With the passage of the three agricultural bills, plans are underway to launch a e-market of all kinds for agricultural products.
Named Krishi Setu, this platform will be managed by the National Bulk Handling Corporation (NBHC), an agricultural warehousing services company based in Mumbai and touted as an “Amazon for agricultural commodities”.
If all goes according to plan, Krishi Setu could be live by the end of June this year.
One of the three recently adopted agricultural reforms essentially allows buyers to purchase products outside the designated areas. mandis. It does this by redefining the term “commercial zone”, greatly expanding the places where farmer-buyer transactions can take place.
It also redefines the “trader”, aka the intermediary. Previously, only intermediaries appointed by the APMC by the state could buy crops from farmers. From now on, anyone with a PAN card can become a merchant.
Enough intrigued? Listen to one of our previous podcasts to know how the Indian agricultural value chain actually works and how the Indian farmer is often caught between the devil and the big blue.
By broadening the definition of who can buy agricultural products and where such transactions can take place, agricultural reforms have paved the way for online trade in these products.
In addition, the law states that “no market fees, taxes or levies” will be levied on farmers or traders in shopping areas – online or offline.
(For a detailed analysis of the pros and cons of the three agricultural laws, click here. And to find out in depth why farmers are protesting these laws, read this.)
The NBHC announced that it will engage with Producer and Farmer Organizations (OPA) and other groups, following which the platform will be officially launched. It is also looking to expand its list of accredited labs to test all kinds of agricultural products (it has over 40 quality testing labs across the country). It will also use its existing infrastructure for collection, storage and fumigation purposes.
The platform would operate like a typical e-commerce platform. Buyers – which can include large companies – can place an order on Krishi Setu. The collection, storage and delivery of agricultural products would be handled by the NBHC.
The platform should register and operate according to rules set by central and state governments.
Major in commodity and warranty management, NBHC is wholly owned by the local PE company True North. It has a pan-Indian warehousing presence with over 1250+ warehouses in 19 states – totaling 2.10 million metric tonnes of agricultural products under management.
As for True North, the Mumbai-based PE fund specializes in consumer (36%), healthcare (23%), finance (18%), infrastructure services (13%) and other sectors (10%). Its total assets under management total nearly $ 3 billion, including its co-investments. With an ownership structure that resides in a private trust, the company has made many successful bets on leading companies such as Biocon, Trinethra, Atria Convergence Technologies and Aster.
In April, at the height of the COVID-19 shutdown, the Center launched the Krishi Rath mobile app to facilitate the transport of agricultural products – but it was limit from farmers to mandis.
Farmer groups in Madhya Pradesh, Rajasthan, Telangana, Andhra Pradesh and Punjab have been selling produce on the internet for a long time – and have reportedly won too 15-20% more than the price they used to pick up earlier.
Additionally, several agricultural production companies (FPCs) have joined the National Commodity and Derivatives Exchange (NCDEX) to delve into forward and spot auctions.
FOR YOUR INFORMATION: NCDEX is a commodity exchange dealing primarily with agricultural commodities. Since March 2019, it Featured futures contracts on 19 agricultural commodities and options out of five. And that’s huge – based on the value and number of contracts, it’s right behind the Multi-Commodity Exchange (MCX), which focuses on energy and metals.
Then there is the National Agricultural Market (eNAM), a government initiative founded in 2016. It is a pan-Indian e-commerce portal for the APMC. mandis create a unified national market for agricultural products.
But if eNAM is above all a mandi service, online platforms such as the one developed by NBHC are broader in scope as they encompass a larger market.
Speaking of NBHC, it isn’t the only warehousing company trying to digitize Indian agricultural marketing. Others, such as Star Agriwarehousing & Collateral Management and National Collateral Management Services, have also launched their own online commodity trading platforms (AgriBazaar and Marketyard respectively).
As we can see, the idea of an e-market for farm products is not new. But it has undoubtedly received a major boost due to the pandemic and farm laws.
Going forward, the fate of agricultural laws is uncertain due to continued protests and intervention by the Supreme Court. However, the pandemic is still very much present and agricultural marketing will not be able to navigate the circumstances without embracing some degree of digitalization.
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