Transforming Agricultural Marketing in India:
Linking Farmers to National Gateway and e-markets
Status and a Way Forward
ICRISAT Development Center
1
Now…
• Primary or Periodic Markets (haat/bazaars) neglected
•
basic amenities absent.
• Low density of regulated markets in some States•
farmers have to travel long distances.
• APMCs – professional management inadequate.
• Licensing systems creates entry barrier to new trader/buyers.
• Multi-point levy of market fee (0.5 to 2%) and multiple licensing.
• Restrictions on movement of goods inter-state and even intra-state.
• Condition of cattle markets most appalling.
Key issues
• Too many intermediaries
•
high cost of goods and services.
• Inadequate infrastructure
•
storage, sorting, grading or post-harvest management.
• Private sector unwilling to invest
•
in logistics or infrastructure under present conditions.
• Price setting mechanism not transparent.
• Mandi staff- inadequate capabilities.
• Market information – asymmetrical and access is not easy.
• Essential Commodities Act impedes
•
free movement, storage and transport of produce.
Way Forward
Way Forward
Better
Assaying
and storage
Increased
adoption by
farmer
adoption
Better
quality
produce
Better price
realization
Improved
buyer
Confidence
Virtuous cycle of next generation agricultural marketing
Way Forward
Technology
•
•
•
•
•
•
Improve e-trading process in APMCs
Initiate computerized billing process
Start end-to-end automation processes
Improve assaying and grading systems
Linkage with spot exchange
Create warehouse receipt system in
APMCs
Way Forward
Institutions
• National Agricultural Market
• Single license enabling pan India
operation
• Easy movement of goods
• Regulatory environment
• Pan India electronic platform
• Creation of Special Purpose
Vehicle (SPV)
• Horticulture- integrated markets
• Cold storage, grading
• Livestock Market – DAISY/ NaDAX
Way Forward
Financing
• Initiate electronic payment system
• Linking warehouse with financial
institutions
• Technology up gradation for FPOs
• Open PPP options
• Infrastructure and logistics on
BOOT, e-platforms
• Budgetary support for gap
funding, pilots and scale up
Way forward
Policies
• Immediate e-tendering in all
APMCs
• Create Grading Standards
Authority by GOI
• Warehouse financing
• Facilitating role by the
Government for PPP model
• Boost up capacity building and
certified skills
Way Forward
National Agricultural Market
Objectives
• Allowing interplay of local demand and supply, duly reckoning
aggregate national demand and supply for efficient price discovery
in every local market.
•
An efficiently discovered price leading to a better return to the
producer, thereby enhancing the viability of the agricultural sector.
•
Increased price information for the farmer to help in making
planting decisions and enabling to effectively negotiate forward
contracts.
•
Lower costs and time taken for transaction.
•
Availability of pledge loan facility to avoid distress sale.
Way Forward
ICT
Solutions
Networked
Warehouses
Warehouse
management
SPV
Grading
labs
WDRA
Market
Committees
Lab
Regulator
The linkages of the proposed SPV
Way forward
Livestock market
DAISY &NADAX
Management system
• Define Public Good
• Policy Landscape
• Financial/ Technical Assistance
• Feasibility
• Monitoring and Evaluation
Govt Ministries/Depts
(M&E)
Local Insititutions/
Panchayats
Donors/ Multilaterals
Universities/ Research
Centres
State/ Public Sector
banks
MANAGEMENT
SYSTEMS
•FORMAL PPP AGREEMENTS:
CONTRACTS & MOUS
• FIXED, WELL DEFINED PROCEURES
AND CRITERIA (LA)
•DEMANDING BIDDING &VETTING
PROCESS (LA, SEA)
•FEASIBILITY ANALYSIS (ECONOMIC,
ENVIRONMENTAL, VCA)
• BUSINESS PLANS
•M&E/ BUSINESS PLANS / CONTRACT
FARMING
• Complinace with Program
Design
• Lead Implementation
• Secure Markets/ Finance
• Technology innovations
Agribusiness
Entrepreneurs
FPOs/ PCs/ Other
farmer organizations
Financial
Insititutions
NGOs
Foundations
Producers/ Farmers
• Ensure Inclusion
• Organize producers
• Deliver support
Suggested Action Plan
•
Group action/collectives-Pos/PCs/FPOs/Associations
•
to link small farmers to markets.
•
Transaction facilitation for inputs and produce.
•
Improving competition through value chains.
•
Create better conditions for investment
•
in agriculture marketing infrastructure and logistics.
•
Good governance: Government as a facilitator and not regulator.
•
Co-existence of regulated mkts and emerging formats of marketing.
•
Marketing extension as a strategy to link farmers to mkts.
Proposed activities
Organization
Anticipated
immediate role
Warehouse management Market for these
companies
organisations is
negligible at present.
Sources of funds
Anticipated future role
Regulation
Predominantly
private. Scope for
joint or public sector
firms
Private, PPP or public
funds
Employed by warehouses for facility
management and logistics.
Market. SPV to ensure that
Enter into contracts with market
committees. Network with smaller
storage places with improved
infrastructure and mobile testing
facility.
Licencing of traders, warehouses
Warehouse Development
and Regulation Act.
Warehouses
In private, public or joint
sector
Market Committees –
existing local institutions
APMC regulator
Testing laboratories
In the private, public or
joint sector
Market fee
(Rationalised),
Budgetary support,
and rent
Private, PPP or public
funds
Proposed SPV State level
organisation
The Market facilitating
body at the state level
Equity, Budgetary
support
Operate in close proximity of APMCs
To be regulated by a
and warehouses. May add mobile
separate entity
services.
Provider of online auction marketplace Commodity spot exchange
regulator
State Agricultural
marketing Board
Regulation of APMC
activities
Regulatory charges
from APMCs
State level regulator. To be a
professional body
State Agricultural
marketing Department
Policy making, regulation Budget
and administration
Policy making
National agricultural
standards organisation
(NEW)
Dept. of Agricultural
marketing, Government
of India
-
Specifying and disseminating
standards, Regulation, accreditation
and training
Policy
Universities/ICRISAT
/KVKS
Technical
support/Market
extension
Regulatory fees
Policy,
Budget
regulation,accreditation,
administrationetc
State Agricultural
marketing Board
Government of India/
Concerned state Govt.
Dept. of Agricultural
marketing, Government of
India
Budget support from Advisory/ build farmer groups/Capacity Government
State Govt/ Marketing building
Boards
To sum up…
• Agricultural market reforms needed urgently
• Technological up gradation –electronic transaction systems
• Financial provisions – both private and public
• National Agriculture Market system
• Regulatory atmosphere should be conducive
• Transparency and investment friendly environment
• Equity and gender inclusiveness
• Capacity building of all stakeholders
• Promote PPP models
•
BOOT, BOT, BOO, swiss challenge, hub and spoke models, regional/sectoral
Thank you!