National Policy Framework on Agricultural Marketing (NPFAM)

Context:

Both factions of the Samyukt Kisan Morcha (SKM and SKM – non political) have decided to hold joint agitations against the Union Government’s draft National Policy Framework on Agricultural Marketing (NPFAM) as the next stage of their protests.

National Policy Framework on Agricultural Marketing (NPFAM)

The National Policy Framework on Agricultural Marketing (NPFAM) is a draft policy that aims to improve agricultural marketing in India. The policy was released by the Union Agriculture Ministry for public comments. 

Vision of the Policy

• Objective:
  • To create a vibrant marketing system where all classes of farmers gain access to the market of their choice and gain the best possible price for their produce.
• Critical Objectives:
  • Enhance the performance and competitiveness of markets.
  • Provide multiple marketing channels that are transparent, infrastructure-enabled, and digital technology-intensive.
  • Develop agriculture value chain-based marketing.

Key Features

Private Wholesale Markets

• Promotion:
  • Gives the private sector the opportunity to establish wholesale markets for agriculture products.
• Status Today:
  • There already exist 125 private wholesale markets in five states.

Direct Purchases

• Direct Procurement:
  • Empowers processors, exporters, organized retailers, and bulking buyers with the right to purchase directly at the farm-gate.

Corporate Post-Harvest Infrastructure

• Alternative:
  • Replaces market yards by corporate warehouses and silos which provide better storage and handling conditions.

Integrated National Market

• System Setup:
  • This will provide a single, integrated market charge and trading license system that provides hassle-free trading.

More Choices in Marketing

• Cold Storage: It will declare silos and cold storage as deemed market yards for easy marketing opportunities

E-Trade

• Private Platforms:
  • It encourages setting up and operating private e-trading platforms for better access to markets

Contract Farming

• Agri-Processing Linkage:
  • It facilitates agro-processing, exporting, and trading units to enter into agreements with farmers and Farmer Producer Organizations (FPOs).

Federal Committee

• Empowered Committee:
  • The empowered agricultural marketing reform committee to be constituted along with state agriculture ministers for uniformity.

Empowerment of GrAMs

• GrAMs Development:
  • 300 Grameen Agricultural Markets (GrAMs) would be developed every year with a focus on their strengthening.

Modernization

• Technological Integration:
  • Modernize the supply chain with cutting-edge technologies such as blockchain, AI, and machine learning.

Digital Marketing

• Making the Current e-NAM into a Full Digital Marketing Platform:
  • Upgrade the existing e-NAM to an entirely transparent Digital Marketing Platform.

Policy Justification

Income to the Farmer

• Farmer Accesibility
  • Build an ecosystem wherein farmers find access to their preferred markets easy and receive fair value for their products.
• Price Stabilization
  • Increase the possibilities of reducing uncertainty of market as well as of price instability in order to empower farmers to guess their incomes beforehand.
• More Efficient Markets
  • Increase marketing competition through applying various channels by which all exchange related to the trade will have more transparency; therefore, more efficient market efficiency will be obtained and improved market output.
• Integrated Output Management
  • Integrated production and marketing processes by providing digital public infrastructures like Blockchain and internet portals for smooth performance.
• Address Unsustainability of APMCs
  • APMCs should operate as service providers to the value chain of agriculture rather than the centers for charging fees to the market.
• Learn from New Patterns of Marketing   
  • Institute  End-to-End Value Chain Centric Infrastructure(VCCI), and  digital infrastructure  in order to better adapt to changes in market structures.

Problems with the Policy

• Inadequate Research and Studies
  • There are no independent studies of the private wholesale markets working on effectiveness and problems.
    End

• Lack of Fairness to Farmers
  • Farmers would not have bargaining power among the private storage infrastructures during the price volatility period.
    End

• No Surplus Sharing
  • There is no such stipulation in the regulatory clauses that the traders should share surplus with farmers.

• Homogeneous Policy
  • The one-size-fits-all approach will overlook the variegated requirements and expectations of farmers in each state.

• Impact on Federalism
  • The creation of the Empowered Committee may be undermining the states’ authority to regulate and monitor agricultural marketing in their jurisdiction.

• Absence of Price Guarantee
  • There is no assurance of minimum support prices (MSP) or minimum support during distress sale and the farmers can be left at the mercy of adverse forces.

Way Forward

• Mechanism for Price Guarantee
  • Include price guarantee mechanisms that provide minimum levels of income protection to farmers at the time of distress sale.

• State Flexibility to Change the Policy
  • Allow the states to make changes to the policy according to their regional agricultural needs and circumstances.
• Analysis of Private Markets’ Performance
  • Analyze private markets to examine if the interest of farmers can be enhanced by improving operation or management.

• Regulation of Private Sector Participation
  • Installation of regulations over entry and performance of corporate as well as private players in the agricultural marketing space and fair competitiveness.