1. Impact assessment of e-markets in Karnataka A Amarender Reddy Principal Scientist(Agricultural Economics) Division of Agricultural Economics ICAR-Indian Agricultural Research Institute, New Delhi

2. E-market towards National Agricultural Markets
Government of India announced National Agricultural Markets based on the experience of e-market in Karnataka (Digital India)- major reform in agricultural markets
120 million cultivators across the country.
One trader for 50 farmers
Literature on e-governance shows that it will
increase transparency,
reduce corruption and collusion
increase competitiveness, timeliness.

3. Theory of change (e-market)
Electronic market provide level playing field to farmers
Reduce information asymmetric between farmers and traders
Reduce collusion among traders
Increase competition among traders
Better price for the farmers

4. Process flow in e-mandi
Produce exposed on the platform-
Ready for sale
Farmer with Produce to the APMC
APMC
Gate Entry
Unique lot Number given
Process flow in e-mandi
Post auction Activity
BID FINALIZATION
Bidding across on UMP
Sale bill
Payment
Highest bidder wins lot
Delivery
SMS to Farmer
E permit
Source: e-mandi officials

5. Theory of Change in National Agricultural Markets

6. Progress of e-mandi in Karnataka
APMC MARKETS
157 (354 sub markets)
Per APMC market
TRADERS
34,473
220
COMMISSION AGENTS
17,149
109
NOTIFIED COMMODITIES 92
TURNOVER
Rs. 32,000 CRORE
Rs. 204 Crores
ONLINE MARKETS
103 APMCS
TRANSACTION ON ONLINE MARKETS
35 LAKH LOTS (Rs. 15,500 CRORE)
Rs. 150 Crores
FARMERS REGISTERED ON ONLINE MARKETS
11.5 LAKH FARMERS
11165 farmers
TRADER LICENSE
ONE LICENSE FOR THE STATE
MARKET FEE
SINGLE POINT OF LEVY

8. Objectives of the study
1. To review the progress and bottlenecks if any in implementation of e-market(APMC) markets in Karnataka state in terms of hardware and software installation and working with special reference to groundnut (Hypothesis: software and hardware required by the e-markets were established in all markets and there is sufficient fund flow from state governments and skill level of local officials is enough to deal with e-markets): Research method: this was probed through physical verification of e-markets. 2. To understand the procedure(process flow) in the perspective of different stakeholders(farmers, commission agents, traders and grassroots level field assistants and implementing agency to document skill gaps at each level). (Hypothesis: the procedures and processes were appropriate and without any defect) (Research method: for this field survey data collected from e-markets was used: pre-tested questionnaires and focus group interaction were used to collect data.

9. Objectives cont..
3. To understand the impacts of e-market on prices and arrivals, transparency, competition, collusion, timeliness and universal participation
Hypothesis: implementation of e-market increased prices and market arrivals, increased competition among traders and reduced procedural delays.
(Research method: tabular analysis were used. Difference-in-difference method was used to know the impact of e-markets on the prices received by farmers and the arrivals)
4.To suggest policy strategies for inclusive participation of all stakeholders (including illiterate farmers, traders) to realize full potential of e-market scheme and upscaling to National Agricultural Markets
(Hypothesis: A few best practices enhanced effectiveness of the program and a few bottlenecks are hindering the progress and effectiveness)
(Research method: discussed results of the study with stakeholders by organizing focus group interactions and also data collection from key informants.

11. Methodology (difference-in-difference approach)
Y= β0 + β1*[Time] + β2*[Intervention] + β3*[Time*Intervention]+ε
Note: A shows baseline price in intervention group
B shows baseline average price
C shows prices in the intervention group after intervention
D shows prices without intervention in the intervention group
Table 2. Interpretation of difference-in-difference regression parameters
Coefficient Calculation Interpretation
Β0 B Baseline average (before e-market)
Β1 D-B Price trend in control group(non-e-market)
Β2 A-B Difference between two groups before introduction of e-market
Β3 (C-A)-(D-B) Difference in change in prices over time

13. Impact of e-market
Prices
% increase in prices

14. Impact of e-market on price variability

15. Difference-in-difference regression in prices
Independent variables
Unstandardized Coefficients t
Sig.
(Constant)
1743.1
14.07
0.00
Time (year) (β1)
265.4
12.06
Intervention(e-market=1; non-e-market=0) (β2)
-256.5
-1.46
0.14
Interaction between time and intervention (β3)
65.1
2.09
0.04
Adj. R2
0.56
Number of observations
289

17. Difference-in-difference regression in arrivals
Unstandardized Coefficients t
Sig.
(Constant)
449.5
0.18
0.86
Time (year) (β1)
84.6
0.19
0.85
Intervention(e-market=1; non-e-market=0) (β2)
2271.0
0.64
0.52
Interaction between time and intervention (β3)
1166.6
1.85
0.07
Adj. R2
0.32
Number of observations
289

18. Major findings from field survey (e-mandi)
Concerns of traders
Fear of taxation of traders (45%)
Slow broadband connectivity (57%)
Some traders don’t have computers, but facilitated by officers
Sudden shut down of the system(partial implementation)
Farmers opinion
Transparent (90%)
Timely payment by 2.30 pm (100%)
Not understand the process (45%)
Reduced collusion among traders (57%)
Suggestions
Connectivity
Hardware installation and working
Awareness (training programs to both traders and farmers)

19. Main benefits Automation of auction process Increased transparency
Traders from across the state can participate in bidding
Increased competition among traders (reduced collusion)
More bids per lot (6 to 11)
Higher prices to farmers
Timely payment to farmers

20. Major findings from field survey (e-mandi)
Concerns of traders
Fear of taxation of traders (45%)
Slow broadband connectivity (57%)
Some traders don’t have computers, but facilitated by officers
Sudden shut down of the system(partial implementation)
Farmers opinion
Transparent (90%)
Timely payment by 2.30 pm (100%)
Not understand the process (45%)
Reduced collusion among traders (57%)
Suggestions
Connectivity
Hardware installation and working
Awareness (training programs to both traders and farmers)

21. Conclusion
There was increased competition among traders and reduced scope for collusion, increased number of bids per lot from about six to eleven.
There was 128 % increase in average prices in e-markets compared to only 88% in non-e-markets between 2007 and And also there was significant reduction in price variability in e-markets (by 3%) compared to increase in non-e-markets (1%).
The difference-in-difference regression results shows that with the introduction of e-markets, prices increased by Rs.65/q after controlling for initial conditions.
There was also an increase in average market arrivals by 1166 tons with the introduction of e-markets.
All stakeholder mentioned that there was increased transparency, reduced delay in payment. However, still most of the e-markets are operating partially, hence there was a need to improve the system in Karnataka as well as in National Agricultural Market scheme.

22. Policy suggestions
First and foremost is to increase awareness about the e-market processes and benefits to farmers.
Improvement in broadband connectivity, placing the skilled manpower for uninterrupted operation of system, setting up of help desks for farmers, traders and commission agents to place their orders and clarify doubts about e-market system.
Although most of the farmers are in favour of the e-markets, a few traders and also commission agents are expressing their concern about the utility of the system.

23. Thanks