Challenges In The Indian Mandi System

Challenges In The Indian Mandi System Challenges In The Indian Mandi System

Although things have become better in the past few years in the existing mandi system of India, there is still room for transformation. Undoubtedly, there are still several challenges that are obstructing its success, but an integrated effort in the direction of strengthening the system can bring fruitful results. Farming communities could benefit at large by making some changes in the internal marketing system of our country.

We have got an in-depth understanding of the Indian mandi system in our last blog. Through this write-up, we’ll put forward some challenges faced by the Indian mandi system.

Lack of Mandis

Around 7000 mandis are operating in different parts of India. This number might look big to some people, but the truth is that India still lacks mandis. It is worth mentioning that the National Commission on Agriculture (NCA) recommended in its report that every Indian farmer should be able to access a mandi in one hour by cart. This suggestion exposes the truth that we have not achieved even half of that yet. According to the report, the average area served by a mandi should be 80 square kilometers, but presently our mandis are serving an average area of 463 square kilometers. Thus, we need more and more mandis to strengthen the agricultural ecosystem.

Majority of farmers are marginal

In India, the farming community is segregated into different categories depending on the size of the land they own. Today, about 85% of land holdings are owned by marginal farmers in our country. Their average landholding is less than 1 hectare. They are economically weak and couldn’t even bear the transport costs of taking their harvested produce to the mandis. They somehow manage to sell their produce to the village traders who don’t offer much for their harvest.

NSS-SAS -2012 clearly states that the main sales at mandis are made by large farmers. Small farmers mostly sell their produce to local intermediaries or traders.

Indian Mandi System - Categorization of landholdings
Indian Mandi System – Categorization of landholdings

Lack of investment in agricultural markets

You might be surprised to know that around 18 states have allowed private market establishments, but till now nothing much has been changed. Despite the legislative changes, private investments in the domain remain insignificant. According to experts, high transaction costs in the collection of products are among the major challenges. Also, seeing a significant number of marginal farmers in the country, costs would always remain on the higher side. This is the reason giant retail chains purchase from mandis rather than farmers.

Irrational market fees

There are different types of fees charged in mandis. There is a market fee, rural development fund, purchase tax, social development fund, etc. Along with it, different kinds of cess are also levied which makes the system more complicated. Therefore, APMCs should waive some taxes.  Once this problem is solved, a better system could be created for traders and other stakeholders.

Steps to overcome the challenges

Here are the steps that can be taken for the betterment of the existing mandi system.

  • The density of mandis should be increased.
  • Viable investments should be at focus.
  • Efforts should be made to overhaul mandi infrastructure.
  • Taxes should be re-examined.
  • Internal reforms should take place in the APMCs.
  • The bargaining power of farmers should be kept as a priority.

The technological shift with eNAM and Bijak

National Agricultural Market (eNam) has become the best example of a technological shift in the Indian agricultural marketing system since it was launched in 2016. This electronic trading portal is continually linking the existing APMC mandis across the country. It is a unified national market for agricultural produce. The digital portal also provides an online marketplace for farmers to sell their crops.

On July 14, 2022, Union Agriculture and Farmers Welfare Minister Narendra Singh Tomar launched the Platform of Platforms (POP) under National Agriculture Market e-NAM at the State Agriculture and Horticulture Ministers Conference in Bengaluru. National Agriculture Market (e-NAM) announced the integration of 41 private entities. Bijak, India’s most trusted agri-trading app, is also proudly associated with e-NAM. Under this integration of e-NAM and Bijak, farmers and mandi traders can trade with counterparties who give them the best price for their commodities. With this integration, Bijak will be able to empower more agriculture traders and farmers in times to come.

The Indian mandi system has its own complexities but it also has the potential to become a turnaround story. Companies like Bijak can help in strengthening the current agriculture supply chain and contribute to empowering the Indian mandi system. Bijak connects buyers and suppliers with the right counterparty. It ensures that traders get end-to-end agriculture trade services. If you also want to grow your agriculture business digitally, download Bijak App from Google Play Store or contact us at 8588998844 for more information.

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