Leveraging the e-NAM platform for agri-logistics support
The national e-NAM portal has been a great achievement for the Ministry of Agriculture. It reflects the efforts being made by the government towards the goal of doubling farmer income. And it isn’t just the e-NAM app (which is at par with any top-end app), but also the significant push by state governments in India to better their APMC (Agricultural Produce Market Committee).
What follows is an explanation of why e-NAM platform has such immense potential to help farmers cut costs and drive revenue.
1. What is e-NAM?
A pan India electronic trading portal which networks the existing APMC mandis (farmer markets) to create a unified market for agri-commodities. The e-NAM portal provides information and services related to agri-produce marketing:
- What commodities are available in various mandis along with their prices
- The historical prices of various commodities
- Buy and sell trade offers for these commodities available for farmers.
The core problem which e-NAM solves for is the lack of information available to farmers, at present, around prices. By being aware of offers available in other mandis, farmers can bargain a better return for their produce. Currently, the farmers get less than 30% of the total value generated from their produce.
Traders, farmers and commission agents have their own modules on the e-NAM portal, thus bringing the entire (almost) value chain in one place.
2. Why do farmers need logistics support?
Before we talk about logistics, its important to understand the process a farmer goes through after she/he has grown their produce.
Step 1: Take your stock to the farm gate
Step 2: Stock goes from farm gate to a mandi. Sometimes, transport agents buy the stock here at a price the farmer assumes is the best price.
Step 3: Stock is assessed at the mandi – graded and the farmer agrees on a price at which it’ll be sold.
The farmer’s role in the value chain is over now. Your food changes hands between traders, commission agents and retailers whose primary contribution is distribution, storage and bulk breaking. You’ve now bought the produce. How much does the farmer typically make out of every rupee you spend on the produce? 27 paise.
From the above process, you’ll appreciate that post-production, it's mostly logistics that need to be figured out.
- Sorting and grading: These are essential for creating a market. If produce isn’t sorted, a farmer selling high-quality potatoes will end up getting paid for low-quality potatoes because no one is noticing the difference. e-NAM is an ideal platform for farmers to pick standardized grading and assaying services. A small fee on such a service, even if not paid for by a farmer buy mandatorily paid by a trader, can significantly help farmer’s get a fair price for their output.
- Storage: More than 20% of food waste happens because of poor storage. And here we are referring to storage while transport as well. We still use gunny bags to transport fruits, thus ensuring an excess of pulp in the market – a not as lucrative output. Not having standardized storage equipment ensures we overpay for transport space as well. The e-NAM platform is a great tool for ensuring standardized storage norms for each commodity are made clear to farmers and traders. Standardized storage can be a contributor to the final grade given to the produce, thus ensuring efficient storage investments are made. Investment in proper post-production storage from farm gate to mandi can help farmers ensure a better price for their output as well.
- Transport: Currently, farmers hire transport services to get their produce to the market. Given that the number of mandis is much lesser than the mandis required, the transport requirement of produce ends up being a significant cost to the farmer and one which she/he cannot escape. The transport services are provided by local transport vendors.
- These transport services are very expensive
- They cause losses because products are just dumped in most cases
- While the freight losses are to be borne by the transport, the cost is invariably transferred disproportionately to farmers
3. What does e-NAM offer for logistics support currently?
- Currently, there is no facility for finding agri-logistics service providers for farmers on e-NAM. The only services available to farmers are -
- Price discovery
- Tracking their produce lots' history
- Having a clear system of accepting / rejective bids
- There is no facility of allowing farmers to find transport providers at reasonable rates or for them to easily pool transport services.
- There is no check on freight service quality and no incentive for freight service providers to improve service quality.
4. If they had to, what kind of logistics support should be provided on the e-NAM portal?
For grading and storage services, simply listing and geo-tagging service providers with empanelled rates can help farmers and traders make the right investments themselves.
Transport, however, can not work on a standardized model but given the details e-NAM already captures there are multiple directions the e-NAM platform can go in to solve for these.
e-NAM captures the following details from farmers:
- Farmer name
- Farmer address (not geo-tagged)
- Phone number
- Bank account number
- Historically what mandi’s they sell at
- Commodities along with lot size which is sold at the mandi
This information can be optimally used for organizing last mile transport connectivity of agri-produce from farm to the mandi. The agri-logistics support from e-NAM should aim to solve the following problems:
- The high cost of the Transport
- Limited availability/information on available transport options
- Quality of transportation service providers
- The monopoly of transport providers in certain areas
- The difficulty of finding other farmers with whom transport services can be pooled
Option 1: Empaneled Listing Method: Aggregate local transport providers on the e-NAM and allow farmers to see who the available transport providers with empanelled rates are.
Step 1: Create a module for Transport providers where they can specify the geographies covered by them.
Step 2: Empaneled Transport service providers agree on a fixed rate on a /km basis depending on the load capacity offered with minimum load capacity.
Step 3: Empaneled Transport service provider details are made available on the e-NAM portal/ physically at the mandi as well. Farmers simply call service providers and avail service.
Step 4: Farmers can rate service providers, thus impacting their demand as well. Ratings have shown to significantly improve driver behaviour with app-based cab companies like Ola and Uber. High-rated service providers can demand a premium for their services as well, thus ensuring a natural check on the quality.
Step 5: There can be a provision to establish pre-set bulk booking discounts, discounts for booking more than 10 visits in a month in advance etc.
- Easier to implement
- Scaling up can be done without much change to existing infrastructure
- Doesn’t require a smartphone
- Doesn’t require internet connectivity
- Ratings ensure the quality of service providers. However, ratings can not be mandated.
- Doesn’t allow farmers to easily pool transport costs with other similar farmers
- Hit and trial system as real-time availability is not made clear to farmers. Farmers would keep calling service providers awaiting anyone to accept requests.
Option 2: An Uber for e-NAM logistics: Aggregate local transport providers on one end, and farmers/ transport service users on the other end. The booking system matches common requests and pools them with a single transport provider for further cost reduction for farmers.
Step 1: The farmer module should collect location coordinates of farmer’s site from where commodities are to be collected.
Step 2: Transport providers to be empanelled and made available on the transport module with constantly linked geographic coordinates.
Step 3: Farmer simply opens the e-NAM app and schedule a pick-up after specifying a pickup location and drop-off site.
Step 4: Depending on aggregated demand, farmers can choose a ‘pool’ option similar to Uber pool where capacity available is specified for the respective transport provider and multiple farmers are able to book the same carrier.
Step 5: Farmers can rate service providers and be provided ‘Krishi-Mandi Transport Pass’ to facilitate discounts.
Step 6: Farmers who own their own transport can monetize the same by making their load capacity available on the Transport booking module of e-NAM.
- Allows farmers to pool services thus reducing costs
- More transparency with respect to available payload capacities thus facilitating more options for farmers for transport.
- Breaks any monopoly of service providers as rates are fixed depending on transparent demand and supply.
- Ratings ensure the quality of service providers. Implementation of mandatory ratings ensures quality improvement.
- Real-time availability of information ensures farmers spend the least time to find cheapest transport options.
- Requires more changes to existing e-NAM digital infrastructure
- Internet connectivity would be a limitation
- Most farmers have feature phones which can support such access
5. Suggested Next Steps?
- Given the nature of the problem, as a first step, a regulatory sandbox may be made available across 10 high performing APMC zones which are present on e-NAM along with APMC zones which have Krishi Vikas Kendras present as well.
- Startups may be allowed to test their solutions here and be paid a fixed fee for running the pilot over and above any expenses incurred on actuals. Data from e-NAM of the farmers in the regulatory sandbox area will have to be shared with the Startups
- KVKs may be used as centres for training farmers on using the technology made available.
A regulatory sandbox will help e-NAM:
- Identify the contentions of both farmers and service providers
- Identify further gaps which are present in the delivery of such a service
- Identify the finer details of what changes need to be made in the transport module before any tech changes are laid out in the e-NAM App.
Startup India platform may be used for identifying startups for running such a pilot operation.