Harvesting the benefits of NAM – (Electronic) National Agriculture Market !!!
Background :-
On 14 April 2016, Prime Minister Narendra Modi launched the e-NAM – Electronic National Agriculture Market – aiming to bring existing Agriculture Produce Market Committees (APMCs) on a common nationwide platform to facilitate trading in agricultural commodities.
Considering the monsoon deficiency of the first two years of the NDA government and the rising rural stress, the PM has set an ambitious target of doubling Indian farmers’ incomes by 2022, with the e-NAM playing a key role in achieving that vision.
Analysis:-
Indian agriculture has traditionally been marred by sub-scale farming operations, over-dependency on monsoons and poor supply chains, resulting in inadequate price realizations.
Every central government has juggled between guaranteeing minimum prices for farmers and managing food inflation. The compounding effects of these issues have kept Indian farmers struggling for subsistence incomes.
The central and state governments have attempted to manage this complex supply-demand equilibrium of agricultural produce through minimum support prices, buying produce directly for the Food Corporation of India (FCI) stocks from the farmers and repeatedly urging APMCs to unshackle their stringent rules.
The small-scale farmers, however, continue to be condemned to running a difficult commercial operation, the alternatives being a search for temporary farm wage jobs or migrating to cities.
In 2003, the government under prime minister Atal Bihari Vajpayee tried to reform the APMCs. The government created a model act, which asked states to enact laws to:
- · Remove licences for APMC agents
- · Permit creation of new APMCs outside of the existing ones like the cooperatives
- · Remove multiple levies
- · Permit contract farming for bulk buyers
- · Create special markets for different types of commodities with varying restrictions, especially opening up the markets for non-perishables
- · Goad APMCs to invest in modern supply chains from the profits they make
- · Allow direct sale of farm produce to large buyers
States have since moved in this direction at varying pace. Most of the more than 7,300 APMCs in the country, including the 600-odd district-level APMCs, continue to be run by a middlemen network that is busy choking farmers’ access to the buyers in the supply chain.
The programme has opened up an opportunity after 13 years of Vajpayee’s stillborn efforts to reduce Indian agrarian distress. To ensure that e-NAM gets adopted in spirit and benefits the small-scale farmers across the country, the government still has some way to go. Here are 10 areas that should be a point of focus in the next couple of years:
1. Encouraging states to participate in e-NAM
2. Enabling large mandis to lead the way
3. Achieving success early
4. Standardisation of quality of produce
A key aspect that can delay adoption will be the differing quality of the same commodity across the markets. When a buyer purchases a share of a blue chip on an electronic stock market, the share has the same characteristic as that bought by every other buyer on that market. This is not true for agriculture commodities. The type of wheat in Punjab and MP will differ significantly. Even the type of wheat in western and eastern MP will differ from each other.
While the e-NAM will have the provision of quality assessors to certify the produce, there has to be an institutional attempt for quality standardisation, like the option of buying and selling half-a-dozen types of wheat, aggregated for similar characteristics. These teething issues should be addressed on priority.
5. Clearing, settlement and counter guarantees
All trading markets have an associated element of clearing (matching buyers and sellers and assigning trades) and settlement (exchange of the traded commodity and money between buyers and sellers). While there is a network of banks that will participate in the e-NAM for the financial operations, there may be initial hesitation for participants to sign up due to the opaqueness of counter guarantees in place.
As of now, the middlemen in the mandis perform these functions, and personal trust is key underwriting element despite the routine financial gouging involved. The government may have to spend time and resources in educating potential participants in the market, making features and associated fallbacks of e-NAM.
When Indian Railways first launched online ticket booking, the traditional agents who used to facilitate physical ticket bookings did not lose business. They just started operating online terminals, still charging the small one-off ticket buyers for the facility. The APMCs and their intermediaries may well replicate this same behaviour. Admittedly, it will be a more transparent operation for farmers, but the government must strive to scale up e-NAM like the fully functional IRCTC website sooner rather than later.
6. Standardisation of quantities
Electronic markets of all kinds have a concept of lot sizes – the minimum quantities that can be traded. In the case of agricultural commodities, this is a big issue, especially for the small farmers. While a farmer may be willing to sell his produce on the e-NAM, the operation has to be practical – the seller should not incur very high transportation and shipment charges; it would make his price untenable. With the logistics business booming across the country, there’s a case for the government to address this issue with the help of technology and private participation.
7. Storage facilities and supply chain technology
Since most APMCs have not invested in basic facilities like warehouses, cold storages and inventory management systems, storing agricultural produce before or after trading is very difficult for farmers. Today’s systems are based on the assumption that the farmer will not store the produce anywhere except at the farm gates, and then transport it a short distance to the nearest mandis. However, proper price discovery and national trading needs to be backed up by massive investment in storage sites and facilities. The 2016-17 Union Budget opened up the food-processing sector for foreign direct investment (FDI). This change coupled with the logistics boom should reflect in the agricultural supply chains in the short-term.
8. Easier transportation of agricultural produce
Most farmers today use small vehicles to take their produce to the nearby mandis. However, national markets would require movement of the agricultural produce, including perishable ones, across the district and state borders. The maze of permits, the condition of the road network, the ability of the railways to transport commodities at a scale – are some of the areas the central government has to focus on, on priority. Else, the APMC middlemen may cite impracticality of transport options as proof against e-NAM being an effective replacement for their committees.
9. Investment in special transportation vehicles
As India looks to scale up manufacturing, the government can creatively bridge the lack of specialised agricultural produce transportation vehicles with the help of the ‘Make In India’ programme. If private players can be encouraged to spend on research and development on “mobile cold storages” and large farmers, APMCs or transport operators can be encouraged to buy fit-for-purpose vehicles, the reach of the e-NAM may widen fast. Ultimately, the farmers will benefit in spite of the geographical boundaries.
10. Short-term financing
The APMCs and their agents today perform a central function in the supply chain, which is to make short-term finances available at high rates of interest. These middlemen are also the first port-of-call for many farmers for their day-to-day as well as long-term (e.g. marriage, education) cash requirements, thus doubling up as moneylenders. Financial inclusion has naturally been a key area for the Modi government, with a slew of measures adopted to bring the bottom of the pyramid population into the financial net. The government should find a way to extend these inclusion programmes for agricultural credit, which can ultimately make the adoption of e-NAM successful.
The adoption of e-NAM is a test of implementation for the Modi government. The eventual success of the market will also depend on the enthusiasm and participation of the state governments. The central government has been able to create a fairly broad consensus and a sense of competition among the states in areas like ease of doing business, power distribution reforms and smart cities. The same zeal and a federal outlook need to be urgently applied to the e-NAM. The good news is that there are examples of targeted success already in this area. The e-choupal, run by the consumer goods major ITC for many years, has addressed many of the above issues already.
The ministries concerned – agriculture, food processing, food and civil supplies, road transportation and highways and finance – have to come together to create fully-packaged solutions with a long-term vision. The Ministry of Agriculture can lead this effort with the help of sector experience, innovative ideas, technology, and the capacity for risk-taking and entrepreneurship, and usher in real rural transformation.
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The United Nations has shaped so much of global co-operation and regulation that we wouldn’t recognise our world today without the UN’s pervasive role in it. So many small details of our lives – such as postage and copyright laws – are subject to international co-operation nurtured by the UN.
In its 75th year, however, the UN is in a difficult moment as the world faces climate crisis, a global pandemic, great power competition, trade wars, economic depression and a wider breakdown in international co-operation.
Still, the UN has faced tough times before – over many decades during the Cold War, the Security Council was crippled by deep tensions between the US and the Soviet Union. The UN is not as sidelined or divided today as it was then. However, as the relationship between China and the US sours, the achievements of global co-operation are being eroded.
The way in which people speak about the UN often implies a level of coherence and bureaucratic independence that the UN rarely possesses. A failure of the UN is normally better understood as a failure of international co-operation.
We see this recently in the UN’s inability to deal with crises from the ethnic cleansing of the Rohingya Muslims in Myanmar, to civil conflict in Syria, and the failure of the Security Council to adopt a COVID-19 resolution calling for ceasefires in conflict zones and a co-operative international response to the pandemic.
The UN administration is not primarily to blame for these failures; rather, the problem is the great powers – in the case of COVID-19, China and the US – refusing to co-operate.
Where states fail to agree, the UN is powerless to act.
Marking the 75th anniversary of the official formation of the UN, when 50 founding nations signed the UN Charter on June 26, 1945, we look at some of its key triumphs and resounding failures.
Five successes
1. Peacekeeping
The United Nations was created with the goal of being a collective security organisation. The UN Charter establishes that the use of force is only lawful either in self-defence or if authorised by the UN Security Council. The Security Council’s five permanent members, being China, US, UK, Russia and France, can veto any such resolution.
The UN’s consistent role in seeking to manage conflict is one of its greatest successes.
A key component of this role is peacekeeping. The UN under its second secretary-general, the Swedish statesman Dag Hammarskjöld – who was posthumously awarded the Nobel Peace prize after he died in a suspicious plane crash – created the concept of peacekeeping. Hammarskjöld was responding to the 1956 Suez Crisis, in which the US opposed the invasion of Egypt by its allies Israel, France and the UK.
UN peacekeeping missions involve the use of impartial and armed UN forces, drawn from member states, to stabilise fragile situations. “The essence of peacekeeping is the use of soldiers as a catalyst for peace rather than as the instruments of war,” said then UN Secretary-General Javier Pérez de Cuéllar, when the forces won the 1988 Nobel Peace Prize following missions in conflict zones in the Middle East, Africa, Asia, Central America and Europe.
However, peacekeeping also counts among the UN’s major failures.
2. Law of the Sea
Negotiated between 1973 and 1982, the UN Convention on the Law of the Sea (UNCLOS) set up the current international law of the seas. It defines states’ rights and creates concepts such as exclusive economic zones, as well as procedures for the settling of disputes, new arrangements for governing deep sea bed mining, and importantly, new provisions for the protection of marine resources and ocean conservation.
Mostly, countries have abided by the convention. There are various disputes that China has over the East and South China Seas which present a conflict between power and law, in that although UNCLOS creates mechanisms for resolving disputes, a powerful state isn’t necessarily going to submit to those mechanisms.
Secondly, on the conservation front, although UNCLOS is a huge step forward, it has failed to adequately protect oceans that are outside any state’s control. Ocean ecosystems have been dramatically transformed through overfishing. This is an ecological catastrophe that UNCLOS has slowed, but failed to address comprehensively.
3. Decolonisation
The idea of racial equality and of a people’s right to self-determination was discussed in the wake of World War I and rejected. After World War II, however, those principles were endorsed within the UN system, and the Trusteeship Council, which monitored the process of decolonisation, was one of the initial bodies of the UN.
Although many national independence movements only won liberation through bloody conflicts, the UN has overseen a process of decolonisation that has transformed international politics. In 1945, around one third of the world’s population lived under colonial rule. Today, there are less than 2 million people living in colonies.
When it comes to the world’s First Nations, however, the UN generally has done little to address their concerns, aside from the non-binding UN Declaration on the Rights of Indigenous Peoples of 2007.
4. Human rights
The Human Rights Declaration of 1948 for the first time set out fundamental human rights to be universally protected, recognising that the “inherent dignity and of the equal and inalienable rights of all members of the human family is the foundation of freedom, justice and peace in the world”.
Since 1948, 10 human rights treaties have been adopted – including conventions on the rights of children and migrant workers, and against torture and discrimination based on gender and race – each monitored by its own committee of independent experts.
The language of human rights has created a new framework for thinking about the relationship between the individual, the state and the international system. Although some people would prefer that political movements focus on ‘liberation’ rather than ‘rights’, the idea of human rights has made the individual person a focus of national and international attention.
5. Free trade
Depending on your politics, you might view the World Trade Organisation as a huge success, or a huge failure.
The WTO creates a near-binding system of international trade law with a clear and efficient dispute resolution process.
The majority Australian consensus is that the WTO is a success because it has been good for Australian famers especially, through its winding back of subsidies and tariffs.
However, the WTO enabled an era of globalisation which is now politically controversial.
Recently, the US has sought to disrupt the system. In addition to the trade war with China, the Trump Administration has also refused to appoint tribunal members to the WTO’s Appellate Body, so it has crippled the dispute resolution process. Of course, the Trump Administration is not the first to take issue with China’s trade strategies, which include subsidises for ‘State Owned Enterprises’ and demands that foreign firms transfer intellectual property in exchange for market access.
The existence of the UN has created a forum where nations can discuss new problems, and climate change is one of them. The Intergovernmental Panel on Climate Change (IPCC) was set up in 1988 to assess climate science and provide policymakers with assessments and options. In 1992, the UN Framework Convention on Climate Change created a permanent forum for negotiations.
However, despite an international scientific body in the IPCC, and 165 signatory nations to the climate treaty, global greenhouse gas emissions have continued to increase.
Under the Paris Agreement, even if every country meets its greenhouse gas emission targets we are still on track for ‘dangerous warming’. Yet, no major country is even on track to meet its targets; while emissions will probably decline this year as a result of COVID-19, atmospheric concentrations of greenhouse gases will still increase.
This illustrates a core conundrum of the UN in that it opens the possibility of global cooperation, but is unable to constrain states from pursuing their narrowly conceived self-interests. Deep co-operation remains challenging.
Five failures of the UN
1. Peacekeeping
During the Bosnian War, Dutch peacekeeping forces stationed in the town of Srebrenica, declared a ‘safe area’ by the UN in 1993, failed in 1995 to stop the massacre of more than 8000 Muslim men and boys by Bosnian Serb forces. This is one of the most widely discussed examples of the failures of international peacekeeping operations.
On the massacre’s 10th anniversary, then UN Secretary General Kofi Annan wrote that the UN had “made serious errors of judgement, rooted in a philosophy of impartiality”, contributing to a mass murder that would “haunt our history forever”.
If you look at some of the other infamous failures of peacekeeping missions – in places such as Rwanda, Somalia and Angola – it is the limited powers given to peacekeeping operations that have resulted in those failures.
2. The invasion of Iraq
The invasion of Iraq by the US in 2003, which was unlawful and without Security Council authorisation, reflects the fact that the UN is has very limited capacity to constrain the actions of great powers.
The Security Council designers created the veto power so that any of the five permanent members could reject a Council resolution, so in that way it is programmed to fail when a great power really wants to do something that the international community generally condemns.
In the case of the Iraq invasion, the US didn’t veto a resolution, but rather sought authorisation that it did not get. The UN, if you go by the idea of collective security, should have responded by defending Iraq against this unlawful use of force.
The invasion proved a humanitarian disaster with the loss of more than 400,000 lives, and many believe that it led to the emergence of the terrorist Islamic State.
3. Refugee crises
The UN brokered the 1951 Refugee Convention to address the plight of people displaced in Europe due to World War II; years later, the 1967 Protocol removed time and geographical restrictions so that the Convention can now apply universally (although many countries in Asia have refused to sign it, owing in part to its Eurocentric origins).
Despite these treaties, and the work of the UN High Commission for Refugees, there is somewhere between 30 and 40 million refugees, many of them, such as many Palestinians, living for decades outside their homelands. This is in addition to more than 40 million people displaced within their own countries.
While for a long time refugee numbers were reducing, in recent years, particularly driven by the Syrian conflict, there have been increases in the number of people being displaced.
During the COVID-19 crisis, boatloads of Rohingya refugees were turned away by port after port. This tragedy has echoes of pre-World War II when ships of Jewish refugees fleeing Nazi Germany were refused entry by multiple countries.
And as a catastrophe of a different kind looms, there is no international framework in place for responding to people who will be displaced by rising seas and other effects of climate change.
4. Conflicts without end
Across the world, there is a shopping list of unresolved civil conflicts and disputed territories.
Palestine and Kashmir are two of the longest-running failures of the UN to resolve disputed lands. More recent, ongoing conflicts include the civil wars in Syria and Yemen.
The common denominator of unresolved conflicts is either division among the great powers, or a lack of international interest due to the geopolitical stakes not being sufficiently high. For instance, the inaction during the Rwandan civil war in the 1990s was not due to a division among great powers, but rather a lack of political will to engage.
In Syria, by contrast, Russia and the US have opposing interests and back opposing sides: Russia backs the government of the Syrian dictator Bashar al-Assad, whereas the US does not.
5. Acting like it’s 1945
The UN is increasingly out of step with the reality of geopolitics today.
The permanent members of the Security Council reflect the division of power internationally at the end of World War II. The continuing exclusion of Germany, Japan, and rising powers such as India and Indonesia, reflects the failure to reflect the changing balance of power.
Also, bodies such as the IMF and the World Bank, which are part of the UN system, continue to be dominated by the West. In response, China has created potential rival institutions such as the Asian Infrastructure Investment Bank.
Western domination of UN institutions undermines their credibility. However, a more fundamental problem is that institutions designed in 1945 are a poor fit with the systemic global challenges – of which climate change is foremost – that we face today.