NAM is envisaged as a pan-India electronic trading portal which seeks to network the existing APMC and other market yards 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.
NAM is not a parallel marketing structure but rather a device to create a national network of physical mandis which can be accessed online. It seeks to leverage the physical infrastructure of the mandis through an online trading portal, enabling buyers situated even outside the State to participate in trading at the local level.
The NAM electronic trading platform will be created with an investment by the Government of India (through the Ministry of Agriculture). It will offer a “plug-in” to any market yard existing in a State (whether regulated or private). The special software to be developed for NAM will be offered to each mandi which agrees to join the national network free of cost and necessary customization will be undertaken to conform to the regulations of each State Mandi Act.
There are three basic criteria for a State to propose mandis for “plug-in” to NAM:
The NAM basically increases the choice of the farmer when he brings his produce to the mandi for sale. Local traders can bid for the produce, as also traders on the electronic platform sitting in other States. The farmer may chose to accept either the local offer or the online offer. In either case the transaction will be on the books of the local mandi and they will continue to earn the transaction fee. In fact, the volume of business will significantly increase as there will be greater competition for specific produce, resulting in higher transaction fees for the mandi.
The national level platform is being developed by the Ministry of Agriculture, which will also bear the maintenance costs. As stated above, the integration costs for local mandis and customization of software, training etc. will also be paid for by the Ministry of Agriculture as a one-time grant at the time of accepting the mandi in the national network. Thereafter, the running costs of the software at the local level, staff costs for quality check etc. will be met from the transaction fee to be generated through the sale of produce. The intention is to avoid any upfront investment by the mandi when it integrates into NAM, and also enable it to support the running cost through additional generation of revenue.
NAM is being set up as part of an administrative arrangement and requires no enabling legislation as an electronic trading platform.
Ministry of Agriculture, Department of Agriculture & Cooperation (DAC) have mandated Small Farmers’ Agribusiness Consortium (SFAC) to act as the Lead Promoter of NAM. SFAC will select a Strategic Partner (SP) through open tender to develop, operate and maintain the NAM platform. DAC will provide budgetary grant support for this initiative. SFAC will operate the NAM with technical support by the SP.
The process of setting up NAM has commenced on 1st June, 2015 with the issue of RfP by SFAC to select a Transaction Advisor to help it develop detailed bidding documents to select the Strategic Partner. Bid process management for the selection of Strategic Partner has been completed. M/s Nagarjuna Fertilizers and Chemicals Ltd. has been selected as Strategic Partner for implementing the National Agriculture Market, through SFAC.
NAM is envisaged as a win-win solution for all stakeholders. For the farmers, NAM promises more options for sale at his nearest mandi. For the local trader in the mandi, NAM offers the opportunity to access a larger national market for secondary trading. Bulk buyers, processors, exporters etc. benefit from being able to participate directly in trading at the local mandi level through the NAM platform, thereby reducing their intermediation costs. The gradual integration of all the major mandis in the States into NAM will ensure common procedures for issue of licences, levy of fee and movement of produce. In a period of 5-7 years we can expect significant benefits through higher returns to farmers, lower transaction costs to buyers and stable prices and availability to consumers. The NAM will also facilitate the emergence of integrated value chains in major agricultural commodities across the country and help to promote scientific storage and movement of agri goods.