National Agriculture Market (eNAM)

Indian Agriculture Sector & Reforms since Independence

The agriculture sector in India has come a long way from its pre-independence situation. India today has the highest net cropped area in the world and is ranked second in farm outputs. As per the Economic Survey 2022, the share of the sector in the total gross value added (GVA) of the economy is around 18.8 percent^[1].

The agricultural sector’s contribution to India’s gross domestic product (GDP) has seen a gradual decline with the nation’s overall economic expansion. However, agriculture is demographically the broadest economic sector and plays a significant role in the overall socio-economic fabric of India. Over 50% of India’s workforce is still engaged in agriculture. The agriculture sector experienced buoyant growth in the past two years, registering a growth of 3.6% in 2020–21 and 3.9% in 2021–22^[2].

India has made significant strides in achieving food security since gaining independence. The population of India has had a threefold increase, while the output of food grains has witnessed a more than fourfold increase. There has been a significant rise in the per capita availability of dietary grains.

^{[1], [2]} See Website

Green Revolution and the Resultant Evolution of Agricultural Markets

India’s self-sufficiency in meeting its domestic requirements was limited before the mid-1960s, necessitating a reliance on imports and food aid. However, the occurrence of successive years of severe drought in 1965 and 1966 spurred India to initiate agricultural policy changes and acknowledge the insufficiency of relying on foreign aid and imports to guarantee food security. India has undertaken significant policy reforms with a particular focus on attaining self-reliance in the production of food grains. The incident cited above signified the start of India’s Green Revolution. The effort started by identifying wheat cultivars that have high yield potential and resistance to diseases, in conjunction with the use of advanced agricultural knowledge, to augment agricultural productivity. 

The term “Green Revolution” was originally coined by William S. Gaud of the United States Agency for International Development (USAID), in 1968. It was used to describe the introduction of novel technology and policies in developing countries with assistance from developed nations during the 1960s. The primary objective of these initiatives was to enhance the production and yield of food crops. The Green Revolution introduced high-yielding varieties (HYVs) to boost agricultural productivity. These genetically improved wheat and rice varieties were developed by the International Maize and Wheat Improvement Centre (CIMMYT) in Mexico and the International Rice Research Institute (IRRI) in the Philippines. These HYVs had 20% more grain and were more responsive to nitrogen fertilizers. The yield potential doubled due to the incorporation of traits and genes for short stature. The reduced cropping period increased cropping intensity to 2-3 crops per year. The period between 1960 and 1985 saw a doubling of yield per hectare, total productivity, and total food production in developing countries. This led to a 174% increase in cereal production between 1950 and 1990, while the global population increased by 110%.^[3]

^[3] Eliazer Nelson, A. R. L., Ravichandran, K., & Antony, U. (2019). The impact of the Green Revolution on indigenous crops of India. Journal of Ethnic Foods, 6(1), 1-10.

APMC (Agricultural Produce and Livestock Market Committee)

An important characteristic of the Indian agriculture sector is that farmers do not get proper remuneration for their output. Despite the minimum support price (MSP) and subsidies, Indian farmers are net taxed as compared to farmers in other countries as they get low prices in normal, drought, and good years because of distortions in price and market policies. India has substantial regional disparities in agricultural prices. Despite significant expenditures in rural infrastructure, such as road development, and advancements in information and communication technology, such as mobile phones, the phenomenon of pricing variance continues to exist throughout time. Agriculture and markets are part of the ‘State List’ and are regulated by the state government. In the 1960s, the government came up with the Agricultural Produce and Livestock Market Committee (APMC) Act to regulate and streamline the agricultural markets in the country Under the APMC system, the state governments created the agriculture markets or Mandis to provide a platform for farmers to sell their agricultural produce, which would ensure price discovery, farmers’ access to markets, and fair transactions. It started with the good intentions of a democratic system with auctions to provide better prices for farmers. Over time, however, vested interests took over and the system deteriorated. The traders and the commission agents began exploiting the farmers, leading to unfair practices and an unequal distribution of profits. They kept out the competition by forming cartels and farmers had little bargaining power on prices. ^[4]

Finally, to common unified market platform, the government in its Union Budget for 2014-15 proposed the creation of a National Agriculture Market (NAM). The Cabinet Committee on Economic Affairs approved Rs. 200 crores for building the infrastructure of connecting 585 APMCs into one marketplace. ^[5]

^{[4] Dev, M. (2021). Agricultural reforms in India. Indian Public Policy Review, 2(1 (Jan-Feb)), 16-28.
[5] Dey, K. (2016). National Agricultural Market: Rationale, Roll-out and Ramifications. Economic and Political Weekly, 35-39.}

Evolution and Milestones in eNAM implementation

The Emergence of NAM

The government of India envisaged setting up a unified common market platform called NAM, during 2014-15. It took a concrete shape in 2015, with the set up of the Agricultural Technology Infrastructure Fund with a modest allocation of Rs200 crores, to integrate 585 agricultural product marketing committees (APMCs) into a common market platform, with additional APMCs to be added in the next three years, bringing them to a total of 1170 APMCs by 2017-18. The plan contemplates a provision of Rs 30. Lakhs as a subsidy for each APMC to build technological infrastructure to facilitate operating the technology-driven platform called NAM. Small Farmers’ Agribusiness Consortium (SFAC) was designated as the lead agency to implement the NAM Project by the Ministry of Agriculture, GOI.

Briefly looking into the earlier attempts by the government and private sectors in bringing in reforms in agricultural market operations, notable would be e-Choupals of 2003, Farmpic of Adani in 2008, and Rashtriya e-Market Services developed by Karnataka State Agricultural Marketing Board and NeML together may be seen as the triggers and motivators to build this initiative on a PAN-India level. Encouraging was the response by several states to adopt and roll out NAM in their states.

NAM was developed based on the recommendations of the 12^th Plan Working Group on Agricultural Marketing (Planning Commission 2011), Committee of State Ministers, In-Charge of Agriculture Marketing (Ministry of Agriculture 2013), and the Committee of Karnataka Agricultural Marketing Reforms (Government of Karnataka 2013).

A fully developed NAM is envisioned to address the deficiencies and challenges that existed in existing opaque operations of the APMCs and slowly unfold the aspects of transparency, accountability, fairness, and real-time price discovery. States are allowed to bring in all necessary reforms in a phased manner. Some of the essential reforms contemplated include direct marketing, forward markets, electronic trading in the spot market, a single point levy, and single licensing system.  Though the process of reforms started only in eight states, they are expected to gain pace in the coming few years.

Leading from the front – Small Farmers Agribusiness Consortium (SFAC)

Small Farmers’ Agribusiness Consortium (SFAC) was established by the Government of India in 1994, as an instrument of inclusive growth and to foster the participation of small and marginal farmers in India’s agricultural economy’s growth and shaping their success story by way of fostering agribusinesses and enable small and marginal farmers to take advantage of the agribusiness initiatives in the country.

When the concept of NAM started taking shape, the Government entrusted the implementation of the integration of APMCs into the portal and to build its service delivery models through the mobile app and redefine the scope of NAM across all segments of small and marginal farmers.  Having the task of addressing these twin objectives of implementing the NAM and ensuring that the benefits of the initiative are brought to the reach of small and marginal farmers, SFAC and its leadership took path-breaking initiatives and approaches to living up to the vision of SFAC and fulfil the goals of NAM in spirit and letter.

SFAC went with the implementation of NAM by a cascade of interrelated but majorly independent approaches and strategies, in three areas. The first is the identification and onboarding the APMCs from across the country and broad-base the coverage of NAM; the second, relentless pursuit of expanding the kind and types of commodities and make sure their trade and purchase and sale transactions are made fair, transparent and offer path-breaking opportunities; and third, develop methods, technologies and supply chain networks and supportive logistics platforms to facilitate the seamless roll out of the NAM operations no matter what is the size of the transaction and who are the sellers and buyers, as long as they meet the criteria of buyers and sellers in an agricultural commodity context.

In the below paragraphs, case authors articulate the way SFAC addressed these three tenets of implementing path-breaking market reforms in a silent, step-by-step approach from visioning to operations.

Reflections by SFAC Leadership – Saga of implementing NAM

The Case Researchers had a highly inspiring interaction with Dr. Maninder Kaur Dwivedi, IAS,  Managing Director, Small Farmers Agri–Business Consortium, in late May 2023, where she shared some of the salient aspects of NAM implementation and the break-throughs that SFAC got in successfully launched and implementing NAM across the country.

Dr. Dwivedi reflected on the status of affairs before NAM and mentioned that “…before the eNAM came in, trade licenses were given to mandis as traders (under that mandi’s jurisdiction). If one person was licensed to buy the primary produce, since the APMC deals only with primary agricultural produce, they could transact business only in that one mandi. The first change was that they would allow unified licenses making inter-mandi trade and inter-state trade possible. One must appreciate that the end objective is to give the farmer transparency and the best possible price. If this was done, they could have shifted onto the platform”.

Dr Dwivedi went on to clarify that “…eNAM is not a specific program; it’s just an electronic platform for trading every produce to facilitate a state and help it get better prices for its farmers when they bring the produce to Mandi. It continues to be Mandi-based. The farmer interface is separate. A farmer is part of a mandi because he offers (farm) produce, takes it to the mandi to dispose of, and gets a reasonable price for the farm produce. Whether a farmer, a corporation, or a farmer producer organization (FPO) aggregates and takes the produce to the mandi, they get the requisite facilities to trade their produce at the mandi. As part of the eNAM, different modules are developed to facilitate them, so the modules could be, say, about a price advisory helping all know what the prevailing price is, which Mandi offers a better price, a farmer can see while he is still at home and then decide whether he wants to hold on to it or wants to take it to the Mandi. During COVID, a few other modules were suggested by states and were also developed. For instance, a farm gate module was suggested; it involved the farmer getting support to dispose of the produce from the farm gate itself.  Now this module depends on a mandi and region within which a farmer is located. It’s a farmer-centric module but heavily dependent on the Mandi. They (Mandi) need sufficient staff to deploy somebody to go to the farm gate and do the procurement activity based on farmers’ indents.”

Breakthroughs

The first breakthrough – rarity and criticality of commodities that got on-boarded on NAM

Speaking on the major breakthroughs that SFAC and NAM Project achieved, Dr Dwivedi reflected on a wide range of commodity markets that were never anticipated. She was very happy to speak about the Mulberry Silk Cocoons trading in Maharashtra APMCs, Jammu & Kashmir handling saffron which other states don’t produce; Odisha does a lot of trading in dry fish, fresh fish, crabs, and shrimp. She reflected and went on to theorize from an academician’s perspective as well as a policy maker’s perspective when she stated that “..there’s much variation in the quantity of the amount that is being traded. The end objective was that the bidder should not limit a farmer or buyer within the premises of the mandi when he takes produce to the market; it should be sold, stored, be offered at the right time for one’s choice price, and it should be open to anybody anywhere in the country who is part of the system to enable him to buy it”.

The second breakthrough – breaking the geographical barriers.

While tracking the inter-mandi and inter-state trade, the pointers show whether people have utilized the digital facilities. If a person is in a Mandi and likes the rate at which a particular asset/commodity is offered elsewhere, eNAM allows him to change his choice and trade in a different location. eNAM facilitates same-day payment to the farmer – and makes sure the payments are made before the goods leave the Mandi premises. To have that kind of faith to transfer the money, eNAM is created to build systems and processes to adhere to fair practices and accountability to farmers. Interestingly, eNAM gave a considerable fillip to inter-mandi and interstate transactions (which were impossible earlier).

Elucidating the impact of this breakthrough, Dr Dwivedi mentioned the last Apple season (2021-22), where Jharkhand digitally bought about Rupees Two Crores worth of apples from Jammu & Kashmir on eNAM. She went on to emphasize the significance of the quantity and value of these transactions and was candid to say “… Two crores may not sound like a very big amount, but it is a very big amount because the year before, it was zero. So, from zero to two crores in one year is significant. Some of these buyers were asked to record their experience on why they did it, so most of the messages were that when the first order was placed, they were a little hesitant. Still, they were comfortable once they got the truck on time, and the price of buying it directly was commensurate with the attempt made”.

She explained the criticality of this scenario. “…there are 4 or 5 Mandis in Jammu and Kashmir, which were trading, and the Apple getting delivered was cheaper than the apples which were trading via sales at authorized Mandi because otherwise, the typical route for Apple is from Jammu and Kashmir and Himachal through the middlemen all through the existing supply chains and the market mechanisms. Besides the middlemen, there are layers of loading and unloading at each stage and cumulating the charges for those operations. Then, apples get stored for some number of days at room temperature at the mandis in J&K or in Himachal, and those costs are much lesser than cold storage costs added in traditional supply chains. So, this digital purchase resulted in fewer costs and was cheaper for them to purchase digitally”.

The Third break-through – Opening up of NAM for trading de-notified commodities.

April 2023, a new feature was created in eNAM, where one can see information – both in the portal and the app, where it allows one to log in to buy de-notified commodities. In other words, all these commodities, like saffron, walnuts, and cherries, can be accessed and procured/ sold by anybody from anywhere and anytime, once they register and log in to trade. In other words, eNAM, as a platform, is developed as a commodity agnostic platform, facilitating a wide range of farmers’ produce that could be traded as easily as possible. The simplicity of the platform is further highlighted by the fact that the buyer/ farmer registration is a simplified one, with only a bank account needed to establish the KYC and transactions can get done immediately.

These two elements – a bank account and a physical postal address – are sufficient to operate eNAM and agricultural commodities trading becomes simplified and easy and transparent as well. The most important, but often unnoticed aspect is, the smallness or the largeness of the volumes to be bought or sold, and if one takes the example of saffron, the purchase SKU goes to the smallest denomination of 1 gram, 5 grams, or 10 grams. The most significant order shipped (for Saffron) is 50 grams, and the buyers break it into smaller samples and sell them as one-gram packets. Walnuts and almonds are invariably one or two kilograms and can be split into 200-gram packets. In the process, eNAM facilitated a new mode and most cost-effective mode of logistics as well, where any SKU can be packaged and easily sent anywhere in the country by India Post. The role of India Posts as the logistics partner for eNAM has added value to digital transactions.

Role of Middlemen

Transparently, under eNAMs, purchases happen in a manner that has been bid out, and middlemen have existed for a long time, traditionally in our system. So as things formalize in this sector, they will fall into or transform to perform new roles. They will either evolve, morph into a new role, or go out of the sector and pick something. The Commission agents are asked to be in a digital space, not thinking of it as a threat to their business but as operating in a digital space. They can look at becoming a service provider where someone gives the insurance for the transport or does the logistics. So instead of just taking part as a middleman, they will be doing a service, and whatever is due to that service should go to them.

Deemed Mandis

Several states have amended the APMC Acts to introduce the concept of Deemed Mandi so that innovative markets, such as eChoupals, can operate as Mandis and procure produce from the farmers. Like any other licensed traders, they pay the APMCs the market cess/trading fees for the transactions that they do, and thus allow APMCs to continue to protect their revenues, even in scenarios where farmers don’t visit APMCs but sell to the corporate procurers and gain from the transactions. She further clarified that FPOS are not yet brought into the ambit of deemed mandis; however, there is a special module for FPOs in the eNAM platform, allowing the FPOS to aggregate and sell on behalf of farmers and also act as buyers for competitive pricing to establish in a mandi on a given day for a commodity, and thus protect farmers’ interests.

Implementation Milestones and Unfolding of the Success of eNAM

There has been a 41% increase in the amount of agricultural products from 13.2 million tonnes to 18.6 million tonnes in 2022-23 over the previous financial year. The trade between interstate mandis increased 36% to 2, 36,140 metric tonnes in 2022-23. 1361 mandis of 23 states and 4 UTs have been integrated with e-NAM.

The increase in trade shows that the platform is proving worthy of its intended impact. The platform allows trading in 209 commodities. There are 17.5 million farmers, 2575 FPOs, 0.24 million traders, and around 0.1 million commission agents who are registered on e-NAM.

UP government allowed traders from outside the state to buy several vegetables and fruits including potatoes, tomatoes, mangoes, green chilies, and carrots on e-NAM without the requirement of a separate license. Farmers in UP have seen the benefits of inter-state trade for potatoes on e-NAM which has helped them to sell their commodities to the highest bidder.

In a similar move in TN, the Agriculture Marketing Department and Agribusiness (AMDAB) is taking the benefits on e-NAM to around 1000 farmers who are associated with 2 FPOs. Tomato which is grown by these farmers in Dharampuri were low priced and subjected to exploitation by middlemen. This was because of large scale cultivation in the area which forced farmers to sell the produce in the private markets in Palacode or Royakottai in Krishnagiri district.

The AMDAB buys the tomatoes from farmers of these FPOs at market value and deducts the expenses related to marketing, packaging, transporation and service charges. AMDAB is able to pass on benefits to farmers despite the expense deducted. Farmers are able to realize twice the income from this transaction. The tie up with FPOs has also helped supply markets like Salem in need of 22 tonnes of tomatoes daily.

To improve the key elements of market linkage- Assaying, grading, sorting and logistics government has allowed integration of trading, transportation, logistics, warehousing, assaying, packaging, weather forecasting and fintech services provided by 60 odd private entities through Platform of Platforms with e-NAM portal. This will help more farmers to use the online platform to sell.

Salience of eNAM

To appreciate and develop a perspective on the slow but decisive impact that eNAM and NAM is making on farming and farmers’ markets, it is essential to reflect on the differences between traditional APMC way of working and the changes brought in by NAM.

Traditional Process

Farmers who bring their produce to the mandi are required to pay a small entrance fee to enter the mandi. Next, the farmers arrive at an auction platform or commission agent (CA) shop, where the traders and CAs physically inspect each lot for quality assessment before conducting the auction. Each lot is individually auctioned off by a group of traders, CAs, and mandi officials. The price is therefore set at the time of the auction, and the mandi official creates a slip mentioning the price. The final weighing is done at the traders’ shop, and a slip is generated to record the final payments. Payments are generally made to the farmer in cash, checks, or by accounts transfer. The trader then pays the mandi fees and other fees before withdrawing the produce from the mandi.

eNAM Process

In this process, the farmer must do a one-time registration. It is done normally at the mandi entry gate by providing various details such as personal information for KYC, land, commodity, bank, and commission agent (CA) details. All these details are required to be submitted in the eNAM site. So, when a farmer brings his product to the mandi, these details are updated on eNAM and a lot number is generated. In the mandi, farmers deliver their goods to CA shops or the auction site.

A sample from each lot is obtained and tested for quality in accordance with the quality parameters set out by eNAM, in a lab at the mandi. The results are then recorded and uploaded on the eNAM portal in relation to the lot numbers.

The mandi officials then create a bid through the eNAM portal to initiate an e-auction for a certain time slot. The registered traders place a bid for a specific commodity using their login IDs. Traders continue to bid until the auction is over. An agreement to sell the lot is created when the highest bidder completes the transaction.

Once the deal is complete, the trader makes an online or offline transfer of the funds, along with the commission and mandi fee, to the eNAM escrow account. The farmers receive a direct deposit into their bank accounts. When all payments are made and realized, the commodity associated with that lot leaves the mandi.

Initial Challenges in the eNAM Process

Lack of information and understanding about the eNAM scheme along with inadequate infrastructure and a difficult registration process acted as a hindrance in the initial stages of the project.

Similarly, the lack of adequate infrastructure, including tools, personnel, and space for quality assaying at the mandis was another concern that hampered managing peak loads or high number of arrivals. There were also instances of mismatch between the traditional and automated processes, thereby making the transaction complex.

Underdeveloped IT infrastructure along with lack of trust on technology saw very negligible interest on e-auctioning process. Moreover, at times e-auctions would take substantially longer than the traditional approach, resulting in higher opportunity cost for traders.

Farmers often require cash to cover immediate needs but digital transfers make it difficult for them to repay informal loans from commission agents.

Current Status of NAM in Various States and Field Learnings Across Traditional Apmcs and Emerging NAMs

In order to understand and appreciate the diversity that exists in Indian Agriculture and the complexities in agricultural markets across the country, few APMCs in Kerala, Karnataka, AP and Odisha were studied and they present a microcosm of India in its deep-rooted complexity and range of challenges across region, commodities and market dynamics. The Case Researchers’ Team documented the below experiences, which highlight various aspects of NAM-driven reforms in the agricultural sector of our country.

Reflections from the Field

The Case writers team attempted to understand the intricacies in the agricultural market operations, both in conventional markets and also in the emerging NAM integrated markets. The diversity of Indian Agricultural Markets the concerns and considerations of the stakeholders and the ground conditions in various markets, for various commodities and farming communities were enormous and at times the case team struggled to fathom the depth and complexities of agri markets. The below paragraphs attempt to capture these elements in a snapshot.

APMC – Kozhikode, Kerala

Vengeri market in Kozhikode is one of the markets where eNAM is being implemented. The Mandi is located 5-7 kms from the main city and is closer to the highway, making the access and connectivity smooth for goods coming in from other areas.

The APMC has a huge campus with adequate facilities. The mandi is equipped to handle large volumes of goods. There is a presence of prominent wholesalers dealing in certain products – Onion, potato, Banana, and topioca. The wholesalers have small storage units within their outlets. The government has storage facilities for the procured products, which it supplies to Horticorp and other government establishments.  There are also well-equipped vans to supply the produce to the buyers.

The list of infrastructure facilities observed are an administrative building, lab facility, conference halls, nursery, experimentation plots, training wing, dormitory, Entry/Exit (Gate Operations), Agriculture Technology & Management Centre, Auction area, Outlets ( wholesalers & Retailers), Horticorp, Agriculture information & Sales centers and Storage facility (Government and  Leased).