Mains Practice Questions

Introduction

The electronic National Agriculture Market (e-NAM) is a pan-India electronic trading platform launched in April 2016 to create a unified national market for agricultural commodities.

• By integrating various Agricultural Produce Market Committees (APMCs) across the country, e-NAM seeks to address the longstanding challenges of price disparities and fragmented markets

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Role of e-NAM in-

• Reducing Price Disparities:
  • Transparency and Price Discovery: e-NAM provides a platform for real-time price discovery, allowing farmers to access information about prices in different markets.
    • This transparency reduces the potential for price manipulation and exploitation by intermediaries.
  • Expanded Market Access: By connecting farmers with buyers across the country, e-NAM expands their market reach, enabling them to sell their produce to the highest bidders.
    • This reduces the dependence on local markets, which often suffer from limited competition and price fixing.
  • Competition and Efficiency: The increased competition fostered by e-NAM encourages efficiency among traders and processors, leading to lower costs and fairer prices for farmers.
• Improving Market Integration:
  • Unified Market: e-NAM creates a unified market for agricultural commodities, breaking down barriers between different regions and states.
    • This integration promotes a more efficient allocation of resources and helps to stabilize prices.
  • Reduced Transaction Costs: By streamlining the trading process and reducing the need for physical transportation, e-NAM lowers transaction costs for farmers and traders.
    • This benefits both parties and contributes to a more integrated market.
  • Improved Logistics: The platform's integration with logistics providers facilitates the efficient movement of agricultural produce, reducing wastage and ensuring timely delivery to markets.

Challenges Faced in e-NAM Implementation:

• Infrastructure Limitations: Inadequate warehousing (since the last 5 years, warehousing demand has outpaced supply by a whopping ~40%), grading, and assaying facilities in many APMCs.
• Digital Literacy and Connectivity Issues: Low digital literacy among farmers (Only 23.4% of adults in rural India lack even basic digital literacy skills) and poor internet connectivity in rural areas.
• Resistance from Intermediaries: Traditional commission agents and traders often resist the transition to e-NAM.
• Limited Participation of Private Players: Insufficient involvement of the private sector in the e-NAM ecosystem.
  • Only 1 and 3% of farmers from Uttar Pradesh and Gujarat were using e-NAM mobile apps as of 2020, limiting competition and price discovery.
• Quality Assessment Challenges: Lack of uniform quality standards and limited capacity for quick quality assessment.
• Payment and Logistics Issues: Delays in online payments and lack of integrated logistics solutions.

Conclusion

The e-NAM platform has shown potential in reducing price disparities and improving market integration for agricultural commodities through enhanced price discovery, expanded market access, and increased transparency. Furthermore, greater involvement of private players and integration with logistics and warehousing services could significantly enhance the platform's effectiveness in creating a truly unified national agricultural market.