Agriculture, which contributes 17 percent to the $2.3-trillion economy, has remained relatively untouched by reforms with growth rates averaging below three percent over as many decades. Lack of technology, inefficient markets and small landholdings have worsened challenges. The ministry of agriculture estimates that to double farmer incomes by 2022-23, private investment in agriculture must jump two times to almost Rs 1,40,000 crore.

Measures taken for a unified market for agricultural produce by government:-

• Single national agriculture market (NAM) was launched in 2016 in the country, with a view to enable farmers to get a better price and for consumers to pay a lower price for agri-produce, a win-win situation at both ends of agri-value chains. It was launched with the goal of formulating a unified national market for agricultural commodities by integrating Agriculture Produce Marketing Committees or APMCs across states in India.

Why there is a need to ensure creation of a pan Indian market for agricultural produce :-

• National Commission on Agriculture (1976) as well as the NCF (2006) had categorically emphasised that higher output alone will not provide higher income to farmers unless it is well marketed. Recent incidents of farmers reportedly dumping their bumper produce of tomatoes and onions and emptying cans of milk into drains is clear evidence of it. So had the markets been integrated, the surplus produce would have been transferred to deficit regions. 
• The Dalwai Committee on Doubling Farmers’ Income has pointed out that the share of farmers in consumer’s price is very low. It generally varies from 15 to 40 per cent.
  1. The dominant role of middlemen among others is primarily responsible for farmers not realising a reasonable price for their produce, lowering farm income and profitability. 
• The Committee of State Ministers, in charge of Agricultural Marketing to Promote Reforms (2013) has highlighted in its report that
  1. Covered and open auction platforms exist only in two-thirds of the regulated markets
  2. Cold storage units exist in less than one-tenth of the markets and grading facilities in less than one-third.
• States alone cannot revamp the agricultural marketing sector, primarily due to paucity of funds and technology.
• Measures taken by government failed:-
  1. States role:-
     • Most of the reported transactions are intra-mandi. Inter-mandi and inter-state trading on the platform are minimal. What this means is that the states on e-NAM have not been able to provide farmers with better price discovery in other mandis of the same state or across states.
     • E-payment facility is not available in most mandis, and that there is no competitive bidding reported in these states.
  2. Infrastructure:-
     • Even as the Centre works with States to persuade them, infrastructure such as reliable third-party certification for the produce in every mandi and robust computer systems, including uninterrupted web connectivity, need to be put in place.
  3. Middlemen influence:-
     • The hold of the middleman, who often is also the financier of the farmer against a pledge of the produce is not completely broken.
  4. The challenges posed by present day APMCs :-
     • Fragmentation of Stateinto multiple market areas, each administered by separate APM
     • Separate licensesfor each mandi are required for trading in different market areas within a state. This means that there is  limited first point of sale for the farmer.
     • Licensing barriers leading to conditions of monopoly
     • Opaque process for price discovery
     • An overwhelming majority of farmers still rely on the same broken system of markets under APMC, which is monopolistic and rent-seeking, with high commissions, especially for perishables.
     • APMCs play dual role of regulator and Market. Consequently, their role as regulator is undermined by vested interest in lucrative trade. Generally, member and chairman are nominated/elected out of the agents operating in that market.
     • Exporters, processors and retail chain operators cannot procure directly from the farmers as the produce is required to be channelised through regulated markets and licensed traders. There is, in the process, an enormous increase in the cost of marketing and farmers end up getting a low price for their produce.
  5. NAM does not say anything about interstate taxes and levie
  6. Dominance of cash:
     • Critical link was creating an electronic payment system that would allow the buyer credit the proceeds directly into the farmer’s bank account. But this has not taken off, and farmers continue to be paid in cash
     • Physical trading is still taking place even in mandis that are integrated with e-NAM.

Way forward :-

• Following steps need to be taken in a concerted manner :-
  1. Unyielding focus on agri-market reforms starting with basics of assaying, sorting, and grading facilities for primary produce as per nationally recognised and accepted standards
  2. Creating suitable infrastructure at mandi-level (like godowns, cold storages, and driers) to maintain those standards
  3. Bringing uniformity in commissions and fee structures that together do not go beyond, say 2%, of the value of produce
  4. Evolving a national integrated dispute resolution mechanism to tackle cases where the quality of goods delivered varies from what is shown and bid for on the electronic platform. This would require significant investments, and changes in state APMC Acts. 
• Committee on Doubling Farmers’ Income under the chairmanship of Ashok Dalwai, in its draft report, justifies the recommendation saying marketing has no boundaries. This necessitates a pan-India operation to meet the demand across the country. Besides, the committee has also recommended rolling out the model Agriculture Produce Marketing Committee (APMC) Act 2017 which would facilitate single-point levy of taxes, promote direct interface between farmers and end-users, and give freedom to farmers to sell their produce to whomsoever and wherever they get better prices
• Creation of accreditation agency to ensure quality assurance .
• The Economic Survey suggests incremental steps as possible solutions for setting up a national market. 
  1. State governments may be specifically persuaded to provide policy support for alternative or special markets in private sector. 
  2. In view of the difficulties in attracting domestic capital for the setting-up marketing infrastructure, liberalization in FDI in retail could create possibilities for filling in the massive investment and infrastructure deficit in supply chain inefficiencies. 
• Roping in the private sector for investments would create jobs and promote efficient agri-value chains.
• Buying the produce from farmers below the MSP should be made illegal. The ‘model price’ that these markets offer should therefore be replaced with MSP.