Cart Before the Horse?

When Prime Minister Narendra Modi launched the e-trading portal for agricultural produce on April 14, he was technically fulfilling one of his early promises made immediately after coming to power. But he may have just put the cart before the horse. The launch of the national agriculture market (NAM) portal was meant to allow farmers to discover best prices for their produce by participating in e-auctions and selling agri-commodities to the highest bidder from anywhere in India. However, its implementation is easier said than done.

An electronic marketplace for agricultural products may sound an easy task, but in reality, could prove to be just the opposite because regulation of agriculture-related activities is the states' responsibility. And the Central government's plan to automate and free up agricultural mandis will only be successful if states do away with the existing archaic rules and fill the huge infrastructure gap in the predominantly traditional mandi system, which limits the freedom of farmers to even sell their produce to licensed traders at the nearest mandi.

The portal is yet to become national in its true sense. As of today, it provides real-time information, on a pilot basis, about the prices of a select list of commodities that are being traded (electronically or otherwise) in 21 mandis across eight states. The participating states have already reformed their Agricultural Produce Market Committee (APMC) Act to ensure a single licence across states, a single-point levy of market fee and a provision for e-auctions as a mode for price discovery.

The scheme is modelled after a Karnataka government initiative, where 51 mandis and sub-yards are linked through a common market platform. The Rashtriya e-Market Services (ReMS) manages the automated auction and post-auction facilities, including weighing, invoicing and collecting market fees. The networking mandis also have standard checking facilities and enable warehouse-based sale of produce and commodity funding.

NAM needs to catch up with a similar support infrastructure, if not an improved version, to be successful. According to Ajay Vir Jakhar, who heads Bharat Krishak Samaj, there is complete lack of clarity on several operational issues that are key to running a "national" e-mandi pilot. Lack of uniform rules, including the need to define the permissible level of moisture content, can make transactions litigation prone, he says. Lack of clarity on a dispute-resolution mechanism related to inter-state transactions is yet another grass-root level issue that has not been touched upon.

More critical is the volume of transactions that happens as one cannot invest in physical infrastructure to facilitate e-trading of seasonal produce. It would take several years before one can see a near perfect e-trading platform that makes a difference to farmers' lives. The launch of the portal before fixing the operational problems does not, however, reduce the significance of the project. A beginning had to be made. And, Modi did it. But, the e-mandi project will remain a work in progress.