given the print of successful lots with farmer and commission agent details with the rate quoted. Similar details are being supplied to the farmer/commission agent.

• Buyers go back to the lot again and finalize the deal after farmer giving the consent. In practice it’s mostly buyer and commission agent who close the deal and farmer remain as silent spectator. If farmer crib about the rates the buyers settle the deal by increase of 2 to 3% over the bid. This increased amount is not recorded and paid to farmers in cash.

• After farmers consent,the sale will be confirmed by APMC, later final weight is recorded and farmer invoice, APMC commission report etc are generated.

• APMC commission is being paid by buyer to APMC ( in  practice it is paid by commission agent in periodic intervals to APMC not on sale confirmation basis). 2% commission to agent is paid by farmer and agents also charge another 2% towards hamali, loading, unloading, incidentals and it total farmer bears about 4 to 6% commission to sell his produce.

• Commission agent is making the payment to farmer on same day after deducting all the expenses including the loans, interest etc and they get the payments in 15 to 30 days from buyers. All these facilities have hidden cost involved and the same is on account of farmer both in direct and indirect manner.

• Though APMC act says farmer can directly sell produce without involvement of commission agent in the yard, it is not happening due to nexus between all stakeholders. Even if some farmers try to break it, it will not happen unless until APMC take a serious view and facilitate the whole process of sale ( lot making to payment and dispatch).

• Though the farmers have right of refusal, it is very rare, as the farmer is vulnerable, once he moves the stock from his village to market.  He can maximum stay away from village for a day or two. Looking at their condition, trade further exploit them and quote lower prices.  Farmers interactions in market yard revealed that the buyers while visiting the lots orally quote higher prices and while quoting on system they reduce the rates and farmers have a feeling that they form as syndicates and control the markets.

• “Rythu bandhu” though designed very well to provide storage at nominal cost, credit linkages and insurance (single window) , in practise it is helping the traders more than farmers. APMC which is supposed to be facilitating the process , is least bothered and farmers are taken for a ride and infrastructure built in the account of farmers is being accessed by traders.

APMC ACT- Reforms:

• Reforms of the act proposed a cap on market fees and commission charges payable by a farmer after bringing produce to a wholesale market, and help create a national market with provisions for an inter-state trading licence.

• Traders will be able to transact in all markets within a state by paying a single fee and sell perishables such as fruits and vegetables outside existing mandis (wholesale markets).

• Currently a regulated market is available per 462 sq km while ideally there should be one every 5 sq km. GOI goal is to increase the avenues where a farmer can sell the produce and propose to allow warehouses and cold storage to act as regulated markets.

• Though the marketing is state subject, GOI has a model act which is acting as a guiding force and most states brought our reforms in last decade by allowing ITC e choupal, direct purchases of big bazaar etc and shifting from open auctions to electronic systems for better realization to farmers.

NeML operations in Adoni market:

• Adoni is the first electronic market of AP implemented through NeML and its started in the year 2014.

• NeML is robust and time tested platform developed keeping the whole supply chain in mind, not just the software.  Huge trader base across the nation is developed by NeML by investing huge amounts for developing the talent pool of manpower to handle the integrated operations in professional manner and to address future challenges.

• The farmer registrations, lot information to traders is made available through app and they are facilitated to quote the rates from their offices rather than using APMC centre, farmers are informed the rates realized through cell phone and also whole lot of information like the range of rates, quantities traded, participation is being shared to create more completion and hence better rate realization.

• One state one market concept with single licence is being tried and also online payment gateway was put to practice.

• Next level it is planned to implement e markets with country as one market and integrated concept is developed.

• NeML platform was functioning very well and able to provide services as promised without any interruption.

Emergence of e NAM:

• Based on the success of NeML and few other online Agri markets, GOI took a decision to go for few e- markets in first phase and later cover entire country with e-markets and named it as  e NAM.

• Extending the NeML, e choupal and other platforms , it is proposed to include grading of the produce by fixing quality parameters, APMC certification for quality, facilitating traders from other mandis in the state initially and later extending the facility to all national markets and to all registered buyers is planned and designed in the system.

• Integrated quality assurance, price realization, deliveries and payment gate is planned as integral part of the system.

• GOI called for national tenders to decide on service provider for e NAM and to everyone’s surprise NeML was not qualified for bidding and it was awarded to NFCL,   who has no trading background like NeML or NCDEX or e Choupal.

• e NAM came into operation in the year 2016 and few mandis in each state are selected for implementation. As GOI is fully funding the operations from their budget, most of the states initiated migration to e NAM and NFCL software. In AP except Guntur chilli market others migrated from NeML to e NAM. Guntur being a large market and perhaps biggest in the nation, they are still reluctant to switch over due to bad experiences with new platform.

• Karnataka which is ahead of other states in electronic Agri markets, sensing the failures  and problems in e NAM preferred to continue with old systems and looks to be ahead of other states in e trading and claiming that their volumes are going up with better realizations and even attracting farmers from AP, Telangana and few other states.

Implementation of e NAM:

• As gathered from the field, the registration process is taking around 20 to 30 minutes for each farmer as against 3 to 5 minutes in old system.  Even now same is the issue and APMC secretary is confident of resolving the same before commencement of peak season.

• During interactions with commission agents and buyers, it is informed that state system (NeML) was much better than central system (e NAM).  They mentioned that in state system the price realization, arrivals, all rates quoted etc are flashed on cell phone and they are able to participate better and optimize their purchases. In present e NAM system, only their quotes are being reflected and they have to go to APMC systems room to quote the rates and they feel it is not leak proof. Whereas in earlier system they can operate from anywhere. These  were brought to the notice of APMC and is promised of better service before next season.

• Product grading and certification by APMC is nonstarter activity and APMC is of the opinion that it will never happen and will remain on paper only.

• Though one licence for all markets is put to practice, none of the traders from other markets are present or not even operating through developing linkages with local commission agents.  As gathered, few traders from Guntur market came to Adoni to participate and it did not work out. Unless until grading and APMC certification for quality and other logistical issues are addressed this will again remain  nonstarter and only as claim on paper by MOA.

• Aadhaar linked farmer registrations, information on farmer’s cell phones, direct sale by farmers, educating farmers on grading and quality parameters are not at all taken seriously and non starters.

Reflections:

·   Hardly 15% of what was promised and stated is put into action in field. It is really unfortunate that the implementer are either not looking into the micro level situation or knowingly concealing facts from policy makers.

·    As it is a state subject, local governments shall take it serious and reorient APMCs towards implementation of e NAM in letter and spirit in the interest of farmers. This cannot be neglected, as 70% of population is dependent on agriculture and marketing and better price realization is real challenge in global economy.

Recommendations:

•      AP can take two to three markets on pilot basis (preferably Adoni, Duggirala, and Anakapalli) and ensure that direct sale of farmers, grading, pan India trade participation, proper payment gateway etc are made fully functional and see that AP become role model to other states.

•     Virtual markets with spot licence to service providers in collaboration with APMCs shall be tried in good agriculture belts like Tenali, Ravulapalem on pilot basis, where farmers bring samples and sale happen on sample display basis through technology and farmer producer companies, progressive farmers, service provide etc play vital role in quality assurance, physical deliveries and payments to ensure satisfactory supply chain.

• ·  Seed production through registered farmers, developing own brand seeds for self pollinated seeds like paddy to begin with; other input supplies, credit and insurance linkages shall be tried in these model markets. Successful models like Mulkanoor, Achanta shall be taken into consideration before bringing out operational strategy.

B Guruva Reddy- 9866889246

       grbonthu@gmail.com