eNAM will help farmers with rabi harvest in the time of COVID crisis: Acuité Rating

An Acuité Rating Press Release focused on how COVID crisis can be an opportunity for agriculture marketing reforms. They have also written on how eNAM can prove to be a revolutionary reform amid this crisis.

The Coronavirus Pandemic has brought the economy to a standstill. Following the lockdown, farmers are struggling to trade and harvest Rabi crop. As a result, the perishable rabi harvest is accumulating at the mandis. Therefore, farmers are finding it hard despite the government giving the green signal. Farmers are facing a lot of trouble from the police authorities. Besides, without migrant workers, there is no one to harvest, load, unload and transport the crops.

The government has put in plenty of effort to ensure that the agricultural sector does not face hurdles. For instance, the cold storage units are utilized to their maximum capacity to store rabi crops. Further, relaxation on the transport of agricultural commodities to ensure distribution. However, these are still not sufficient. Hence, the government is striving to assist the farmers with their tasks.

India’s former chief economic adviser (CEA) Arvind Subramanian has said, "The government’s immediate focus should be on the rabi crop harvest and the retail supply chain, besides strengthening the health infrastructure to battle COVID-19, amid limited financial and administrative resources. We need to start focusing on a war footing on the harvest, the mandis, MSPs and start preparation for dealing with more cases of hospitalisations, improve capacity to deal with this should things get worse." He addressed a webinar hosted by the National Council of Applied Economic Research.

What is eNAM?

National Agriculture Market or eNAM is an online trading platform for agricultural commodities in India. The market facilitates farmers, traders and buyers with online trading in commodities. It helps farmers in better price discovery and facilitates smooth marketing of their produce. The Ministry of Agriculture and Government of India launched the app in April 2016. The eNAM mobile application is available on Android for farmers and traders to bid and complete a transact on the app. It is available in 8 languages.

The objectives of the app to:

• Improve transparency in agricultural markets
• Levy single point market fees
• Have common tradable parameters
• Help farmers make informed decisions

What does Acuité Rating have to say about eNAM?

Acuité Rating believes that the commencement of the Rabi harvest season amidst the current lockdown crisis presents a good opportunity for online sale and trading of agricultural goods across the country. The report read that there is a risk of a domestic GDP contraction in the first quarter of the current fiscal. Even after that, the expectation of a gradual economic revival in the next 3 quarters, domestic economic growth is likely to be limited to a low single-digit in FY21.

They released the share of eNAM in total food grain production: (Source: Press Release)

The report read that since agriculture mandis are subject to the state government, the central government can't do much in the affair. The states have not been able to fetch a fair price to the farmers through the mandi (local market) auctions. This challenge has been there with APMC over the years.

They said, "In our opinion, this can be alleviated by taking advantage of the eNAM or electronic national agriculture market. It is one of the digital initiatives of the government that can bring about significant efficiencies in the system. The app will act as an effective tool to fight inflation or price distortions. It will also reduce the procurement burden on the exchequer. It will allow prices to be governed by market forces by keeping the middlemen at bay and allowing buyers and sellers a fair price. The mechanism, when fully operational, will allow free movement of food commodities across the country while mitigating the problems related to regional level hoarding.

How will eNAM help?

Acuité Rating said that it is encouraging to note that both the central and the state governments are urging farmers and traders to utilise eNAM. It will avoid physical presence at the auction site amidst the threat of COVID-19. The report said that farmers have started to bid online through eNAM platform at 585 mandis.

Currently, there is a plan to pool Rabi output across the states. The Government can effectively implement this via electronic identification of food commodity movements across the states. The eNAM mechanism can provide distant bidding facility for wholesale produce in APMC mandis without the need for the physical presence of a buyer or trader near the auction site.

The electronic platform also provides an e-payment facility through which traders can pay farmers after the trade. This will help in avoiding crowds.

Given it is a digital platform, eNAM provides a good avenue for social distancing in the current scenario while undertaking trade in agriculture produce seamlessly.