 "NAM con cover hardly 10 per cent of agri produce due to quality differences")
Quality variations will ensure barely 10 per cent of commodities are traded on the National Agricultural Market (NAM), an electronic link among various mandis in the country, according to experts.
The government switched on the NAM on Thursday, linking Agriculture Produce Market Committee (APMC) markets. There are 6,500 APMCs in the country, of which 585 large district-level mandis will be being linked by the NAM.
A farmer in north India can sell his produce on the NAM to a trader in the west or south based on price. This will make a significant difference because there is no state or national price. Futures exchanges poll to arrive at prices but it is not an efficient mechanism.
However, wide quality variations in farm produce within a state, and even wider variations across states, pose a challenge for the new market. Commodities with similar standards nationally are few. Wheat in Punjab and Haryana is of medium quality while that in Madhya Pradesh and Gujarat is superior.
An electronic platform can only trade standardised commodities. For the rest, the NAM might not be the right platform.
A state agricultural market model, launched in 2009 by the NCDEX, provides some lessons in market integration. The Karnataka model, a joint initiative of the government of Karnataka and NCDEX e-Markets, was the first such initiative. “It took us two years to get the first mandi, Gulbarga, off the ground. Now we have linked 130 markets in three states,” said Rajesh Sinha, chief executive officer of NCDEX e-Markets.
Other states where linkages of the mandis have begun are Andhra Pradesh and Telangana. Gujarat has awarded a contract to launching a project.
The NAM allows states to have their own electronic platforms and they can decide on linking these to the national exchange.
Farmers can sell their produce on the e-platform after having its quality graded by recognised assayers. As the trade is executed, farmers are paid money financed by network banks. When after settlement money is paid by the buyer, the bank money is settled.
Sinha said his platform had linked the Aadhar card and other details of farmers in Andhra Pradesh. Any farmer can use these to sell his produce.
Several banks finance farmers who choose to sell later and want to store their produce. This can be done when the produce is hedged — sold in the futures market to be delivered at a later date.
Maharashtra has saved a significant amount by procuring sugar for on the NCDEX e-markets platform. Karnataka last year saved Rs 900 crore, according to the estimates of a mandi official, as falling copra prices resulted in a private trade on the electronic platform.
The government switched on the NAM on Thursday, linking Agriculture Produce Market Committee (APMC) markets. There are 6,500 APMCs in the country, of which 585 large district-level mandis will be being linked by the NAM.
A farmer in north India can sell his produce on the NAM to a trader in the west or south based on price. This will make a significant difference because there is no state or national price. Futures exchanges poll to arrive at prices but it is not an efficient mechanism.
However, wide quality variations in farm produce within a state, and even wider variations across states, pose a challenge for the new market. Commodities with similar standards nationally are few. Wheat in Punjab and Haryana is of medium quality while that in Madhya Pradesh and Gujarat is superior.
An electronic platform can only trade standardised commodities. For the rest, the NAM might not be the right platform.
A state agricultural market model, launched in 2009 by the NCDEX, provides some lessons in market integration. The Karnataka model, a joint initiative of the government of Karnataka and NCDEX e-Markets, was the first such initiative. “It took us two years to get the first mandi, Gulbarga, off the ground. Now we have linked 130 markets in three states,” said Rajesh Sinha, chief executive officer of NCDEX e-Markets.
Other states where linkages of the mandis have begun are Andhra Pradesh and Telangana. Gujarat has awarded a contract to launching a project.
The NAM allows states to have their own electronic platforms and they can decide on linking these to the national exchange.
Farmers can sell their produce on the e-platform after having its quality graded by recognised assayers. As the trade is executed, farmers are paid money financed by network banks. When after settlement money is paid by the buyer, the bank money is settled.
Sinha said his platform had linked the Aadhar card and other details of farmers in Andhra Pradesh. Any farmer can use these to sell his produce.
Several banks finance farmers who choose to sell later and want to store their produce. This can be done when the produce is hedged — sold in the futures market to be delivered at a later date.
Maharashtra has saved a significant amount by procuring sugar for on the NCDEX e-markets platform. Karnataka last year saved Rs 900 crore, according to the estimates of a mandi official, as falling copra prices resulted in a private trade on the electronic platform.
