Archive for the ‘Agriculture’ Category

At present, farm marketing varies not only from state to state but also within the states, with each wholesale mandi being governed by its own Agricultural Produce Marketing Committee (APMC). These mandis require separate licences and they charge different marketing fees. The use of technology is low, which means that there is very little transparency in transactions, which eventually hurts farmers.A pan India trading portal , E-National Agricultural Market (NAM) is designed to create a unified national market for agriculture commodities. The first-ever National Policy for Farmers brought out in 2007 by the United Progressive Alliance government also mentioned this need.  The new integrated electronic platform begins, in a limited way, to address many of these problems. Some features of E- NAM as follows:

  1. Farmers can showcase their produce online from their nearest market and traders can quote price from anywhere.
  2. Results in increased number of traders and greater competition.
  3. This would allow them to escape the cartels that dominate local mandis and strangle the freedom to trade.
  4. Ensure open price discovery and better returns to farmer.
  5. Will cover 585 markets across country in three years during first phase. India has 2477 principal mandis and 4843 submarkets  created by the APMCs.

Limitation in implementation of E-NAM: Wide quality variation in farm produce within a state , and even wider variations across states, pose a challenge for the new market. Commodities with similar standards nationally are few. Wheat in Punjab and Haryana is of medium quality while in MP and  Gujrat it is of superior. An electronic platform can only trade standardise commodities. For the rest , the NAM might not be the right platform. A state agriculture market model launched in 2009 by the NCDEX , provide some lessons in market integration. The Karnataka Model  a joint initiative of govt of Karnataka and NCDEX e- Markets, was the first such initiative.

But it is dangerous to presume that a model that has worked well at the state level will automatically succeed at the national level as well. There are too many prerequisites for that to happen. The three most critical among them are a single wholesale trading licence valid across the catchment area, a single-point levy of market fees, and e-auction as the mode for price discovery. Currently, there are too few warehouses equipped with facilities for weighing, grading and standardisation of stocks sold through the electronic platform. Moreover, aggregators would need to emerge that pool together small marketable surpluses of individual farmers for sale to bulk buyers to attract competitive bidding. The Small Farmers Agribusiness Consortium (SFAC), the nodal agency for running the new electronic platform, can serve as an aggregator through its existing or specially created local units.

Getting states on board for full agricultural marketing reform will also be difficult.


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Rural Distress is growing (Due to falling market prices of agri produce, unseasonal rains, faulty MSP(Minimum Support Price) regime while inadequate supply of fertilisers add to this ). Ramesh Chand committe report on MSP shows some way out. Some of its recos as below:

a)committe suggested  “Deficiency Price Payment mechanism” for crops to which MSP is declared but purchases are not materialised. Because CACP recommends price policy of 24 crops but purchase of only six takes place and even this happens where government procurement system is good and person has surplus to sell . In such a situation govt can provide difference b/w market price and MSP to farmers in case market price is below MSP.This would not have negative impact on the market price and subsidy given to farmer in such a way would not attract any WTO sanction.

b) Need to change the current methodology for calculating cultivation cost as it has lacunae. It dose not involve full value of family labour, the rental value of land, the interest on capital, the depreciation of fixed assets, etc. So committee suggested that Head of a family engaged in farming should be valued at skilled-wage rates,the interest on working capital should be estimated for whole, not half, of the period of a crop season,the land rental values should be based on actual rates prevailing in the sample villages and Interest & depreciation on fixed capital be projected by raising them at the rate of inflation in construction material etc.

c) CACP be consulted in Export – Import decisions as they are generally taken in the interest of consumer rather than the farmers.

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