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e-Marketing of Agricultural Commodities- Karnataka's Initiative

G.Basavaraj & Ashok S Alur

Background

Agricultural marketing in India has undergone a rapid change owing to impressive growth in agriculture production, liberalization of trade, globalization of markets, increased incomes and urbanization.  These changing trends have had a profound impact through change in traditional marketing system which was primarily supply driven to the one with demand driven. Traditional marketing system which was highly regulated opened up owing to changing system and emerging agribusiness. Increase in marketable surplus of agricultural commodities, urbanization and changes in consumption pattern have also contributed to the changing systems. Accordingly, both the Central and State governments initiated policy reforms in marketing to address to the drawbacks in the existing marketing to meet the challenges and requirements of emerging business opportunities. This led to the evolution of new initiatives in marketing of agricultural commodities. These new initiatives include, bulk marketing, contract farming, organized retailing, commodity exchanges, cooperative marketing, direct marketing by farmers, Information and Communication Technologies (ICT) enabled supply chains, market linkages and specialized wholesalers etc. These new alternate marketing systems have brought about improved efficiency in marketing and market transformation. In the more recent years the focus of the reforms has been to bring more transparency in price discovery mechanism and ensure remunerative prices to farmers. Towards this direction, Government of Karnataka through its “Agricultural Marketing Policy 2013” has taken new initiatives by leveraging technology in agricultural marketing system. One such initiative is introducing e-tendering and e-marketing in different Agricultural Produce Market Committees (APMC’s) across the state.

 

The e-tendering system was first introduced in 2006-07 on pilot basis for paddy in Mysuru while e-marketing was launched during 2013 by Rashtriya e-Market Services Limited (ReMS), a joint venture of Karnataka Government and NCDEX Spot Exchange Limited. The new system is found to bring about transparency in tendering process and eliminating various malpractices prevailing in the marketing of agricultural produce.

 

E-Marketing/Online Marketing

To ensure remunerative prices to farmers through competitive price discovery mechanism a unique ICT based platform e-marketing was introduced in the regulated markets of the state. E-marketing is an ICT enabled platform that allows for display of the produce quality, bid by traders across different markets of the country and immediate payment for the produce sold. The platform at every stage of the marketing helps the farmers with access to information and ensures that the sale proceeds are deposited on the same day of sale transactions to the farmers bank account.

 

E-marketing- Registration requirements

Farmers have to ensure that they are registered in the platform to participate in trade and sell the produce.  The registration details include, farmers name and address, age, mobile number, bank account number along with bank name, branch address, IFSC code. The phone registration details will enable farmers to receive information through messages pertaining to the price quoted for their produce by the traders. With the receipt of messages, farmers can decide whether to sell or hold the produce. Provision of bank account number and details will ensure that the sale proceeds of farmers are transferred directly his account and reduce the waiting period of farmers till the transactions are complete.

 

E-marketing- Method of Sales

The method of sales of the produce through e-marketing is done in stages. In the first stage, after the farmers get his produce to the market yard, details about the farmer and the type of produce will be recorded at the gate entry. The produce will be weighed and lot number slip along with a unique identity number of the farmer will be generated for display of the produce before sales. The computer generated slip which contains all the details about the produce like type, weight, grade, unique identity number will be given to the farmer before the produce is offered for sales. Grading and standardization of the produce will be done before sales to indicate moisture content, inert matter, inferior quality, size, color, wastage and other grade parameters of the produce. The commission agent’s in-turn will provide the details of the produce for sales to traders who hold license issued by Director of Agricultural Marketing to participate in trade via e-marketing platform and take trade decisions. In the second stage, the interested traders will quote their prices online against the lot number of the produce offered for sales. As the platform for trade is networked, a time limit is set for traders to quote their price. After the prescribed time limit, the platform will display the highest prices quoted for different lots of commodities. The price information will be circulated online to the respective offices of the market yards, and through messages to the registered commission agents and farmers. After the receipt of the message, farmers have to give their consent to the commission agents regarding acceptance/rejection to sell the produce within a specified time period. If the farmers fail to convey their decision, the price quoted will considered as accepted for sales. In the third stage, the value realized for the farmers produce will be directly transferred within 24 hours to the farmers account provided at the time of registration. With the completion of online transfer the ownership of the produce will shift from farmer to trader.  

 

E-marketing- Charges

All the market activities of online marketing will be handled by service provider through a platform. The traders who purchase commodities via the online platform will have to pay a market charges of Rs 0.20 per 100 rupees of value realized which is specified by the Director of Agricultural Marketing. The service provider which collects the market fee in-turn will deposit the money to the bank account of the market committee.

As the produce is weighed and graded before it is offered for sales, farmers on the other hand have to pay charges towards weighment and grading of the produce as specified by the market committee. Apart from this, if the farmer sells the produce through a commission agent, the commission charges incurred toward the sale will be paid by the trader who procures the producer to the service provider. The service provider will transfer the commission charges to the commission agent’s bank account online.

 

E-marketing- Benefits

The uniqueness of the system is that the traders across markets in the country can participate in trade without their physical presence. As the e-marketing platform is networked, there will be more competition for bidding and hence farmers will realize better prices.  Also, the markets across the country will be well integrated. Apart from this, services like auction, weighment, invoicing, assaying, market fee collection, payment of proceeds to farmers are all automated and there is little scope for human intervention. Apart from this, the benefits include;

§  A transparent price discovery mechanism

§  Increased participation as the different stakeholders across the markets are involved

§  Increased competition

§  Single licensing system

§  Real time monitoring of the prices

§  Increased arrivals to markets

 

E-marketing- Status in Karnataka

The state of Karnataka has been the leader in the country to initiate reforms in marketing. The focus has been to improve efficiency in marketing, price discovery mechanism, creating infrastructure for processing and value additions and help farmers realize better value to their produce. Toward this end, the state has established Rashtriya e-Market Services Limited (ReMS), a joint venture launch of Karnataka Government and NCDEX Spot Exchange Limited on 22 February 2014 to leverage technology in agricultural marketing system. The Unified Market Platform (UMP) so far has integrated 105 markets across 27 districts and aims to cover all the155 main market yards as well as 354 sub-yards. Since its launch, there have been 7.5 lakh lots of trading done on the platform with 45 lakh bids. The transactions were worth 15,000 crore. 

 

Karnataka's Initiative- A model for other States

Among various states of the country, Karnataka has been the forerunner in market reforms and in devising innovative practices to improve agricultural markets and competitiveness. The state was first in implementing Model APMC Act and it has been piloting several new initiatives such as Bhoomi, Bhoochetana to boost productivity of rainfed agriculture, and Krishi Yantra Dhare” for access to farm mechanisation through custom hire centres to bring about reforms in agriculture. The e-marketing initiative of Karnataka has caught the attention of Union Government and to give it a big push the Hon'ble Prime Minister of India launched the electronic trading platform for National Agriculture Market (e-NAM) on 14 April  2016. In its first phase, the initiative will cover 21 mandis from eight states, namely, Gujarat, Telangana, Rajasthan, Madhya Pradesh, Uttar Pradesh, Haryana, Jharkhand and Himachal Pra desh. Further, 25 crops, including wheat, maize, pulses, oilseeds, potatoes, onions and spices have been included for trading on the platform. It is proposed that 585 markets across the country will be brought on the platform by March 2018. The states of Andhra Pradesh, Telangana, Maharashtra and Gujarat have already adopted the Karnataka model.

 

Conclusion

The e-Marketing initiative of Government of Karnataka will help in increasing competition in trade, access to markets, bring about efficiency and transparency, leverages technology by farmer to realize better price on the philosophy of "My Produce- My Price". However though it is considered reduce inefficiencies in the marketing system, it will not be a panacea for all deficiencies in agricultural markets. The complete success of the initiative depends on the willingness of the larger number of traders to participate in trade through online and the infrastructure needs on assaying facilities to ascertain grades and standards. Along with these are the issues of trade in online for horticultural commodities. Addressing these issues on priority will go a long way in helping farmers from the clutches.

 

 

 

 

 

 

 

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