Making mandis farmer-friendly: National agriculture market to complete a year, but its potential benefits remain untapped

It was in the year 2000 that eChaupals were launched with much fanfare. Using information technology as an autonomous agent of change, and hailed as the lone success story to bridge the information divide, these eChaupals were projected as the game changer, empowering farmers by providing information and removing ‘corrupt’ intermediaries. But strangely, the eChaupals are missing from the newly launched electronic trading platform, the national agriculture market – eNAM. Launched with much fanfare on April 16, 2016, Prime Minister Narendra Modi had proposed to integrate 585 regulated wholesale markets or Agriculture Produce Market Committees (APMC) under one platform, called eNAM, within a couple of years. The basic objective being to break the monopoly of registered wholesale traders in APMC markets by allowing other traders from across the country to participate in e-trading. As a result of which farmers are expected to sell their produce to highest bidders.

Laudable objective indeed. But that is what eChaupals set out to achieve. And this is exactly what the APMC too has been attempting. Under the APMC Act, the farmer brings his produce to the regulated markets, and it is the private trade which is first expected to purchase at a price which is higher than the minimum support price (MSP) that the government announces. It is only when the private traders fail to offer a higher price that the government steps in through the Food Corporation of India (FCI) or numerous other government agencies on its behalf to buy whatever is available at the MSP. 

The eNAM is expected to cater to 25 key commodities, including wheat, paddy, maize, onion, jowar, bajra, groundnut, potato, soyabean and mustard seed. Add to it the emphasis laid by Finance Minister Arun Jaitley, when he presented the Budget 2017, wherein he acknowledged that e-NAM is integral to commodity trading, the underlying objective becomes crystal clear. No wonder, FICCI and CII had been lobbying hard for getting out of APMC and strengthening e-NAM network instead. 

The e-NAM fits in very well under the proposed Model Act for contract farming. Just like the eChaupals, where the underlying objective was to procure soyabean for the international value chains, e-NAM is aimed at procuring a wide variety of agricultural commodities through spot trading for the corporate value chains that are being established. Over the years, as Richa Kumar says in her magnificent book Rethinking Revolutions (Oxford Publications), the ‘higher price’ farmers got from eChaupals too turned out to a well-orchestrated hype. The basic idea was to privatise the markets in the name of efficiency. Dismantling the APMC regulated markets and bringing in instead the eNAM network too suffers from the same ideological thinking.

By 2005, the eChaupals were converted into a rural retail network of malls known as Chaupal Saagars to sell FMCG products to villagers. No wonder, eChaupals are not even talked about as the probable pathway towards the promise of doubling farm incomes. 

I am aware that the APMC regulated markets have over the years turned into a den of corruption. Strong cartels of wholesale traders have certainly been using their financial muscle to manipulate prices. Using technology to bring in transparency in trading is therefore welcome. Allowing more competition for bidding by making the process open to traders from across the country too is welcome. But unless farmers are assured of a remunerative price, I think the entire emphasis on proving an electronic trading network is lost. 

To bring in efficiency in market trading, I have two suggestions. First, although the Commission for Agricultural Cost and Prices (CACP) announces MSP for 23 crops, APMC markets procure only two commodities – wheat and rice. For the e-NAM network, which presently caters to 25 key commodities, purchasing at the MSP price should be made statutory. Buying the produce from farmers below the MSP should be made illegal. The ‘model price’ that these markets offer should therefore be replaced with MSP.  

Secondly, instead of amending the APMC Act to take out fruits and vegetables from its activities, and eventually ending up with dismantling the regulated mandis, the focus should shift to expanding the network. Against the existing 7,000 APMC markets, India needs 42,000 regulated mandis.

The author is an agricultural policy expert.