Understanding e-NAM

“e-NAM is not just a scheme but it’s a journey which aims to benefit the last mile farmer and transform the way they sell their Agri produce. This intervention brings immense benefits to our farmers in augmenting their income by enabling them to realize competitive & remunerative prices in a transparent manner without incurring additional costs.”

– Ministry of Agriculture and Farmer Welfare, 2021.

The e-National Agricultural Market or e-NAM was launched on 14th April, 2016 as an online trading mechanism to enable seamless trading across Mandis in India. The lead promoter of e-NAM is the Small Farmers’ Agribusiness Consortium (SFAC), a registered society of the Department of Agriculture, Cooperation & Farmers’ Welfare under the Ministry of Agriculture and Farmer Welfare. e-NAM was set up as an expansion of Karnataka’s Unified Market Platform (UMP) model at a national level and acts as a single window service for Agriculture Produce Market Limited (APMC) related services. This model is not a parallel market, but a platform to connect the existing physical markets. Farmers can access the e-NAM portal through their phones from anywhere or at kiosks which are made available at Mandis making this platform user-friendly. On e-NAM platforms, farmers can register and trade their produce independently or through commission agents. This trading is done through trading computers or the mobile app and payments for the same are through debit cards, UPI facilities etc. To date, e-NAM connects over 1000 Mandis and 1.76 crore farmers, across 18 states and 3 union territories in India. (Ministry of Agriculture & Farmers Welfare, 2022)

How it Works

The working of this platform is quite simple. After registering themselves and their product, the seller is required to send their product to the mandi for weighing and quality assessment. Once the product passes the quality checks, the seller then proceeds to participate in an e-auction on the platform. Once sold, the transaction is made through multiple payment methods and the product is sent out for delivery to the buyer.

Aims and Advantages of e-NAM

Idealistically, this platform presented many advantages for the stakeholders as it worked towards creating a competitive, fair and wider market for small and big farmers without the interference of middlemen. The introduction of a nation-wide trading platform means having the entire country as a market. E-NAM, through its intra-state access, strived to create a competitive market with multiple buyers and sellers which can offer the farmer a better price for their agricultural product, removing their dependence on MSP. This model also aimed to combat cartel formation and market manipulations by local buyers who dominate smaller I. e-NAMs can result in a lower price spread among surplus and deficit states meaning that states with the surplus of a crop received the same/a similar price as a state with a deficit of the crop; thereby reducing the price fluctuation due to local demand/supply. Minimizing tax burden by establishing a single point levy (i.e. tax is collected at only one point in the supply chain) was another major incentive for traders to adapt to the electronic portal.

e-NAM also aimed to achieve administrative efficiency with centralization of licenses required for trading; by enabling buyers to purchase agricultural products without being physically present in Mandis and creating a centralized platform for secondary trading. A reduction in book-keeping burden is also bound to take place as all data would be registered online.  

Better prices from sales are an important incentive for farmers, pushing them to experiment with technology, to increase production and to modify farming methods. E-NAM also provided a wider market for alternative crops which earlier would have little to no local demand thereby incentivizing crop rotation and alternative cropping patterns. Unifying quality standards and provision of assaying, weighing and soil testing facilities near the mandis was another plus point of this model as these facilities would all be available at one place making the process faster.

Problems With e-NAM

There have been many chinks in the plan which can be looked at through the 3 I’s – infrastructure, institution and information. 

Infrastructural impediments have been bad rural roads, lack of scientific and cold storage provisions, assaying facilities which furthered the already existing low market density in e-NAMs. These I have limited capacity making it hard to deal with produce during peak seasons. E-NAM has many quality parameters, but at the same time, their Mandis lack the resources to test the products for the same. Assaying as a facility assists poor farmers in getting a better price for their produce – thus a lack of aforementioned facilities harms the small and marginal farmers who e-NAM wishes to help. A lack of technical expertise, inability to handle large volumes plus the running and setting up cost of the assaying facilities acts as a major deterrent in this process.

Generally, farmers aren’t the ones handling packaging and transportation of goods, which they have to do if they use e-NAM. Their lack of experience and knowledge in this very area has resulted in the above-mentioned logistic issues. This was a huge blow to the supply chain with buyers seldom receiving their orders in time. Moreover, this is an online portal thus no access to operational devices, regular electricity, high-speed internet and technological know-how poses a problem with implementation.

A major institutional bottleneck was the burden of unskilled human resources at the APMCs. There have also been legal problems because of the inability of states to amend their APMC Acts making the procurement of a single trading license and the establishment of a single point levy difficult. Many farmers were also unhappy that their payments would be directly transferred to banks as they believed that the banks would withhold their money on account of unpaid loans. Delays in payments due to technological discrepancies also created distrust in the average farmer’s mind. e-NAM biddings take place at set times making it difficult for farmers to be able to sell their produce as and when they need money.

Government pressure to reach targets has led to people using e-NAM as a formality, for many farmers registered details after they conduct their sale in-person, violating the portals’ aim of transparency. This is because according to them, e-auctions were more time consuming. They also expressed their trust and comfort in in-person transactions. 

Informational obstacles have also been many. In research conducted by Mehta et. al., only 29% of the respondents were aware about e-NAM. Farmers also received incomplete and false information regarding this scheme creating a hesitancy for the same. This led them to continue using physical markets post introduction of e-NAM. Lastly, buyers are a little wary of purchasing fruits and vegetables without seeing the produce for themselves, which for many becomes a deal-breaker leading them to not trade via the portal. Research also shows that farmers fear they will receive a lesser price if their goods receive an average grade on the quality check and believe that their penalties for poor quality goods will be lower if the buyers visually inspect the goods. 

Current Scenario

With social distancing as a priority, an efficient e-NAM system could be helpful to farmers in the pandemic. As of May 2020, digital payments worth INR 708 crore have been made, benefiting 1.25 lakh farmers. (Invest India, 2020) On 5th May, 2021, Kotak Mahindra announced themselves to be the payment partners for e-NAM providing payment, clearing and settlement services to farmers on the portal. (Monteiro, 2021) SFAC also made changes to the way they work to accommodate social distancing measures by letting FPOs trade produce from collection centers without bringing them to an APMC. They introduced transport tracking features along with ‘Negotiable Warehouse Receipt’ (e-NWRs) based trading modules to facilitate the trade from warehouses itself. (SFAC, 2020)

In theory, e-NAM is a thoughtful scheme, but its application is poorly structured. There is a total of 6946 regulated Mandis in the country and only 8.42% are connected using e-NAM making this facility available to only 14% of farmers in India. In spite of being of use to only 14% of the farmers in India, their response to e-NAM has been satisfactory given the profits they are able to realise from it. But it is important to note that given the number of stakeholders in the Agri-value chain, it is a huge task to complete within two/three years. However, if states give it more attention along with bringing the necessary amendments in their APMC acts, the change can come sooner. e-NAM’s success depends on the grading warehousing infrastructure and sorting at the Mandis. A faster assaying system at market yards keeps the stakeholders interested in the policy therefore the Centre should come forward to invest in research and development in assaying technology. Start-ups in this field should also be encouraged with support of funding and miscellaneous resources.

About Tanishq Tiwari

Tanishq Tiwari, the Founder of Beyond Margins, is a student of Economics with an inclination to research. When not occupied by discussing matters concerning Policy, Development and Trade, you can find her nose buried in a musty copy of Jane Eyre.

Tanishq Tiwari

Tanishq Tiwari, the Founder of Beyond Margins, is a student of Economics with an inclination to research. When not occupied by discussing matters concerning Policy, Development and Trade, you can find her nose buried in a musty copy of Jane Eyre.

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