Article

Electronic National Agricultural Markets, IIM Kozhikode Society & Management Review
8(2) 143–155, 2019
Impacts, Problems and Way Forward © 2019 Indian Institute
of Management Kozhikode
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DOI: 10.1177/2277975218807277
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A. Amarender Reddy1
Mehjabeen2

Abstract
There are about 585 Agricultural Produce Market Committee (APMC) markets which were linked to Electronic National
Agricultural Market (eNAM) in 14 states in India by 2018. There was a slow but definite increase in the adoption of eNAM
by the stakeholders. There has been no detailed study so far on the impact of eNAM on prices received by farmers and
bottlenecks faced in introducing this e-market platform in the existing markets. This article fills this research gap. The
econometric results show that there has been an increase in prices received by the farmers and more markets have
linked to eNAM due to the introduction of e-auction. Other benefits of eNAM include timely online payment of sale
proceeds to the farmer’s bank account and reduced chances of collusion among traders. However, on the flipside, due
to lack of quick assaying facilities, participation of distant traders has not picked up, which has resulted in no significant
increase in competition. There is a need for increasing the participation of the stakeholders through formation of farmers
groups, private sector participation in the maintenance of eNAM, convincing the traders and commission agents to
use eNAM and linking warehouses and rural periodical markets to eNAM to increase the scale, scope and efficiency of
market operations.

Keywords
Electronic markets, electronic auction, price discovery, market efficiency, agricultural markets, India, market innovations

Introduction under-weighment, delayed payments and unauthorized

Agriculture is a provincial (state) subject in India. Many
Indian states have Agricultural Produce & Livestock Market
Committee (APMC) markets in place as the first selling
points for farmers for their agricultural produce since the
early 1960s under the APMC Act of 1963. Although APMC
markets were established with the good intention of facili-
tating fair market practices by introducing open outcry
system of auctioning, they have become breeding grounds
to exploit the farmers over the years. The problem is not
APMC itself, but the state’s failure to reform its APMCs,
adopting technology and creating competition by encourag-
ing private investment. Over the years, traders and com-
mission agents have indulged in various malpractices such
as collusion in bidding at lower price for the produce,
deductions to the extent of 10–20 per cent of the value of the
produce as market fees, commission, loading and unload-
ing charges and involvement of too many intermediaries
(Aggarwal, Jain, & Narayanan, 2017; Chand, 2016; Reddy,
2016a, 2016b).
The Model APLM Act, 2017
In the recent past, the Government of India has emphasized
market reforms to encourage the states to adopt the
Agricultural Produce and Livestock Marketing (Promotion
& Facilitation) or APLM Act, 2017. Many states have
amended their APMC Act to incorporate several compo-
nents of the model APLM Act.

1
Director (Monitoring and Evaluation), National Institute of Agricultural Extension Management (MANAGE), Hyderabad, Telangana, India.
2
Periyar University, Department of Economics, Salem, Tamil Nadu, India.

Corresponding Author:
A. Amarender Reddy, Director (Monitoring and Evaluation), National Institute of Agricultural Extension Management (MANAGE),
Rajendranagar, Hyderabad 500030, Telangana, India.
E-mails: amarender.reddy@icar.gov.in; anugu.amarender.reddy@gmail.com
144 IIM Kozhikode Society & Management Review 8(2)
The model APLM Act aims at promoting transparency,
competition, increasing divestment and infrastructure in
agricultural markets across states. It contains provisions
such as private markets, direct marketing, contract farming,
consumers’ markets, farmers’ markets, single levy, single
licence and provision of e-auction through electronic
National Agricultural Market (eNAM) to increase compe-
tition and for better functioning of the agricultural markets.
Investments to introduce e-markets in the existing APMC
markets will be considered as public good and will be
funded by the government (Cordella & Bonina, 2012) as it
is expected to benefits the farmers immensely.
eNAM
National Agriculture Market (eNAM) is a pan-India elec-
tronic trading portal to interconnect the existing APMC
markets to form a national market for agricultural commodi-
ties. The eNAM portal was developed to provide a one-stop
facility for all information and services related to APMC.
It provides information on the arrival of commodities to
market and the respective prices, buy and sell trade offers,
provision to respond to trade offers, payment settlements
and grievance redressal among other services, while the
material flow (agriculture produce) continues through the
APMC markets. The online market reduces transaction
costs and information asymmetry. Over the years, the
objective of eNAM is to separate the physical movement of
commodities from the trading activities using warehouse
receipts and grades to reduce transaction costs (Coulter
& Onumah, 2002).
Agriculture marketing is administered by the states as
per their agri-marketing regulations. The state is divided
into different market areas; each of it is administered by an
APMC market which imposes its own marketing regulations
including market fees, permissible commission charges
levied by commission agents. This fragmentation of markets,
even within a state, hinders the free flow of agricultural
commodities from one market area to another, multiple
handling of agricultural commodities and multiple levels
of market charges escalate the prices where its larger share
goes to the middlemen without benefiting the farmers.
The eNAM addresses these challenges by creating a
unified market through an online trading platform at the
national level and promotes uniformity with standard
procedures across the integrated markets, seamless infor-
mation flows among buyers and sellers through the trans-
parent automatic auction process and price discovery
(Schmitz, 2000). Under eNAM, farmers get access to buyers
across the nation, and the price is discovered based on the
quality of the produce and its nationwide demand. It also
ensures online instant payment. However, the use of eNAM
by the farmers depends on the relevance of available
e-market options to the needs of the farmers, traders and
other stakeholders, timeliness in auction and payments,
reliability in transitions and payment systems, scope of
operations and scalability for wider participation, easy
access to all farmers and traders and easy usage and
navigation experience (Lee, Shin, & Lee, 2009).
Under eNAM, in all 585 mandis, physical trade was
replaced by electronic trade as of 28 August 2018 in 14
states. All the stand-alone e-markets are scheduled to be
electronically linked to enable distant traders to participate
in bidding to make eNAM a truly national market for price
discovery later. So far, 73 lakh farmers, 54,000 commis-
sion agents and over 1 lakh traders are registered on the
eNAM platform. This number is a minuscule, given that
there are more than 12 crore farmers in India. eNAM was
envisioned as a unified national electronics agriculture
market, faced multiple hurdles in implementation.
The traded volume of agricultural produce on eNAM is
only 11 million tons against 279 million tons of grain pro-
duction in 2017–2018. The traded value is just to `29,000
crore in 2017–2018, but it is also less when compared
to the value of agricultural produce in India, which is
`13 lakh crore (Reddy, 2018a, 2018b).
The slow pace of growth and reported obstacles in the
implementation of eNAM is the motivation for this study.
Primarily, the article examines the impact of eNAM by
choosing the best functioning eNAM from the 585 eNAMs
by examining the prices and market arrivals. Then it explores
the opinion of the traders, farmers, commission agents and
market committees in its implementation. The article ends
with the analysis of the functioning of eNAMs and explore
possible improvements.
Objectives of the Study
The eNAM was introduced in 585 APMC markets in 2016,
now all of them are working, but with variations in success
rate. Most of the eNAMs suffer from implementation
bottlenecks in using assaying systems as most of the farmers
and traders do not use them due to technical problems to
grade the produce. Some of the eNAMs are using e-auction
platform to e-actions only and all other market-related
activities are done manually. It has reduced the full utiliza-
tion of the eNAM platform for its intended purpose of
market efficiency. There are a few exploratory and some
empirical studies which examine the impact of the
e-markets in Karnataka (Reddy, 2016b), but there is no study
so far on eNAM to establish its impact on the prices received
by the farmers, market efficiency and market arrivals
(Aker, 2010; Chand, 2016; Lee, 1996). The present study
fills this gap in the literature by employing difference-in-
Reddy and Mehjabeen 145
difference (DiD) method to estimate the impact of eNAM
on prices and market arrivals. The article explores the prac-
tical problems that arise while implementing the platform
in different markets and also provides some solutions to
make it a success.
Methodology and Sampling Framework
All of the 585 APMC markets linked to the eNAM portal
were listed for the study. However, it was found that most
of the eNAMs have not fully adopted all prescribed opera-
tions such as e-auctioning, e-gate pass and the like. Hence,
only those eNAMs which have fully adopted all of these
operations have been selected for the study as a treatment
group. To keep the costs low, those markets in which rice,
pigeon pea and groundnut are predominantly traded (in
terms of the share of these crops in the total yearly market
turnover) have been chosen. After examining various oper-
ations followed by the online platforms such as e-entry pass,
e-auction, e-permit, information dissemination via SMS and
online payment to farmers, 12 eNAMs have been short-
listed as a treatment group along with 12 non-eNAM markets
as a control group to examine the performance of eNAMs
against non-eNAM markets. The research used DiD
analysis to understand the impact of the eNAM on the price
received by the farmers and market arrivals. The monthly
average prices and market arrivals were collected from the
AGMARK portal for both eNAM and non-eNAM markets.
Difference-in-Differences
Monthly data for the prices and arrivals from January 2015
to July 2018 for the selected commodities, such as paddy,
pigeon pea and groundnut, were collected for both the
eNAM (treatment group) and the non-eNAM (control
group) markets. The research uses the DiD method to com-
pare prices and market arrivals of the treatment group with
the control group before and after eNAM implementation
as the data before and after eNAM implementation for both
treatment and control is available. In a regression frame-
work, DiD equitation for prices (average monthly price)
is given in Equation 1 and for market arrivals (monthly) is
given in Equation 2:
Price it = b 0 + b 1 (treatment dummy
[eNAM market = 1; non - eNAM market = 0]) it +
b 2 (after dummy [monthly data before int roduction
of eNAM = 0; monthly data after int roduction (1)
of eNAM operations = 1; monthly data before
int roduction of eNAM = 0]) it +
b 3 (treatment dummy) * (after dummy) it + b 4 X it + u it
Table 1.  The Results (Means) of Difference-in-difference
Before After Difference
Treatment (eNAM) b0 + b1 b0 + b1 + b2+ b3 b2+ b3
Control (non-eNAM) b0 b0 + b2 b2
Difference b1 b1 + b3 b3
(treatment–control)
Source: The authors (derived from Equation 1).
Market Arrivals it = b 0 + b 1 (treatment dummy
[eNAM market = 1; non - eNAM market = 0]) it
+ b 2 (after dummy [monthly data before int roduction
  (2)
of eNAM = 0; monthly data after int roduction
of eNAM operations = 1;]) it + b 3 (treatment dummy)
*(after dummy) it + b 4 X it + u it
where β3 is the DiD in mean prices in Equation 1 between
treatment (eNAM) and control (non-eNAM) groups. The
results are derived from the simplification of Equation 1.
The DiD approach uses the dummy variable approach for
deriving impact of the eNAM compared to the non-eNAM
after controlling for initial conditions. Each group (treatment
and control) means and the differences between treatment
and control and DiD that is difference between treatment
and control after deducting the initial differences among
these groups (bottom right corner) are shown in Table 1.
A similar analogy is applicable for Equation 2 for market
arrivals.
There may be a selection bias in selecting 585 APMC
markets from among the 7,000 APMC markets for upgrad-
ing them as eNAM in 2016, based on some criteria such as
higher market arrivals, strategic location in terms of near-
ness to large towns and so on. Hence, we have included
population density in the district in which the markets
are located as an explanatory variable (denoted as Xit) to
control for other factors.
Here, we are concerned only with β3, which indicates
the impact of eNAM (DiD) on prices received by farmers
in treatment (eNAM) group when compared to control
(non-eNAM) after deducting the initial price differences
among treatment and control groups. A similar analogy is
applicable to measure the impact of eNAM on market
arrivals based on Equation 2.
Exploratory Analysis and Farmer-level Data
In addition to the mean monthly price and monthly market
arrivals collected from AGMARKNET, interviews have
been conducted with farmers (120; from villages close to
the eNAM), traders (15), commission agents (15), market
committee secretary (1) and other implementing agency
functionaries (5–10 depending on their availability) for
documenting their opinions about eNAM. Questions such
146 IIM Kozhikode Society & Management Review 8(2)
as what is the existing level of infrastructure, what addi-
tional infrastructure is required, knowledge and skill gaps
and how to improve them to increase the utility of the
eNAM scheme to the farmers have been asked.
eNAM Modalities and the Process Flow
The Government of India is encouraging the states to intro-
duce eNAM as a ‘One Nation One Market’ strategy. It
improves transparency in price discovery, reduces possibil-
ity of formation of cartels among the local traders as distant
traders too can participate in the e-bidding (traders from
Mumbai and Delhi can bid to buy turmeric in the Nizamabad
eNAM; Chand, 2016). It also facilitates direct bidding by
retail food chains like Reliance Fresh and exporters and
agro-processing industry by eliminating the middlemen.
For example, a cotton miller in Mumbai can bid for the cot-
ton put up for auction in the e-market of Warangal district
of Telangana.
To introduce eNAM, the states have to ensure that (a) a
single traders licence is valid to trade in all markets within
a state, (b) a single point levy of market fee and (c) elec-
tronic auction as a mode for price discovery is allowed.
Figure 1.  Process Flow Chart of an eNAM in India
Source: The authors.
The eNAM is a national e-market platform for transparent
sale transactions and price discovery initially in regulated
markets and willing states need to accordingly enact suit-
able provisions in their APMC Act for promoting e-trading.
Liberal licencing of traders/buyers and commission agents
by the state authorities without any pre-condition of physical
presence or possession of shop/premises in the market yard
is a precondition for introducing eNAM. Harmonization of
quality standards of agricultural produce and provision for
assaying (quality testing) infrastructure in every eNAM to
enable informed bidding by buyers is another precondition
for effective functioning of eNAM.
Market Environment of eNAM
The process flow of eNAM is presented in Figure 1. Each
eNAM met the marketing needs of the farmers from about
20 to 50 nearby villages. On an average, in each village
there were about 300 farmers. It means each eNAM is con-
structed to cater to the marketing needs (mostly to sell their
farm produce) of approximately about 6,000 to 15,000
farmers. On an average about 50 to 100 active traders buy
the produce through each eNAM. Most of the traders were
Reddy and Mehjabeen 147
also registered as commission agents. These markets are
active only during the harvest season from October to
December during the monsoon harvest and during the
peak market arrivals of post-monsoon (March and April).
Generally, two to three and at most five commodities
dominate the trade in terms of value, depending on the total
area of these crops in the nearby 20–50 villages.
Process Flow of eNAM
The process flow of eNAM is presented in Figure 1. The
farmers have to clean and grade the produce before bring-
ing it to the eNAM. An e-gate entry pass is then given to
the farmer with a unique lot ID after recording the type and
the weight of the commodity, along with the farmer’s
Aadhaar-seeded bank account. Then, as per the farmer’s
option, the lot can be assayed by an assaying lab within the
premises of the eNAM (assaying is not mandatory at
eNAM) or directly displayed on the auction platform. After
the assaying certificate with a specified grade to the
produce is issued, both the certificate and the lot number of
the produce are displayed by the commission agent or the
farmer himself on the auction platform. The local traders
and other buyers then physically verify the produce and bid
online either from their or on-premises computer or through
a mobile app for each lot between 9:30 am and 12:00 pm.
Traders and buyers from other markets can also bid for the
produce based on its grade displayed online. It was noticed
that for each lot, about 3–10 buyers bid depending on the
season and market arrivals. However, the participation of
buyers from distant markets has been rare and varies from
10 to 30 per cent of the trade depending on the market
conditions. The online auction gets closed at 12.10 pm.
Automated price discovery mechanism is issued by the
computer system to discover the highest bid for each lot
following the English auction system. This system raises
the price after each bid until the last bidder is left. The
highest bidder for each lot will be announced by the market
functionary and an SMS is sent to the farmer mentioning
the bid price and the buyer’s name. An SMS is also sent
to the buyer and the commission agent. The farmer can
reject the bid price if he so desires, but it is rarely done by
the farmers. If the farmer accepts the bid price, the accurate
quantity of the produce is determined through electronic
weighing and the sale bill is generated by the system. From
an escrow account money is transferred to the commission
agent after deducting the market fees and the like from the
trader’s account and the commission agent then transfers
the payment to the farmer. These transactions happen on
the same day of the trade, so the farmers can leave the
eNAM by 12:30 pm with the sale proceeds.
Theory of Change for eNAM
The Theory of Change is essentially a comprehensive
description and illustration of how and why the desired
change is expected to happen because of the introduction
of a new scheme (here, the eNAM). It is widely used in the
planning and prioritization of government schemes. In it,
the desired changes are higher market arrivals and higher
prices for the farmers and to eliminate all malpractices and
excessive margins by the middlemen and linking the local
markets to national markets. The theory of change behind
an e-market is illustrated in Figure 2. The success of
this platform depends on meeting the expectations of all
market participants (farmers, traders, commission agents
and market administration) simultaneously. If one group is
not satisfied, the market will not function effectively.
A successful e-market should incentivize farmers through
higher prices and timely payments; incentivize traders
through regular, large and quality market arrivals and reduced
transaction costs, providing logistics and maintaining rea-
sonable profits; and satisfy the commission agents through
higher market arrivals and turnover to make their business
viable. The reliable assaying facilities to facilitate distant
traders to participate in biddings is missing in the eNAM
system. Therefore, the eNAM system should run uninter-
ruptedly with continuous supply of power and Internet
connectivity without any technical problems so that it
would be easier for the market officials to fulfil the require-
ments of the farmers, traders and commission agents. Overall,
the success of the e-market depends on more market arriv-
als coupled with fair prices for the farmers with reasonable
profits to traders and commission agents. This could be
achieved by lowering the transaction costs. Only then the
farmers, traders and other participants could invest their
skills, software and hardware necessary to participate in
the e-auction.
Results
Impact of E-markets
In Table 2, the administrative data of eNAM compared
with the non-eNAM markets has been presented. 2015 was
taken as the base year as eNAM was introduced in 2016.
Although eNAM has been in operation since 2016, it took
almost two years to feel its visible impact. Hence, we have
taken 2018 as the post-project year. However, many APMC
markets have remained non-eNAM even in 2018. Since
eNAM was not implemented in these markets, these
markets are taken as a control group. In some APMC
markets, where eNAM was introduced in 2016, are taken
as a treatment group.
148 IIM Kozhikode Society & Management Review 8(2)

Figure 2.  Multiple Stakeholders and Theory of Change

Source: The authors.
Reddy and Mehjabeen 149

Table 2.  Impact of eNAM on Prices, Arrivals and Volatility of Prices

Non-eNAM (control) eNAM (treatment)

Before After % change Before After % change
(Column 3–2) (Column 6–5) Difference-in-
Crop Average price (`/quintal) *100/Column 2 Average price (`/quintal) *100/Column 5 difference
1 2 3 4 5 6 7 Column 7–4
Pigeon pea 4,221 5,607 32.8 4,309 6,100 41.6 8.7
Rice 1,517 2,223 46.5 1,702 2,571 51.1 4.5
Groundnut 3,234 4,318 33.5 3,100 4,691 51.3 17.8
% change % change Difference-
Average Arrivals (Column 3–2) Average Arrivals (Column 6–5) in-difference
(ton/month) *100/Column 2 (ton/month) *100/Column 5 Column 7–4
Pigeon pea 926 1,012 9.2 3,774 4,512 19.6 10.3
Rice 1,571 1,628 3.6 6,412 7,210 12.5 8.8
Groundnut 1,561 1,738 11.3 5,166 6,319 22.3 11.0
Volatility in prices (Coefficient of variation %)
Pigeon pea 31 29 –6 35 27 –22.9 –16.4
Rice 25 26 4 20 21 5.0 1.0
Groundnut 35 33 –6 37 32 –13.5 –7.8
Source: The authors (calculated from the AGMARK monthly average market price and market arrivals data).

Two indicators, namely the average price (`/quintal) and
the average arrivals (tons/month) to assess the impact, have
been selected. The analysis was carried out both before the
introduction of eNAM in the state, that is, in 2015, and two
years after its introduction, that is, in 2018. This represents
the before and the after of the implementation of eNAM.
The increase in prices and market arrivals was more in the
eNAM (treatment group) than the non-eNAM (control
group) markets for all the three commodities. This indicates
that the introduction of eNAM has a positive impact on the
prices and market arrivals.
The regression results also show a similar picture. The
online platform has a positive impact on both prices and
market arrivals (Tables 3 and 4). This indicates that the
farmers benefited from higher prices and also the traders
and commission agents benefited from higher market arriv-
als. In the case of prices, although signs are positive for all
the three commodities, they are significant for pigeon pea
and groundnut but not for paddy. This is probably due to the
implementation of minimum support prices (MSPs) in all
markets (both eNAM and non-eNAM). In the case of market
arrivals, only pigeon pea showed significance at a level of
5 per cent. It indicates that the positive impact of eNAM
was more on prices than on market arrivals.
Exploratory Analysis
Focus group interactions were conducted with farmers,
traders, commission agents and administrative staff of 12
eNAMs and adjacent five villages (by grouping villages

Table 3.  Results of Difference-in-difference Regression Analysis for Price (`/quintal)

Pigeon pea Rice Groundnut

Item Coef. Sign. level Coef. Sign. level Coef. Sign. level
Constant 4,310 0.01 1,519 0.001 2,378 0.001
Time (month) (b1) 53 0.07 35 0.001 12 0.001
Intervention(eNAM = 1; non- 115 0.08 132 0.03 –269 0.01
eNAM = 0) (b2)
Interaction between time 478* 0.00 12 0.37 129* 0.04
and intervention (b3)
Adj. R2 0.75 0.01 0.47 0.001 0.63 0.00
Number of observations 392 410 270
Source: The authors (calculations from the AGMARK data).
Note: Dependent variable price (`/quintal).
150 IIM Kozhikode Society & Management Review 8(2)

Table 4.  Results of Difference-in-difference Regression Analysis for Market Arrivals

Pigeon pea Rice Groundnut

Item Coef. Sign. level Coef. Sign. level Coef. Sign. level
Constant 1,210 0.02 3,201 0.01 4,392 0.90
Time (month) (b1) 45 0.12 54 0.73 62 0.89
Intervention (eNAM = 1; non-eNAM = 0) (b2) 114 0.10 –27 1.04 560 0.55
Interaction between time and intervention (b3) 570 0.14 120 0.21 122* 0.04
Adj. R2 0.23 0.00 0.31 0.00 0.21 0.00
Number of observations 392 410 270
Source: The authors (calculations from the AGMARK price and market arrivals data).
Note: Dependent variable market arrivals (tons/month).

based on their distance from the eNAM; Table 5). Majority
of the farmers are aware of the e-auction and e-gate entry
pass in the villages close to the eNAM (less than 10 km),
but in the villages farther than 10 km from the eNAM, less
than one-third of the farmers know about eNAM. Many
farmers in adjacent villages also do not have adequate
knowledge about the bidding process followed at eNAM.
Overall, 85 per cent of the farmers, 57 per cent of the trad-
ers and 51 per cent of the commission agents said eNAM is
beneficial for the adjacent villages. Around 50 per cent of
the traders and commission agents who have been inter-
viewed in both the adjacent and distant villages also think
that eNAMs are beneficial.
Opinion about eNAM Operations by Farmers,
Traders and Commission Agents
Around 55 per cent of the farmers said that eNAM helped
in reducing the collusion among traders; 36 per cent said
that there were reduced incidences of deductions by
commission agents in the name of recovery of previous
loans of the farmers from the sales proceeds; 68 per cent
said that transparency in transactions has increased (Table 6).
About 74 per cent of the farmers said that they got payment
on time. While 50 per cent of the farmers reported that they
do not understand the process flow of eNAM, about 72 per
cent of the farmers are worried about the deduction on their
loan amount (both principal and interest) from the payments
they received from eNAM.
About 68 per cent of the commission agents and traders
mentioned that it is easy to understand and use eNAM.
Seventy-three per cent of commission agents and traders
said that there were timely transfers of payment online;
67 per cent said that there were less procedural hurdles.
Among traders and commission agents, only 38 per cent
mentioned that though they don’t have computers, they are
facilitated by the officers of eNAM and put their bids from
the Internet centres established close to the eNAM offices
after the introduction of the scheme. About 77 per cent
expressed fear of taxation of income from their accounts
because of the increase in the visibility and transparency of

Table 5.  Awareness about eNAM Operations

Villages located nearby eNAM Villages located faraway from eNAM

Commission Commission
Operation Farmers Traders agents Farmers Traders agents
E-auction implementation 79 91 89 30 78 88
E-gate entry pass available 73 76 87 28 70 78
E-gate entry pass is mandatory 63 73 86 24 23 33
The trader with highest bidding price will 33 94 90 12 31 36
win the bid
Bid results declared by 12:00 pm 73 89 89 28 18 29
Direct money transfer to farmer’s 63 77 77 24 21 10
account of sale proceeds
Opinion about eNAM
Good 85 57 51 71 53 41
Not good 6 30 33 5 22 38
Don’t know 9 13 16 24 25 21
Source: The authors (field survey).
Reddy and Mehjabeen 151

Table 6.  Opinion of Farmers, Traders and Commission Agents where and at what price. There is a need for proper record-
ing of price information and information dissemination
Opinion % of the Responses
through dashboards in the market-by-market committee
1.  Farmers
and also by AGMARKNET. Market information such as
(positive feedback) the prices in other adjacent markets, buyers’ contacts,
Reduced collusion among traders 55 market channel, grades and standard specification, assay-
Reduced incidences of deductions 36 ing facilities, location of warehouses and markets, different
by commission agents in the name
good practices in marketing including maximum market
of recovery of previous loans of the
farmers from the sales proceeds fee, commission charges, loading and unloading charges,
Transparency increased 68 post-harvest handling advice, and storage and transport
Timely payment 74 recommendation has to be converted into market know-
(negative feedback) ledge and disseminated in the local language. Encouraging
Do not understand the process 50 public–private partnerships in funding the market informa-
Fear of deduction of the loan (principal 72 tion infrastructure, such as electronic dashboards in market
and interest) by banks if the sales yards and rural kiosk like e-chowpal, can help in providing
proceeds are transferred to their bank the relevant information, extensions and other services to
accounts the farmers, and which needs to be available not only in the
2.  Commission agents and traders market but also in different public places such as village
(positive feedback) panchayat, banks, bus stands and so on.
Direct money transfer to eNAM 67 Presently, only marketing officials are involved in the
account dissemination of market information in the APMC markets;
Easy to use 68 officials from the agricultural department are not involved
Less procedural hurdles and paperwork 67 in post-harvest and price information dissemination.
Timely account transfers 73 Traditionally, for all practical purposes, farmers trust more
(negative feedback) the agricultural officers, hence it is important to rope in the
Some traders don’t have computers, but 38 agricultural department in the dissemination of price infor-
it is facilitated by the officers or is done mation before sowing and before harvesting, so that the
through Internet centres
farmers can make informed decisions on acreage under
Fear of taxation of traders 77
each crop and whether to sell the produce immediately or
Slow broadband connectivity 42
store it for better price later (Ba & Pavlou, 2002; van Heck,
Sudden shutdown of the system (partial 31
van Damme, Kleijnen, & Ribbers, 1997).
implementation)
Source: The authors (field survey). Avoid Internet Shutdown
India is a country with the largest number of Internet shut-
their transactions as those are made online via their Aadhaar- downs especially in the rural areas. The eNAM operations
linked bank account. About 42 per cent said that Internet should not be disrupted by these frequent shutdowns. The
connectivity is slow, and 31 per cent said that sudden system first thing before implementation of the eNAM project is
shutdowns make possible only a partial implementation of that the administration should ensure uninterrupted Internet
the scheme. Some of the eNAMs are still not functional connectivity and power supply so the operations run smooth.
due to interrupted power supply even after the setting up of Options to Use Multimedia
power generators in all the eNAMs for uninterrupted power
supply. In order to encourage distant traders and to increase
competition to eliminate collusion among traders, there is
an urgent need to facilitate the display of samples of the
Results of the Focus Group Discussions commodity put up for an auction by taking real-time
photographs. This facility requires huge bandwidth as the
Market Information uploaded photos/videos take huge digital space (Lee, 1997;
van Heck & Groen, 1994).
The most frequent and a major problem expressed by the
farmers is the lack of price information. In many markets, Separating Physical Movement and Actual Transactions
most of the market arrivals are low and irregular. These and Grievance Redress
low volumes cannot generate reliable price information to In the mature world of e-markets, goods are sold through
represent broader market conditions. Hence, the farmers electronic auctions without the physical presence of the
were unable to take informed decisions about when to sell, offered commodities. In this virtual marketplace, transactions
152 IIM Kozhikode Society & Management Review 8(2)
take place based on information (descriptions/grade/stand-
ards) and products move from the farmer/farmers directly
to buyers/traders only after online transactions are com-
pleted. eNAM should implement this process to separate
the product movement from the transactions by means of
advanced assaying laboratories to grade the produce, store
them in warehouses and generate transferable e-warehouse
receipts (Wrigley, 1997).
However, this could increase transaction risks as
inaccurate product grades assigned by the assaying system
or loss in quality in warehouses may lead to loss of trust in
the system (Clark & Lee, 1999). The eNAM should frame
elaborate institutional rules, grievance redressal mechanism
and policies which can not only guarantee the correctness
of product information but also enforce the execution of
the deals made on the eNAM platform.
Regulation and Development Activities
In most of the APMC markets, the administration and
employees are more interested in the collection of market
fees, and little emphasis is put on the market development
except for some activities such as construction of auction
platforms and roads. There is even less emphasis on the
dissemination of the information about price and market
arrival among the farmers.
Linking Rural Periodical Markets
Thousands of rural periodic markets exist in India, which
are normally weekly markets. They are held on a specific
day once a week and where selling and buying of different
commodities take place. Other recreational activities such
as village dramas, dance, gambling, eating joints and so on
also are organized at the marketplace to attract more
customers. Farmers and local consumers prefer these markets
due to factors such as their convenient location and sale in
a small area, and also because these markets make the
social gathering possible. The Government of India is
planning to select about 22,000 rural periodic markets and
develop and upgrade them into Gramin agricultural markets
(GrAMs). These GrAMs are to be electronically linked to
the eNAM portal to extend the reach of the eNAMs to the
farmers. There is, however, a need to develop suitable
infrastructure for these periodic markets to act as ‘aggrega-
tion hubs’ in order to facilitate various farmer groups to
aggregate their surplus produce for direct farmer-to-
consumer sale by eliminating the middlemen and also to
link different marketplaces (both regional and national)
including the eNAM.
Strategic Location and Linking of Warehouses to eNAM
The strategic location of warehouses and markets with
seamless connectivity between them is important. The
warehouses and markets should be strategically located
between major production and large consumption centres.
Warehouses and transport infrastructure form the backbone
of an agricultural marketing system. Adequate storage
capacity in strategic locations with proper maintenance and
warehouse receipt facility is the need of the hour to make
them a part of national agricultural markets. Currently,
most of the warehouses are used for the sole purpose of
storing the buffer stocks of food grain procured under the
MSP, which are poorly maintained and have no facility to
issue warehouse receipts. Recently, the government has
decided to give accredited warehouses the status of mandis,
which will be linked with the online eNAM platform
over a period of time to help the farmers get better market
access and higher returns. All warehouses accredited
under Warehouse Development and Regulatory Authority
(WDRA) have to follow scientific storage practices, have
provision for third-party assaying facilities to allow online
trading on universally accepted grades and facilities for
e-warehouse receipts to get loan from banks by pledging
the receipt, and maintain proper record-keeping with mini-
mum loss in storage. Fully equipped and well-maintained
warehouses will bring in more traders to adopt the eNAM
platform. This will also help traders to get higher volumes
in storage and help in business growth. It will also give
complete flexibility to the farmers in the timing of the sale
as they can observe the price movement. When the prices
are low, the farmer can keep his produce in the warehouse
and sell it when the prices rise. A trader buying through the
eNAM from a warehouse can be assured of the quality,
storage and delivery as the warehouse itself can take care
of the logistics issues. With the upgradation of accredited
warehouses, the third-party assaying system will help the
eNAM to evolve as a true national market equipped with a
free flow of information of the available produce along
with its quality. The separation of the physical movement
of the produce from its transaction drastically will reduce
logistic and transport costs and encourage wider participa-
tion of the distant traders, thereby increasing trade volumes
and economies of scale.
Assaying System Is the Key for the Success of eNAM
Studies on e-markets in Karnataka, where e-markets have
been implemented since 2012, clearly show that there is
an increased price realization by the farmers and market
arrivals of commodities in the e-markets compared to the
non-e-markets. However, they also suggest that proper and
quick assaying system and the participation of traders
located in distant markets are the keys for the success of
the eNAM.
Peak Loading and Scalability
The load on the eNAM server can easily vary by a factor of
10 or 20 depending on the season. Hence the hardware and
software and other support services like assaying system
Reddy and Mehjabeen 153
must be able to handle this scale of operations. Maximum
waiting time must be tested and should be run on peak
hours. While planning the scale of operations in each
eNAM, the maximum waiting time should be considered
such that it should not be more than three hours even
during the peak season. There should be easy options to
scale up the operations from the existing 585 eNAMs to,
say, about 2,000 eNAMs with little modifications in the
system. There should be options to increase the scale of the
operations of each eNAM to cater to the future increase in
numbers of traders, commission agents, farmers, the types
of the commodities and market arrivals of each commodity.
Demonstrating Early Success
Many states are still struggling to implement eNAM as
they lack the necessary infrastructure such as assaying
facilities, skilled workforce and standardized and simple
procedures. Many traders and commission agents are still
reluctant to participate in eNAM. It is high time to demon-
strate the utility of the online platform, at least in a handful
of markets in terms of its benefits to farmers in increasing
price realization, quick delivery of money and elimination
of traders’ malpractices. The results of the implementation
of eNAM will take about five years or more to be visible,
but the long-term vision of creating the ICT-enabled eNAM
to help farmers to sell their produce in national markets
rather than local stand-alone markets is essential for the
benefit of the farmers.
Learning by Doing
There is a need to encourage learning from the best eNAMs
and replicate them in other eNAMs. There is also a need to
adopt the lessons learned across the globe. China’s agricul-
tural market structure, more or less similar to that of India,
has successfully introduced electronic markets. Lessons
can also be learned from the flower e-markets in Holland
and the fish e-markets in Thailand.
Training
Although all practices of selling and buying at eNAM are
similar to those of the APMC markets, they require special-
ized skills in farmers, commission agents, traders and
market administrators. Farmers have to be trained about
grading and assaying their produce and its online transac-
tion, whereas traders and commission agents need to be
trained about how to create an account on the eNAM, its
login process, linking it with their Aadhaar number and
bank account, how to participate in electronic bidding, how
to do money transactions and so on. The administration
also has to be trained on the maintenance of the eNAM.
Absorption of Supply and Demand Shocks
The stand-alone APMC markets do not have the capacity
to absorb sudden shocks in local demand and supply as
they are not interlinked and are confined to local demand
and supply situations which are largely separated from the
national level demand and supply conditions due to regula-
tory and logistic constraints. High logistic costs associated
with the movement of agricultural commodities even within
a state hinder quick adjustments to the demand and supply
signals. Low and irregular volumes of market arrivals of
agricultural commodities are critical problems faced by
most of the stand-alone APMC markets. Small amount of
traded volumes and poor quality of the produce are major
problems in most of the APMC markets, especially in the
remote and dryland areas and backward districts where most
of the farmers follow subsistence agriculture with less and
irregular marketed surplus of agricultural commodities.
Farmer Produce Organizations to Link Small Farmers
Most of the small farmers are subsistence farmers, with about
50 per cent farm produce used for domestic consumption,
hence their marketable surplus is small. It is not economical
for them to bear the transport cost and sell at an APMC
market about 15–20 km away. Instead, they sell it to the
local aggregator or at the weekly market even at a lower
price than they can get at the APMC market. Further, in the
local markets, there is a prevalence of credit–commodity–
input market linkages. In this type of market linkages,
moneylenders-cum-traders give farm inputs on loan during
crop-growing stage. As soon as the produce is harvested,
the moneylenders-cum-traders force the farmers to sell
their farm produce to them at a lower price than the current
market price to recover their principal, interest and other
logistic charges. Farmer–producer organizations (FPOs)
or groups (such as MAHAGRAPES for the grape farmers
and SAHAJAAHARAM for the organic farmers) includ-
ing cooperatives (like Mulkanoor Cooperative Society for
multiple crops) can help in the aggregation of the com-
modities at the village level and sell them wherever they
can fetch higher prices. This will help in reducing the trans-
action costs through pooling costs, increasing economies
of scale through aggregating farm produce and selling in
bulk. It will also increase the bargaining power of the
farmers. It will also help in the aggregated farm produce in
bulk quantities. Hence, there is a need to actively involve
the FPOs in linking the small farmers with the eNAM, as it
acts as an interconnected market to signal national demand
and supply situations across India. Farmers go to a market
for multiple purposes. The eNAM administrative staff
should help the farmers’ groups in building relationships
with institutions such as banks, warehouses, traders in
distant markets and so on to fulfil their needs for credit,
transportation and to get better prices. It may be difficult to
sustain continued participation of small and marginal farmers
in eNAM, if the government does not encourage their
active engagement in eNAM. Agri-food chain enterprises
154 IIM Kozhikode Society & Management Review 8(2)
including the FPOs can use the platform to purchase agri-
cultural commodities in bulk taking advantage of national
markets created by eNAM (Strzębicki, 2015).
Promoting Private Sector in eNAM
Given that eNAM is technology-intensive and market-
driven, in the long run, the private sector is best placed to
scale up the platform beyond the existing 585 eNAMs. The
private sector can also collaborate with farmers to form
agricultural-produce organizations to look into various
ways to achieve the shared objective of reducing transac-
tion and aggregation costs, strengthening the supply chain
and increasing economies of scale. Currently, Nagarjuna
Fertilizers and Chemicals Limited (NFCL) is a technology
partner in the implementation of eNAM at the national
level, while a special purpose vehicle Rashtriya e Market
Services Private Limited (ReMS), a joint venture of the
Government of Karnataka and National Commodity
Derivative Exchange (NCDEX), is the technology partner
to implement eMandi scheme in Karnataka. There is a
large scope for expanding these partnerships to include
other large private food retailers such as Reliance Fresh
and MORE, and also for the involvement of the FPOs in
aggregation to reduce transition costs and for regular bulk
supply to meet the needs of the bulk buyers like food
processing industries through eNAM (Mueller, 2001).
Bond between the Farmer and the Commission Agent
It is a custom that farmers depend on the commission agents
not only for the sale of their produce but also for quick
credit as and when farmers need and for a safe storage of
their produce until it fetches a good price. Hence, over the
years, they build up strong socio-economic linkages, but
this relationship is skewed and sometimes exploitative
given the asymmetric information between them. The
commission agent has full information about market condi-
tions whereas the farmer has less. It is often observed that
commission agents charge commissions beyond permissible
limits under the APMC Act. They also charge exorbitant
interest rates (sometimes up to 36% per year) and make
unauthorized deductions from the sale proceedings of the
produce before giving the money to the farmers. However,
with the introduction of eNAM, farmers can directly
sell their produce to buyers without any involvement of
commission agents.
State-specific Action Plans
Currently, 17 states have fully or partially amended the
APMC Acts to join eNAM; however, only 14 states have
implemented eNAM so far. All states should join the
eNAM to facilitate the integration of markets across the
states for an efficient price discovery at the national level.
There is a need for preparing a road map for each state
separately, as the capacity to absorb the ICT technology
and various market reforms significantly vary from state to
state. For example, Bihar and Odisha may be slow in the
implementation of eNAM, as they lack the necessary infra-
structure and skills at all levels compared to Karnataka.
The eNAM should ensure the primary functions of an
efficient marketplace, namely giving appropriate incen-
tives to farmers to bring in (or shift from other market-
places) more marketed surplus to increase the economies
of scale, attract and retain a large pool of traders to increase
competition and reduce collusion in bidding. It should also
provide other market-related support services to farmers
such as warehouse facilities, price and technological infor-
mation kiosks, access to cleaning and grading facilities,
transportation and other logistic facilities.
Involving Farmers and Traders in Reforms
Farmer–producer groups should be given the option to
auction their commodity directly to exporters/processors/
big traders through eNAM. It would be most effective if
there is a comfortable lot size, the quality is uniform and
there are buyers from distant places to compete with the
local traders.
It was found that traders and commission agents fear
of coming under tax with increased online transactions.
Awareness needs to be created among them to alleviate
these fears. There is also the need to educate all stakeholders
about the benefits of eNAM, so that they are enabled to
support this gigantic task for the long-term gains in terms
of ‘One Nation One Market’.
Conclusion
The Government of India is encouraging all the states to
introduce eNAM, following the concept of ‘One Nation
One Market’. It will improve transparency in price discovery
and reduce the possibility of cartel formation among local
traders in bidding for a produce as the bid happens across
the country. However, eNAM suffers from implementation
bottlenecks, which need to be removed before scaling up
the eNAM scheme beyond the existing 585 eNAMs. There
is also no empirical study about its positive impact on prices
received by the farmers and market arrivals. To bridge this
gap, the article examined the impact of eNAM and also
looked at the problems faced in implementing it along with
the possible solutions.
The empirical results of our study show that there is a
positive impact on the prices received by the farmers and
an increase in market arrivals in the eNAM compared to
the non-eNAM markets for three commodities (namely
paddy, groundnut and pigeon pea). But there is a need for
increasing its efficiency by eliminating the bottlenecks that
these markets face.
Reddy and Mehjabeen 155
The Government of India created the Rs. 2000-crore
Agricultural Market Infrastructure Fund to develop and
upgrade the existing 22,000 rural haats into GrAMs. These
GrAMs, electronically linked to the eNAM portal, are
hoped to extend the reach of eNAMs to the farmers. There
is a need to develop appropriate infrastructure in these
local markets to act as ‘aggregation hubs’ to facilitate
aggregation of marketed surplus for direct farmer-to-
consumer sale by eliminating the middlemen.
The government has decided to give accredited ware-
houses the status of mandis, which will be linked with the
online eNAM platform gradually to help farmers get better
market access and realize higher returns. Trading through a
warehouse linked with eNAM will assure ad rem quality,
storage and delivery, since the warehouse itself can also
take care of the logistics.
Many market participants are of the view that, in every
eNAM, a proper and quick assaying system with minimal
procedural hurdles needs to be established to facilitate
the participation of traders located in distant markets.
Experiences of China, Holland and Thailand show that
electronic markets could be successful if they use the state-
of-the art ICT to solve the problems faced by the farmers in
local markets. Some backward states like Bihar and Odisha
can learn from the successful eNAMs functioning in other
states. For example, turmeric trade in the Nizamabad eNAM
in Telangana is highly successful with quick assaying facil-
ities, timely payment and more participants from distant
markets. Even they can learn from the auction platform of
silk, tea and tobacco, where e-auction was introduced long
back and has been successfully running over the years.
Ultimately, eNAM can be successful only if the govern-
ment assesses and prioritizes each stakeholder’s problems
and solves them to increase the participation and satisfac-
tion levels of all the stakeholders.
Declaration of Conflicting Interests
The authors declared no potential conflicts of interest with respect
to the research, authorship and/or publication of this article.
Funding
The authors received financial support from ICAR-Indian
Agricultural Research Institute, New Delhi, for the research.
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