Digital Push for Agricultural Trade

By Sandeep G., SASTRA Deemed University, Thanjavur.

The discovery of the online trading concept has invoked positivity, not only in the minds of wealthy businessmen but also in the minds of health-protecting farmers. Although India is an agrarian economy, the non-existence of equipoise between the rural and urban economy contributes to the deprivation of both the corporate and agricultural domains. In spite of favouring the corporate domain with Make in India and other similar policies, the Union Government developed a policy on the refinement of the agricultural sector.

The APMC (Agricultural Produce Market Committee) was unsuccessful in uplifting the farmers by failing to contribute towards the prevention of exploitation of farmers, in a proper manner. Farmers account for 50% of the population in India. The physical existence of markets and the restrictions placed on farmers to trade in any market restricted the trade of agricultural products per se. Even the e-tendering policy failed to resolve the issues in respect thereof. Hence, there was a necessity to bring a new platform that can tether buyers and sellers across the nation. The Union Government brought a new online platform to bring together all the farmers and buyers across the nation with a view to promoting agricultural trade. e-NAM does not eliminate the value of physical markets but rather encourages the farmers to sell their products in any market. This policy preceded the introduction of GST (Goods and Services Tax, 2017). The similarity between the GST and e-NAM is the sacrifice of control over the subjects of the State by the State Government. In the case of GST, the States are required to sacrifice a part of their fiscal autonomy. Similar is the case with the e-NAM, which requires all the States to take off restrictions, such as the requirement of multiple licenses and imposition of multiple levies. This removal of restrictions would open the doors for the farmers to sell their agricultural produce in any market across the State. Therefore, the complex fragmentation of markets and hampered flow of commodities are no longer matters of concern.

The formalisation of the informal sector is essential for the economic growth and social welfare of the Country. Without demonetisation, the rise of e-NAM would have remained a dream. Though the policy was introduced prior to demonetisation, all the farmers did not have bank accounts and those who did, express their refusal to availing services provided by the bank. The farmers did not seem to have availed any other service except taking loans and later protesting for waiver of the same in case of the crop failure. Computerization of accounts and transactions backed by adequate cybersecurity, grants access to every stakeholder to gain relevant information in a very short span of time. The direct contact between farmers and buyers curbs the possibility of inflation and also increases the returns to farmers. Cashless mode of transaction boosts the credit-creating capacity of the banks which in turn reduces the number of Non-Performing Assets (NPAs). The increase in per capita income of 600 million farmers is a health-protecting factor as it restricts the farmers from committing suicide. The farmers are unlikely to protest for the waiver of loans as they would be backed with adequate finance to repay their existing loans. Computerization of agricultural trade acts as a considerable impetus to create employment opportunities for the graduates in the Information Technology sector. All these factors will contribute to the rise of India’s GDP in the long run.

The APMC failed to address the issue of exploitation of farmers by the middlemen. Prior to e-NAM, the direct contact between farmers and retailers could not be established because of the middlemen. The manpower required for acting as intermediaries is diminished because of the emergence of the online portal. For instance, a farmer harvesting cotton can market the product directly to the cotton industries without any backing from any middleman. Presently, a farmer can go to any Mandi (market) in a State to quote the final price of the products as the license extends to the entire State. Though this online platform causes integration of existing mandis or markets, transport and warehousing are apparently disadvantageous. Until 2014, there were only 450-500 warehouses. Out of 16 agencies registered with the WDRA (Warehousing Development and Regulatory Authority), only 9 agencies have been accredited. Since the bidding process occurs digitally from any part of the nation, the farmers cannot get the products delivered in the required places swiftly and safely. For example, if a farmer from Tamil Nadu offers to sell 10 mangoes and the buyer bids online from Assam, then the swift transport of mangoes requires a high level of logistic support which is absent. Despite providing details pertaining to the quality and standards of the products, the buyers cannot be sure of the logistic support. This gives rise to the necessity of qualitative storage facilities and speedy mode of transport across the nation.

Training is provided only to Mandi officials in respect of quality testing, grading and other relevant subjects. There is no vacuum for the farmers to secure training related to online business. Having been accustomed to the cash transactions, the mindset of the farmers or even some of the traders is not dynamic enough to accommodate such changes in the digital arena. The lack of awareness among farmers and also some traders has the possibility to have them opt out of online trading. The farmers may not be able to even comprehend the problems that may arise due to transaction failure and they might require the aid of others. Thus, it is highly essential to spread awareness pertinent to online trading among the farmers for causing an upsurge in digital transactions.

In addition to fostering the welfare of farmers, this policy guarantees protection to them against exploitation by the middlemen. Any amendment or legislation or policy related to agriculture is subject to the State Government’s approval, as agriculture is a subject of the State. All the agricultural platforms established by the State Governments can get connected to NAM upon affirmation given by the State Government. The adoption of this scheme is not mandatory. In spite of so much persuasion from the Union Government, only half of the States have responded positively towards this policy. The failure of other States to adopt this policy might widen the existing inequality in income distribution amongst the farmers in various domains. Therefore, unless one could notice a parallel growth in all States with a little difference, it will be a tremendously arduous task to refine the agricultural sector collectively.