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Getting eNam to work PDF Print E-mail
Friday, 27 April 2018 04:05
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Shobhana edit

 

Critical if farmers are to get the real value of their produce

 

While the e-NAM platform held out much promise, trading volumes at just over to Rs 42,000 crore at the end of December, 2017, aren’t as big as anticipated. An expert panel has pointed out that several measures need to be taken to scale up trading, among which is the need for electronic payments across the mandis or APMCs so that payments are prompt. Given the pace of digitisation, this should not be too difficult to initiate. Most of the other suggestions too should not be hard to implement, if the state governments have the will to free farmers from today’s cartelised mandis. Some, such as storage—to prevent distress sales—and assaying facilities, are very basic. If state governments provide the land quickly—and they haven’t so far—private sector players would be willing to set up mandis. Better storage and transportation facilities would allow buyers to participate in electronic purchases irrespective of their location. This would boost volumes, making the exchange a liquid one, and facilitate transparent price discovery.

An electronic platform, like the e-NAM automatically addresses the problem of asymmetry in information flows, which is a problem currently because there is no data on secondary transactions between traders. A well-functioning spot exchange will pave the way for a thriving derivatives platform, given the larger objective is to have a seamless and integrated market for agri- commodities. But unless the produce can be moved quickly from one location to another, volumes will remain small; large retailers would refrain from buying perishables if they can’t be transported fast. Currently, the platform suffers from basic flaws such as data being fed into the system post the auction. The expert panel had noted the need for a dispute resolution mechanism—critical, if e-NAM is to work. If regulated electronic platforms are deemed market yards by the states—whether under the present system or even after the model APLM, 2017, is adopted—it would enable producers or farmers to sell directly through multiple modes or at spot exchanges without having to pay the APMCs a fee. In fact, the expert panel believes farmers should not be restricted to selling their produce only at recognised APMCs, they should be allowed to sell even outside the APMC premises, such as an electronic platform or in regulated private markets, without a fee being charged.

While those benefiting from the existing cartelised mandis will not want to give up their earnings, the government must free the farmers from this bondage if it really wants them to prosper. Moreover, it must try to organise farmers into formal collectives so that they have better bargaining power in the spot markets and also the wherewithal to mobilise bigger lot sizes, which can be used to make deliveries in the derivatives market. While the state governments need to do the heavy lifting, a common regulator for the spot and futures markets might help.

 

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