Freedom for farmers

E-powerment of farmers through the National Agriculture Market (eNAM), a digital mandi that directly connects farmers to buyers, is characteristic of Prime Minister Narendra Modi’s approach to governance. In e-connectivity, he sees solutions to endemic corruption and inefficiencies; digital bots do not demand chai-paani or take the day off. 

As ideas go, it is unexceptionable, on par with Make in India, Digital India and Swachh Bharat, but every great notion needs translation on the ground. The back-end of the scheme, which is intended to allow farmers to sell their products in 585 wholesale markets across the country, will need work. Otherwise, only a small fraction of farmers will be able to take advantage of it and boost their incomes, while the bulk will be right where they are now — at the mercy of middlemen. 

First, the existing Agriculture Produce Market Committees (APMCs) need to be overhauled, top-to-bottom. There is no justification for outrageous mandi taxes and commissions of licensed agents or for draconian restrictions on sale and movement of agricultural goods within or between states, resulting in high transaction costs and a fragmented market. Allowing e-trading through a single license and levy is a big step forward, but it is not enough. The reality is that mandi committees currently operate like fiefdoms.

Crores worth of kickbacks are involved. As anyone who has witnessed a mandi election knows, spots on the committee are as highly coveted as those in the legislative assembly. Corruption in the larger mandis, such as Delhi’s Azadpur and Navi Mumbai, is epic. The apex Navi Mumbai APMC was one of the 166 dismissed for mismanagement by the Maharashtra government in 2014.  Politicisation of mandis has eroded their basic function, which was to ensure a fair deal for farmers. State governments, like Punjab, which earns massive amounts from their mandis, will be reluctant to tinker what they see as a lucrative revenue stream. But they must be made to do so, especially as the eNAM currently does not envisage reducing state levies and mandi taxes.

This is not to argue that the procurement system, based on minimum support prices (MSP), should be dismantled. After all, realistic MSPs which take into account actual production costs, are necessary. Cost of production varies widely across states and private buyers will go for the floor. The idea behind eNAM is simply that farmers can sell their produce to the highest bidder, be it the Food Corporation of India, state agencies or private buyers, with the transaction costs kept at a minimum. The mandi’s brick-and-mortar infrastructure is thus leveraged through e-trading to expand options from strictly local to national. The local trader loses his monopoly, as he must compete with buyers in other states.  

Second, shoring up storage infrastructure and pooling of produce through farmers’ collectives are a must. Farmers who have holding capacity must have the option of dematting their produce and selling when prices are optimum. Few farmers have on-farm storage options for perishables; it is for the mandi to provide storage facilities including and especially cold stores. This will become critical if fruits and vegetables are to be added to the eNAM platform at some point. Also, geographically distant buyers will look to minimise fuel miles through large volumes, so rather than rely on middlemen, farmers must be incentivised set up their own collectives. Only then can small farmers, who prefer spot purchases as they need cash in hand, take advantage of eNAM.

Third, transparency in testing and certifying the quality of produce is essential to build both seller and purchaser confidence; the mandi must be held strictly accountable for any slip-ups. Fourth, physical transportation is the life-blood of the scheme. A system for tracing movement of goods, dovetailed with the Reefer Vehicle Call-in-Centre (RVC), should safeguard transporters from harassment and extortion and eliminate transit delays. The pilot project across 21 mandis in eight states (Gujarat, Telangana, Rajasthan, Madhya Pradesh, Uttar Pradesh, Haryana, Jharkhand and Himachal Pradesh) will hopefully help iron out the initial hiccups.

Properly implemented, eNAM can have collateral benefits, other than creating a robust open market for agricultural produce and enabling better realisation for farmers. Over time, there is hope that farmers’ crop choices will follow the market rather than subsidies, which will lead to crop diversification. Market sensitivity may also persuade farmers to scale down their cost of production by shifting to on-farm inputs like biofertilisers and biopesticides.

To cite one example of how the digital marketplace can benefit agricultural producers: freshtohome.com is a B2C platform that brings the fisherman’s catch of the day to urban homes in Delhi/NCR, Kochi, Thiruvananthapuram and Bengaluru. The company purchases directly from fishermen rather than trawlers, to ensure that the product is fresh (within 20 to 35 hours of landing on shore)  and chemical-free. Bookings naturally must be done a day in advance. It’s expensive, but small fishermen find a larger market and consumers are assured of safe food. The point to be noted is that the back-end is crucial — unless the company has control over its procurement, quality and distribution network — it will soon be faced with consumer complaints over poor quality, delayed or incorrect deliveries, for a product that cannot be returned.

Innovations like the Namami Gange (clean Ganga) and Swachh Bharat have suffered and floundered for bureaucratic bottlenecks. The eNAM, which has the potential to enhance farm incomes, liberate farmers from middlemen and generally transform agricultural marketing, could well go the same way. The devil, as always, is in the detail.

The author is a senior journalist based in New Delhi