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ICRISAT Development Center

Transforming Agricultural Marketing in India: Linking Farmers to National Gateway and e-marketsStatus and a Way Forward

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

Increased adoption by

farmer adoption

Better quality

produce

Improved buyer

Confidence

Better price realization

Better Assaying and storage

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 ForwardNational 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

SPV

ICT Solutions

Warehouse management

WDRA

Lab RegulatorMarket

Committees

Grading labs

Networked Warehouses

The linkages of the proposed SPV

Way forwardLivestock market

DAISY &NADAX

Management system

• Ensure Inclusion• Organize producers• Deliver support

•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

• Define Public Good• Policy Landscape• Financial/ Technical Assistance• Feasibility• Monitoring and Evaluation

(M&E) Govt Ministries/DeptsLocal Insititutions/

PanchayatsDonors/ MultilateralsUniversities/ Research

CentresState/ Public Sector

banks

Agribusiness Entrepreneurs

FPOs/ PCs/ Other farmer organizations

Financial Insititutions

NGOsFoundations

Producers/ Farmers

MANAGEMENT SYSTEMS

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 activitiesOrganization Anticipated

immediate roleSources of funds Anticipated future role Regulation

Warehouse management companies

Market for these organisations is negligible at present.

Predominantly private. Scope for joint or public sector firms

Employed by warehouses for facility management and logistics.

Market. SPV to ensure that

Warehouses In private, public or joint sector

Private, PPP or public funds

Enter into contracts with market committees. Network with smaller storage places with improved infrastructure and mobile testing facility.

Warehouse Development and Regulation Act.

Market Committees – existing local institutions

APMC regulator Market fee (Rationalised), Budgetary support, and rent

Licencing of traders, warehouses State Agricultural marketing Board

Testing laboratories In the private, public or joint sector

Private, PPP or public funds

Operate in close proximity of APMCs and warehouses. May add mobile services.

To be regulated by a separate entity

Proposed SPV State level organisation

The Market facilitating body at the state level

Equity, Budgetary support

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

Government of India/ Concerned state Govt.

State Agricultural marketing Department

Policy making, regulation and administration

Budget Policy making

National agricultural standards organisation (NEW)

- Regulatory fees Specifying and disseminating standards, Regulation, accreditation and training

Dept. of Agricultural marketing, Government of India

Dept. of Agricultural marketing, Government of India

Policy, regulation,accreditation, administrationetc

Budget Policy

Universities/ICRISAT /KVKS

Technical support/Market extension

Budget support from State Govt/ Marketing Boards

Advisory/ build farmer groups/Capacity building

Government

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!