In the wake of COVID19, agriculture like many other sectors is suffering due to broken supply chains, insufficient aggregation, lack of labourers, lack of awareness and information, and an acute demand/supply mismatch. As a result, millions of farmers, especially the smallholder farmers, are staring at huge losses of not only their produce but their income and livelihood in the coming months without proper interventions that can shield them from the crisis.

In the above context, an expert panel was brought together to discuss – ‘Are alternative markets the way forward to tackle disruptions in the Agri supply chain?’ The panel discussion was moderated by Mr. N.V. Ramana, Advisor, Samunnati and the esteemed speakers of the panel were Ms. Neelkamal Darbari, Managing Director, Small Farmers’ AgriBusiness Consortium (SFAC); Mr. Ravi Varanasi, Chief Business Development Officer, National Stock Exchange (NSE); Mr. Vijay Kumar – Managing Director & CEO, National Commodity Derivatives Exchange (NCDEX); Mr. Rajesh Sinha – Managing Director & CEO, NCDEX e-Markets Limited (NeML) and Mr. Karthik Jayaraman – CEO and Co-Founder, WayCool.

The major discussion points of the panel were (i) What are the challenges faced by FPOs in the wake of COVID19? (ii) How can alternative market and digitisation of market platform help overcome the challenges faced by FPOs and their farmers? (iii) How can we prioritize the initiatives and what can be done to resolve the challenges?

Here are some key takeaways from the discussion:

1.  Policies Recommendations

  • Recognising Social capital as a tradable document – It is important to recognise social capital as a tradable document. If a farmer stores goods in the warehouse and receives a receipt, then that becomes a tradable document. The warehouse that is accredited to the Warehousing Development and Regulatory Authority(WDRA) to be also declared as sub mandi yards.
  • Trading outside the confines of APMC – It was discussed that there is a need to free up the farmers in the trade operations enabling the farmers, and the buyers and the sellers or traders, etc to buy from anywhere. In the future, there would be possibilities for farmers to trade from outside the mandis and thereby reduce their costs. There has been a recent announcement from the Government of India, that will cover the trade from outside the mandis on 3rd June 2020.
  • Price Information Symmetry and Integrated Markets – The prices information asymmetry should be removed from the agriculture market system so that, every market of the state can use a single platform creating – one State, one marketplace model. Integrated market is only possible when every state recognises the State market. Integrated markets are the initiative to recognize the local markets.

2. Implementable Recommendations for the Partners in Agricultural Value Chain

  • Digital Platforms: Revolutionary step in the way commodities are traded in India – Markets have been digitized through the e-Nam portal and the thereafter the organisation has witnessed many positive developments. Introducing digitization in training, capacity building and trade operations is the need of an hour. Digitization of the platform would enable easy access of the service by the stakeholder and would significantly increase the service efficiency and adoption rate.
  • Introducing multiple operators in the supply chain: Choice to be available to farmers It is the right time to have multiple operators to operate multiple supply chains into which each farmer can sell. Today, farmers are not given options to sell their products. There is a limitation of the flow of the produce into a limited set of mandis. In that direction, the most recent announcement by the Government is commendable where it indicates as at free purchase by every farmer free to sell to anybody who can directly pick up the material and liquidated any market they choose to.
  • Futures Market – Shift in the Power from Consumers to Farmers – The major focus has always been on the consumers of the country. The Government has ensured the efficiencies and converted Indian agriculture to evolve from a deficient nation to the surplus nation. Transformation cannot be continued on the same lines as it has now become too big even for the government to support the farmers in terms of buying crops, size of support, and physical holding. The futures market is to allow the same thing to happen without the government being involved. So, the farmer uses the futures market and the buyers buy the commodity. And the farmer does not produce the commodity until there is a buyer.

3. Key Takeaways from the roundtable discussion

  • There is the need for innovation and stable regulatory structure. The stable regulatory structure applying to all would mitigate the risk and bring in transparency in trading settlement centre. Introducing telecommunication network in India for trading to make the entire country a single finance digital platform would require significant investment in amount of technology, finances. Innovation is much needed to bring reform to transform the market into a single unit.
  • In terms of the future, the program for 10,000 FPOs has been launched recently and ecosystem is waiting for guidelines to formulate and the program to start rolling. It would mean organising their trade and getting better benefits both in terms of cost reductions as well as having a better infrastructure or having their marketing avenues or finances for all the members of the FPOs.
  • If the entire technology spectrum is to be seen then demand-driven production, then that could be a game-changer in terms of better price discovery for the farmers. This would be benefitting the small and marginal farmers.
  • The Government should start using tools like eNam and eNWR to begin procurement from farmers directly, which has not happened yet, to set an example. For example, the way UPI transaction has taken over the payment system as it has been widely accepted by the public and private sector.
  • The role of the Government can only be that of a facilitator. There is a huge space available for private enterprise to step in and take over the work in terms of quality assaying. The private enterprise must step in either in the form of PPP models where we work together for a period and then we withdraw, and the private sector takes over

To watch the full discussion, please click here https://www.youtube.com/watch?v=uNkj2O8ICxA