Answer:

A common agriculture market is one wherein there is seamless movement of agriculture goods across districts and state borders, requiring only one license to trade and doing away with intermediate transaction costs.

India has a fragmented agriculture market because of following reasons:

♤ APMC Act: It has led to development of mandis with middlemen leading to fragmentation.

♤ Differences in remoteness and connectivity: some agri regions are well connected while others are isolated even lacking roads

♤ Local market power of intermediaries: concentration of power in few hands leading to abuse by intermediaries of mandis. They are averse to any reform.

♤ Disinterest of states: Since Mandis are source of revenue for states they are not interested in diluting them.

♤ Exposure to shocks: shocks affect regular supply chain hampering dependency

♤ Poor storage and supply chain: Limited storage capacity, inadequate mandi infrastructure and poor transportation facility.

♤ Multiple taxes across trade.

Lack of a common market results in harm to producers, traders, processors, consumers, etc.:

♤ Inadequate competition: fragmentation leads to requirement of licenses for each mandi by traders hampering adequate participation leading to lack of specialization in subsectors.

♤ Inefficient resources allocation: most of the money is spent on paraphernalia equipment thus denying resources for core activity performance.

♤ Large number of intermediaries: denying price benefits to producers, processors and consumers.

♤ Low cost for producers, high cost for consumers.

♤ Greater exposure to travesty of natural shocks, crop failures etc.

National Agriculture Market is a pan-India electronic trading portal which seeks to network existing mandis and other market to create a unified national market for agricultural commodities. NAM is a “virtual” market but it has a physical market (mandi) at the back end. It will help in improving marketing and promoting efficiency in following ways:

♤ Increase in competition: producer can either sell to local traders or online, more trades even from other states can participate by having only one license per trader.

♤ Reduction in cost and post-harvest losses: reduction in the number of intermediaries, single levy of transaction cost, assured sales etc. would lower the cost and reduce losses

♤ Facilitate emergence of integrated value chains in major agricultural commodities across country and help to promote scientific storage and movement of agri- commodities.

♤ Efficient resource allocation.

eNAM would lead to One Nation – One Market and this is an important step towards

doubling farmers’ income in the next five years.