National Agricultural Market (NAM)
The National Agriculture Market (NAM) is envisaged as a pan-India electronic trading portal which seeks to network the existing Agricultural Produce Market Committees (APMCs) and other market yards to create a unified national market for agricultural commodities. NAM is a “virtual” market but it has a physical market (mandi) at the back end.
NAM was announced during the Union Budget 2014-15 and is proposed to be achieved through the setting up of a common e-platform to which initially 585 APMCs selected by the states are linked.
NAM will be implemented as a Central Sector Scheme through Agri-Tech Infrastructure Fund (ATIF). The Department of Agriculture & Cooperation (DAC), Ministry of Agriculture will set it up through the Small Farmers Agribusiness Consortium (SFAC). The Central Government will provide the software free of cost to the states and in addition, a grant of up to Rs. 30 lakhs per mandi /market will be given as a onetime measure for related equipment and infrastructure requirements. In order to promote genuine price discovery, it is proposed to provide the private mandis also with access to the software but they would not have any monetary support from Government.
An amount of Rs. 200 crore has been earmarked for the scheme from 2015-16 to 2017-18. This includes provision for supplying software free of cost by DAC to the States and Union Territories (UTs) and for cost of related hardware/infrastructure to be subsidized by the Government of India up to Rs. 30 lakh per Mandi (other than for private mandis).
The target is to cover 585 selected regulated markets across the country, with the following break-up:
- 2015-16: 250 mandis
- 2016-17: 200 mandis
- 2017-18:135 mandis
The Scheme is applicable on All-India basis. There is no State wise allocation under the Scheme. However, desirous States would be required to meet the pre-requisites in terms of carrying out necessary agri-marketing reforms. For integration with the e-platform the States/UTs will need to undertake prior reforms in respect of
- a single license to be valid across the State,
- single point levy of market fee and
- provision for electronic auction as a mode for price discovery.
Only those States/UTs that have completed these three pre-requisites will be eligible for assistance under the scheme.
Benefits of NAM
NAM is said to have the following advantages:
- For the farmers, NAM promises more options for sale. It would increase his access to markets through warehouse based sales and thus obviate the need to transport his produce to the mandi.
- For the local trader in the mandi / market, NAM offers the opportunity to access a larger national market for secondary trading.
- Bulk buyers, processors, exporters etc. benefit from being able to participate directly in trading at the local mandi / market level through the NAM platform, thereby reducing their intermediation costs.
- The gradual integration of all the major mandis in the States into NAM will ensure common procedures for issue of licences, levy of fee and movement of produce. In a period of 5-7 years Union Cabinet expects significant benefits through higher returns to farmers, lower transaction costs to buyers and stable prices and availability to consumers.
- The NAM will also facilitate the emergence of value chains in major agricultural commodities across the country and help to promote scientific storage and movement of agri goods.
Under Constitution of India, agricultural marketing is a state (provincial) subject. While intra-state trades fall under the jurisdiction of state governments, inter-state trading comes under Central or Federal Government (including intra-state trading in a few commodities like raw jute, cotton, etc.). Thus, agricultural markets are established and regulated mostly under the various State APMC Acts.
APMC Acts provide that first sale in the notified agricultural commodities produced in the region such as cereals, pulses, edible oilseed, fruits and vegetables and even chicken, goat, sheep, sugar, fish etc., can be conducted only under the aegis of the APMC, through its licensed commission agents, and subject to payment of various taxes and fee. The producers of agricultural products are thus forced to do their first sale in these markets. For more details on the issues surrounding APMCs and how it hindered the development of a national common market please see here.
Government has been working on the issues for internal trade reforms and making a common market for agriculture products across the country since 2012. As a long term reform measure, Union Government had been nudging states to reform their APMC act and towards this end had formulated a Model APMC Act way back in 2003. Setting up of Spot Exchanges, was an attempt towards creation of a single market in the agricultural commodities in pursuance of the national agenda given by the Prime Minister in his address at the Agricultural summit in 2005. The Department of Consumer Affairs had conceived spot exchanges as an alternative marketing channel which would facilitate a transparent system of direct marketing. It was also to integrate the physical market spatially and temporally by integrating it with the futures market. However, spot exchanges soon landed up in trouble and the permissions were withdrawn in September 2014.
Union Budget 2014-15 (para 82) and Union Budget 2015-16 (para 33) had suggested the creation of a National Agricultural Market (NAM) as a priority issue and Economic Survey 2014-15 (Chapter 8, Vol 1) suggested several ways of implementing the same. On 2 July 2015, Union Cabinet unveiled its plan to go ahead with the project amidst the constitutional constrains as mentioned above, and brought out the broad guidelines of NAM as a central sector scheme.