Drafting Committee on Agri-Marketing suggests ‘Price Insurance Scheme’ to insure the farmers' income

The drafting committee on the National Policy Framework on Agricultural Marketing has suggested quite a few ways to build a vibrant agricultural marketing ecosystem. One of the major suggestions is to roll out a ‘Price Insurance Scheme’ to insure the farmers' income at the time of sowing itself. It has also suggested making payment to the farmers preferably online on the same day of trade-transaction or maximum next day, if procedural so required. Other important suggestions include making food processing and export infrastructure in PPP mode, expansion of eNAM beyond APMC markets, empowered committee of state agricultural ministers on the lines on GST council, bringing all the farmers under one or other farmers' organisations and focusing market linkage as well as future and option trading through FPOs.

Department of Agriculture and Farmers’ Welfare (DA&FW), Ministry of Agriculture and FW, had on 25th June, 2024 constituted a Drafting Committee under the chairmanship of Shri Faiz Ahmed Kidwai, IAS, Additional Secretary (Marketing), DA&FW. Department has asked for suggestions from the related parties within 15 days. The said purpose of this committee is to suggest ways wherein farmers of all categories find a market of their choice to realise best price for their produce, enhanced competition with multiple marketing channels, transparency, infrastructure and adoption of innovative digital technology and also agri value chain based marketing.

The draft of the Framework says, in the last 10 years agriculture income has increased annually @5.23% against a growth rate of 6.24% in the non-agriculture sector and 5.80% in the economy overall. Thus, the difference in the growth rate of income in the agriculture and non-agriculture sector is small. The data indicates that the accelerated agricultural growth during the last two decades has been a result of diversification towards horticultural crops, livestock and fisheries, as fisheries experienced the highest growth of 9.08 % in value of output followed by the livestock sector at 5.76% and the crop sector 2.34% per year.

The draft accepts that in spite of all this, it is a matter of concern that farmers, especially small and marginal ones are still not able to draw the benefit of bumper production and growth in the agriculture sector. A substantial gap in rural and urban economy is still visible and a large section of farmers is still struggling for optimum income. Among the major reasons identified are high fragmented landholding, high cost of production, lack of demand driven production and accessibility to good markets and optimum realization of value for their produce.

Integrated output management with application of digital public infrastructure like block-chain technology, use of innovations, capacity building through proper skilling and professionalism are the critical areas for consideration to improve farmers' income with transparency and ease. The policy identifies the pockets of satisfaction and areas for improvement as well and also modalities for improvement in possible uniform manner.

Wholesale markets
Organised wholesale marketing in the country is undertaken through 7057 regulated markets (2605 Principal Market Yard- PMYs and 4452 Sub-Market Yards- SMYs), as on 31.03.2024, established under APMC Acts of States and UTs. Density of these markets vary from State to State and taking the country's average one regulated market serves 407 sq km area against the norm of 80 sq km (NCF, 2006). Worse is that more than 1100 markets are non-functional.

The draft report says, there are more than 500 wholesale unregulated markets in the country and the situation of infrastructure /facilities in most of these markets are very poor. Most of these wholesale unregulated markets are functional in those states/ UTs where either APMC Acts do not exist or are non-functional (Kerala, Bihar, A&N Islands and NER States).

There are about 125 wholesale private markets in the states of Maharashtra, Gujarat, Rajasthan, Karnataka and Uttar Pradesh. These markets have been promoted with the objectives of improving the farmer-market linkages and creating competition. So far, there is no independent study about functionality, benefits accruing from them and challenges being faced by private owners in operation and management of these markets. There are about 700 farmer-consumer markets in the country, wherein farmers directly sell their produce mostly perishables in retail to the consumers.

As it suggests, DA&FW will engage with the states to redefine the need of market density, state-wise considering the geographical area, production pattern, marketable surplus, transport facility and other logistics. To improve the farmer - market linkages and farmers` accessibility, closer to farm-gate / villages, states may ensure to declare a large number of need-based warehouses/cold storages as sub-market yards. It should also be ensured that at least in the beginning there should be one private market in every revenue division of the state which should subsequently be scaled up to be at least one in each district.

Agri Value Chain and Marketing Infrastructure
In the changed marketing dynamics, the draft suggests, there is a need for creation of end-to-end Value Chain Centric Infrastructure (VCCI) and Digital Infrastructure. Creation of need based VCCI in place of mere upgradation of existing infrastructure or developing it in isolation is essential for effective and transparent marketing delivery to reach the last mile of the farmer. VCCI will lead to integration of supply chains and reduction of transaction costs.

Post-harvest infrastructure, which is quite inadequate, causing marketing inefficiencies, needs to be strengthened. At village/GP levels or at small town level, post-harvest management and marketing infrastructures like collection centres, purchase centres, primary and secondary value addition facilities, drying facility, packaging facility, quality testing facility, small storage facility, etc need to be developed. 

At district level or regional level, precision infrastructure/facilities oriented to processing and export should be developed. Infrastructure and facilities in APMC markets are quite inadequate in most of the markets. States should consider to bridge the gap with private sector participation and preferably in PPP mode.

Building digital public infrastructure, using block-chain technology, AI / ML etc for end-to-end operationalisation of food commodity supply chain processes right from farm to storage, to the arrival at food processing centres may be of great help.

eNAMs to be expanded beyond APMC
The draft report says, eNAM may be consolidated and expanded beyond APMC markets to public & private collection/purchase centres, assembly markets, warehouses/cold storages declared as sub-market yards. For this purpose, an improvised version of e-NAM needs to be developed.

Market Information System (MIS) being implemented since March, 2000 as agmarknet needs to be upgraded. This upgraded portal may be the part of market-stack to provide real-time sowing as well as price information.

Depending upon the farmers' demography, production pattern, etc. states may consider to undertake physical output & value chain infrastructure gap analysis at district level or at any other unit level state deems fit. For this purpose, states may constitute an Infrastructure Gap Analysis Committee (IGAC) under the chairmanship of District Collector / Chief Development Officer.

Professionalism of APMCs
As per the Economic Survey for 2023-24, the food processing industry in India is one of the largest employers in organised manufacturing, with a 12 per cent share in the total employment in the organised sector. The value of agri-food exports, including processed food exports, accounted for about 11.7 per cent of India's total exports in 2022-23. Keeping above facts in mind, APMCs should promote food processing activities in the market yards in PPP mode. In potential APMCs, dedicated space may be earmarked and also develop infrastructure/facilities for value chain based marketing of millets in PPP mode.

Marketing for organic farming produce
As the report says, there is ample scope in the overseas market also together with the domestic market. However, cultivators of organic and natural farming struggle with the issue of certification of being organic produce or produce of natural farming on the one hand and getting the market for the produce on the other. Consumers are willing to buy quality and safe produce but its availability and credibility of being it organic deter them to buy. Therefore, need is being felt to develop and promote a market for produce of organic farming and natural farming as well. APMCs may play their role by providing a dedicated market and infrastructures/facilities. States may endeavour to provide niche / dedicated spot in the potential APMC markets for marketing of produce of organic farming and natural farming as well.

APMCs may endeavour to develop infrastructure / facilities for providing the services for quality assaying, cleaning, sorting, grading, value addition / processing, etc. in the market-yard in PPP mode. States may identify a few APMCs with potential to develop into a export market, wherein, commodity specific all the infrastructure facilities needed to make the produce exportable to the targeted country, may be developed.

Competitive, Transparent and Efficient Marketing Ecosystem
The report asks for an ecosystem wherein there should be an accessible market with the choice to farmers to sell their produce through any channel of marketing and also to any buyer offering the best bid for their produce. Application of digital technology in agricultural marketing is critical in improving the transparency and price discovery.

Recently, DA&FW has identified 12 areas of reforms to take up with the states. It includes areas like allowing setting up of private wholesale markets; permitting wholesale direct purchase by processors, exporters, organised retailers, bulk buyers from farm-gate; declaring warehouses/silos /cold storages as deemed market yard; allowing establishment and operation of private e-trading platform; single time levy of market fees across the state; single unified trading licence valid across the state, rationalisation of market fee and commission charges; recognition of trading licenses of other state; de-regulation of perishables outside the market yard; exemption of market fee on direct sale by farmers / FPOs at processing units/ factories and exemption of market fee on produce brought from other state for processing.

DA&FW with states may endeavour to constitute an Empowered Agricultural Marketing Reform Committee of State Agricultural Marketing Ministers on the lines of Empowered Committee of State Finance Ministers on GST to push the states to adopt the reform provisions in the state APMC Acts, notify the rules and also build up the consensus among the states to move towards unified national market for agriculture produce through single licensing /registration system and single fee.

Digital Issuance of Licence/ Registration
As the draft says, with digitisation not only the process of issuance of licence/registration can be made easy and less time consuming but transparent also. Digitisation and automation of all the licensing processes for establishing private markets, e-trading platforms and also to the direct marketeers, traders, commission agents and other market functionaries etc. States will have to make the entire process of issue of licences/registrations digital and automatic.

Considering the criticality of tracking the produce along the supply chain, reducing the leakage & turnaround time of activities/services, avoiding the delays and ensuring the direct payment in the farmers` account in the transparent manner and also to improve the marketing efficiency, DA&FW will endeavour to formulate a scheme with the state governments to make to processes digitally automated in all the states/UTs.

Market Information & Intelligence System
Endeavour shall be made to develop Digital Public Infrastructure (DPI) on federated model in the name of “Market-Stack Or Unified National Market Portal (UNMP)” on the lines of Agri-Stack. The Market-Stack/UNMP may initially consist of a market information registry, mandi process automation registry and license / registration registry. Subsequently, the eNAM version 2.0 with all modules and CF registry may also be added in the “Market-Stack”. The aforesaid registries developed at state level may be integrated with the central portal (UNMP) through API.

Risk Mitigating Measures
Owing to highly fragmented land-holding, inaccessibility of market and price uncertainty, all efforts shall be made to bring almost all farmers under one or other farmers' organisations i.e. co-operatives, FPOs, SGHs, etc. Endeavour shall be made to develop a DPI as contract farming facilitation registry, which may be the part of Market Stack. The contract farming facilitation registry will be a repository of information relating to all FPOs willing to enter into contract farming, agro-industries and produce clusters.
 
States may consider to allow buying of contracted produce outside the mandi-yard and waive off the market fee when produce is bought for the purpose of processing and export in order to give impetus to these sectors. 

Market linkage through FPOs
FPOs may be another instrument to provide assured market and price. There are around more than 50,000 FPOs in the country promoted by various organisations including self-motivated FPOs, which include both active and inactive FPOs. As provisioned in the national policy on FPOs, states may consider to declare CACMP (Common Agribusiness Centre cum Market Place) or otherwise named FPOs` premises as sub-market yard for the purpose of buying and selling of the farmer-members` produce.

Futures trading and option trading are understood to be a price discovery and risk mitigating tool. Since, FPOs can participate on the platform on behalf of farmer members on the exchange platform for newly introduced option trading, therefore, DA&FW with states may hold discussions with the SEBI and commodity exchanges to promote the trade on exchange platforms.

Ease of Doing Agritrade
Ease of doing agritrade may be as an index jointly developed by DA&FW and state governments and quarterly published by the DA&FW with a view to create a healthy competition among the states towards easing the agricultural trade. It shall be an aggregate figure which would include different parameters, defining the ease of doing agritrade in the state and country.

For marketing efficiency, the draft also focuses on training and skilling. Extension Division of DA&FW with states, involving states' agricultural production department and marketing department/boards, may review the ongoing extension activities under ATMA and get prepared market centric training modules and execute the same with KVK and states' extension machinery.