Trade in agricultural commodities on e-NAM is hit by quality doubt: report

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Lack of confidence in the quality of traded agricultural products has resulted in a low level of activity on the government’s national e-commerce platform, National Agricultural Mandi (e-NAM), Acuity Ratings and Research said in its last report.

The share of e-NAM in total food grain distribution in India has only averaged 5.8% since its inception in April 2016. This is surprisingly low compared to the significant progress that has been observed in the implementation of important digital initiatives, namely Jan-Dhan, Aadhar and Mobile (JAM) as well as successes in Direct Benefit Transfer (DBT).

“Since there is no standardized methodology for independent assessment in Agricultural Commodity Market Committees (APMCs), a system of accredited testers can be implemented centrally. Under this system, growers can obtain third-party evaluation certification from approved testers and market their products online.

The lack of a pan-Indian agricultural trading platform has always been a structural gap that has continued to lead to frequent mismatches between supply and demand for farmers, volatile agricultural commodity prices and inflationary trends. diverging across India.

Buyers, on the other hand, can offer a price based on the certification, thus avoiding the need for physical inspection.

The digital transaction and the contract between buyers and sellers on the basis of a standard quality certification and regulated by the respective APMC will optimize the supply-demand balance and free the government mechanisms from unnecessary monetary interventions.

With the rapid penetration of the India-wide digital platform, we are witnessing a standardization of agricultural commodity prices in all states, leading to better inflation management and a consolidated fiscal position. . In addition, the success of the system will also have to be driven by better logistics and better interstate movement of goods, according to the report.

“A nationwide strengthening of the e-NAM system by appointing third-party testers will make it considerably more efficient. The successful implementation of a nationwide agricultural trade market will be more effective in improving farm incomes compared to increases in minimum support prices (MSPs) of agricultural products or frequent forfeitures of agricultural loans. In addition, the government can take measures to facilitate the development of agro-industries which can significantly increase the incomes of rural households, ”the report adds.

The e-NAM is an initiative that can bring significant efficiency gains to the agricultural ecosystem and act as a double-edged sword to fight inflation and reduce the tax burden, if implemented well. In this way, the two main concerns above, which are potential fallout from a consumption multiplier, can be resolved.

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