Digitalisation has scaled agriculture to new heights. Digital Mandi is a revolutionary and path-breaking concept that is proving to be a giant leap in reforming the agri-sector. The birth of digital Mandis has transformed and brought a new outlook to how post-harvest management practices can be carried out. It is making the agricultural sales process more transparent and ensuring decent remuneration for farmers’ efforts.
How does the Traditional Mandi System Function?
India’s agricultural markets are currently regulated by the states under the Agricultural Produce Marketing Committee (APMC) act. This act enables states to establish Mandis, where the sale of agricultural commodities is carried out through auction. Farmers access these marketplaces to sell their produce to the traders or wholesalers through agents.
Mandis serve as a great platform to connect farmers with end consumers through a complex trading system. Agents are a critical element of this information and infrastructure starved system, capturing a large portion of value in the agricultural supply chain. They help in maintaining information flow across the system as well as in extending credit terms to small farmers. Consequently, these middlemen end up taking away a major chunk of the profits earned through the farmers’ produce.
What Transpired the Need for Digitalisation of Mandis?
Given their higher control over all the sales activities in the Mandis, commission agents take away a major part of farmers’ profits. Farmers only get a tiny fraction of what consumers pay for the agricultural produce. With exploitation by middlemen, lack of transparency, and collusion among traders, this selling system is quite unfair to the farmers.
Delay in payments or over-reliance on cash transactions often lead to liquidity crunches, compelling farmers to sell their crops at significantly low prices. Payment delays also force farmers to take loans at higher rates from agents or local money-lenders to meet their day-to-day expenses. All these factors mean that opting for digital Mandis is inevitable for farmers to ensure more profits for their agriproducts.
Democratising and Empowering Farmers With Technology
Digitalised marketplaces or Mandis can be a gateway to new trading opportunities for farmers. Digital Mandis help farmers with price discovery through the internet or SMS service. This can majorly reduce their dependence on middlemen or agents for agricultural support services. Digital Mandis can also help in ensuring the financial well-being of farmers with improved produce profits and lesser cash crunches.
More Buyers, More Pricing Power for Farmers
Digital Mandis can facilitate trade beyond Mandis / state borders. They can ensure increased direct consumer-access for farmers and can also help in getting good prices for their agriproducts.
Farmers are also provided with access to the ruling price of agricultural produce in different markets across the country. With no geographical constraints, farmers can witness a significant expansion in their consumer base. This, in turn, can strengthen the bargaining power of farmers and help them to get the best price for their produce.
Weeding Out Middlemen, Propelling Big Profits
Farmers’ dependency on middlemen is mainly due to their inaccessibility or lesser accessibility to market and price information. Digital Mandis, with the use of technology, can help farmers in better tracking and understanding prices and market scenarios across different Mandis.
Digital Mandis can empower farmers to directly connect with distantly located processors, wholesalers, large retailers, exporters, etc. It can bring more transparency in trading processes by eliminating the role of middlemen, thereby resulting in full realisation of the price for farmers.
Eliminating Critical Cash or Liquidity Crunches
Given the highly volatile nature of markets in the present times, demand-supply imbalances have become a norm. The reliance on cash-transaction systems in such an environment can lead to acute cash crunches.
Digital Mandis, with electronic payment processes, can ensure that the trading operations go on smoothly without any hassles. They can play a vital role in pulling farmers out from the clutches of cash crunches or payment delays. With improvement in the efficiency of sales operations, digital Mandis can also ensure improved prices and faster payments for the farmers.
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