Monday, January 4, 2016

[Editorial # 32] Breaking down barriers : Business Standard

[Following editorial has been published in Business Standard on 4th January 2016. Read through it and try to answer the questions that follow. Please do not copy and paste answers. The objective of this exercise is to get you in the groove of answer -writing. Try to write in your own words. Don't hesitate to write in a bulleted-format, if you are uncomfortable in writing in paragraph form.]

The nearly decade-old proposal to create a (NAM) finally seems to be making some headway. It would change how farm commodities are traded in the country. Based on online transactions through a national e-platform, this transparent mode of marketing would help tame by cutting down on intermediaries and narrowing the price gap between producing (read surplus) and consuming (deficit) areas. Over half a dozen states have already agreed to knock down trade barriers as the first step towards formation of the unified farm market, and many more are expected to come on board soon. A time-bound programme announced by the agriculture ministry for developing envisages linking 250 mandis by September 2016 and all 585 mandis by 2018. The Centre has already approved funds for states like Gujarat, Maharashtra, Telangana, Jharkhand and Chhattisgarh, to cover the cost of the needed software and its customisation in the participating markets. Karnataka is already running a unified market by interconnecting 51 of 155 major market-yards and over 350 sub-yards through an e-platform. This model is to be upscaled to the national level to create the NAM, with the Small Farmers' Agribusiness Consortium (SFAC) acting as the nodal agency.

If run properly - and this is a formidable "if" given the tendency to fall back on socialist-era recipes to control prices through trade restrictions - the new system can allow farmers to sell their produce wherever they get a good deal. Buyers could source their supplies from wherever they like. There will be a single licence valid for all states and single-point payment of market fees. With an all-India jurisdiction, the electronic platform can facilitate better price discovery. More importantly, it can spur private investment in agricultural marketing, as has happened in Karnataka, and is vitally needed elsewhere as well.

The idea of a unified farm market has been floating around since the early 2000s. It was included in the brought out in 2007. However, since agricultural marketing is a state subject under the Constitution, the states' role is critical in this venture's success. This is especially so because the (APMCs), which operate regulated mandis, have considerable political clout and do not want to forego their hold on marketing of farm produce. The unified e-market has been conceptualised in a way that may not attract much hostility from APMCs. Their interests have not been entirely disregarded. According to the SFAC, a transaction on the e-platform would be deemed to have taken place through the mandi where the seller would normally have brought his produce. Thus, the APMC concerned would continue to earn the mandi fee even if the transaction does not happen in its market yard. With this critical issue having been addressed by the government, it can be hoped that states would have no hesitation to join the NAM for the benefit of both farmers and consumers.
1. What is a National Agriculture Market? Don't we have such market at present? If not, then what kind of agriculture market exists today?
2. What are the proposed features of NAM?
3. Explain the following terms (50 words):
  • Intermediaries
  • Trade Barriers
  • Mandis
  • Small Farmers' Agribusiness Consortium (SFAC)
  • Price discovery
  • State Subject
  • APMC
  • Mandi Fee
4. What is meant by Policy? Highlights the provisions of National Policy for Farmers?
5. What is meant by APMC? What is its role? 
6. Why is it said that the APMC model of agriculture market has not been as successful as was envisaged?
7. Trace out the entire value chain of agriculture commodities from the Farm to the Fork.
8. Despite witnessing a great output over the years, especially after the Green Revolution, agricultural growth in India has stagnated. Comment on this statement highlighting the role of APMCs in slow agricultural growth. (200 words)


  1. 1.What is a National Agriculture Market? Don't we have such market at present? If not, then what kind of agriculture market exists today?
    A. As agriculture is a state subject as of now only state governments are responsible related to the matters of agriculture. In order to make farmer reap his benefits , reduce inflataion, a unified agriculture market is proposed by the GOI.
    As of now we donot have any market regarding agri on national basis. We are planning to promote it.

  2. 2.What are the proposed features of NAM?
    1.unlike earlier under this new act farmers need not have to bring the produce to the mandis to sell. Rather they can sell to anyone.
    To promote trade Private market yards, Direct Purchase Centers, farmers’ market has to be established
    3. promote contract farming where the big private companies will come in contact with the farmers where they pay in advance before sowing season for the quality of production which they required
    4. encourage PPP MODEL in supply chain mechanisms to reduce the wastage; to increase efficiency and a basic decent income to the farmers.
    5. Monopoly of the state is given up and the farmers can sell their produce any where in india without restrictions.

  3. 3.Intermediaries
    Earlier farmers are not allowed to sell their produce directly to the consumers or private. This is due to the chances of farmers getting exploited by the private. Hence governement registered brokers called as intermediaries are available in the Mandis to facilitate trade between them through auction.

    1. Trade Barriers:
      these are the measures taken by the goverment to make imported goods less competitive to promote the indigenous market.

      Mandis: market committees which are entrusted to allot shop to the arhatiyas i.e. commission agents
      Small Farmers' Agribusiness Consortium (SFAC): estb in 1994 with objective of linking farmers to the agricultureal value chain through investment, market, technology in association with private, corporate and cooperatives.
      Price discovery:
      it occurs generally during auctions. the price of the product varies based on supply and demand.
      state subject:
      india being a union of states with federal features had distribution of powers between center and state in the form of central list and state list.
      It is the sole responsibility of the respective states to form legislation which are mentioned in the state list until the central does not involve.

    2. APMC: Agriculture Produce Market committee: these are government designated Mandis where farmers are supposed to sell their notified products.
      Mandi Fee: tax levied by the state, on the transactions between the farmer adn the private entity which acts as a major impediment in creating a national common market.

  4. 4. What is meant by Policy? Highlights the provisions of National Policy for Farmers?
    policy is strategy or approach.
    National POlicy of farmers started to take off from 2007 which is the fall out of the recommendations of the National commission on agriculture.
    The policy deals with improving the Quality of seeds, disease free planting material and soil health enhancement ; water efficiency methods to be adopted to improve the income per unit , increase the yield;establishment of National Agricultural Bio-security System to organize and coordinate agricultural bio security programmes.
    promotion of ICT, renewable energy, space and nano technology to improve the productivity of land. Gyan Chaupals at village level and farm schools in the fields of outstanding farmers to promote farmer to farmer learning .
    appropriate services for women likw creches, child care centers and adequate nutrition to be funded;Necessary steps would be taken to put in place an appropriate social security scheme for farmers; MSP mechanism to be implemented effectively across the country .
    Hence the policy on farmers had focused not only on production and productivity but also to ensure the social security of the farmers.

  5. 5. What is meant by APMC? What is its role?
    Agricultural produce market committee
    encourage cooperative marketing,
    establish regulated markets, and
    grading, storage and warehousing has to be provided for the traders.

  6. 7. Trace out the entire value chain of agriculture commodities from the Farm to the Fork.
    A. farmer will sow the seeds(water, fertilizer, pesticides)
    traders:- the traders will purchase the produce from the farmer either from the mandis/directly(if APMC implemented). they will take to the miller
    miller:- Miller will perform the milling operation and
    ware house storage:- from there the grinded atta will be packed in the plastic covers in different available quantities . The ware house is owned by wholesaler.
    ecommerce:- amazon
    home of the consumer

  7. 1. The National Agriculture Market (NAM) is a unified national market for agricultural commodities. NAM is a “virtual” market which will be implemented as a Central Sector Scheme through Agri-Tech Infrastructure Fund (ATIF). The Department of Agriculture & Cooperation (DAC), Ministry of Agriculture will set it up through the Small Farmers Agribusiness Consortium (SFAC).

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  9. Features of NAM:
    * For the farmers, NAM promises more options for sale.
    * For the local trader in the mandi / market, NAM offers the opportunity to access a larger national market for secondary trading.
    * The gradual integration of all the major mandis in the States into NAM will ensure common procedures for issue of licences, levy of fee and movement of produce.
    * The NAM will also facilitate the emergence of value chains in major agricultural commodities across the country .

  10. 4. Agricultural Produce Market Committee (APMC) is a statutory market committee constituted by a State Government for trading in agricultural or horticultural or livestock products.
    APMC stands for:
    * ensuring transparency in pricing system;
    * providing market-led extension services to farmers;
    * promoting agricultural processing including activities for value addition in agricultural produce;
    * Setup and promote public private partnership in the management of agricultural markets
    * publishing data and rate of agricultural products brought in the market.

    1. sorry, the answer is for question number 5.

  11. 4. Policy is a course or principle of action adopted by an organization or individual.
    The National Policy for Farmers (NPF), 2007, aims to improve economic viability of farming and increase net income of farmers. NPF-2007 include,
    *supply of good quality seeds and disease-free planting material,
    *issue of soil health passbooks to the farmers and integrated pest management system;
    *region and crop specific implements and machinery;
    *adequate and easy reach of institutional credit at reasonable interest rates and farmer-friendly insurance instruments;
    *use of Information and Communication Technology (ICT) and setting up of farm schools to revitalize agricultural extension
    *effective implementation of Minimum Support Price (MSP) across the country and establishing community foodgrain banks;
    *development of agricultural market infrastructure and terminal markets for agriculture
    *special categories of farming like organic farming and contract farming
    *and integrated approach for rural energy, etc.