Steps to Improve India’s Agricultural Marketing Infrastructure

India is one of the world’s largest agricultural producers, yet millions of farmers routinely earn far less than what their produce is worth. The problem isn’t production – it’s what happens after harvest. Fragmented markets, monopolistic middlemen, crumbling storage facilities, and poor road connectivity conspire to drain value from the farm gate before it ever reaches the consumer. Improving India’s agricultural marketing infrastructure is, therefore, not just an economic priority – it is a direct lever for farmer welfare and national food security.

The scale of the problem 🔗

India’s agricultural marketing system has historically been governed by Agricultural Produce Market Committees (APMCs), state-regulated bodies meant to protect farmers from trader exploitation. Over time, however, many mandis became monopolistic, restricted competition, and imposed heavy fees that squeezed farmer incomes. Research from Tamil Nadu Agricultural University found that the average share of the consumer’s rupee that reaches farmers ranges from just 28% to 78% across various commodities – a reflection of high margins and costs along the supply chain.

Compounding the problem is a chronic gap in physical market coverage. According to the Government of India’s Press Information Bureau, the National Farmers Commission recommended that a regulated market should be available within 5 km of every farmer, corresponding to a market area of roughly 80 sq km. The actual all-India average, however, is one regulated market per 487 sq km – meaning most farmers must travel far to reach the nearest market, incurring costs and time losses before the sale even begins.

Reforming the APMC framework 🔗

Dismantling monopolistic practices within the APMC structure is one of the most important steps toward a competitive marketing environment. Analysis by the Carnegie Endowment for International Peace highlights how states like Madhya Pradesh and Karnataka led early reform by liberalizing APMC mandis, introducing private trading platforms, reducing mandi fees, and creating unified licensing for traders. Karnataka’s Unified Marketing Platform, built in partnership with commodity exchange NCDEX, reported that farmers saw a nominal price increase of 38% in the years following its launch – a strong indicator of what competitive, digital markets can deliver.

The central government has reinforced these efforts through the Model Agricultural Produce and Livestock Marketing (Promotion & Facilitation) Act, 2017, which was shared with all states and union territories for adoption. The model act opens up options for private markets, direct marketing, farmer-consumer markets, and special commodity market yards, breaking the exclusive hold that traditional APMC yards had on agricultural trade.

Encouraging private and cooperative market development 🔗

Alongside APMC reform, encouraging private sector and cooperative participation in market infrastructure is essential. When only public mandis operate, farmers have few alternatives and little bargaining power. The Government of India’s Agriculture Infrastructure Fund (AIF) – a ₹1 lakh crore financing facility – was launched to create infrastructure close to the farm gate, stimulating private and cooperative investment in warehousing, sorting, grading, and cold chain facilities. This fund has sanctioned loans worth ₹67,717 crore as of 2024 for post-harvest infrastructure projects.

Farmer Producer Organizations (FPOs) are another critical vehicle for cooperative market development. By aggregating small farmers’ produce, FPOs improve bargaining power, provide shared access to market infrastructure, and help members avoid distress selling. The government’s 10,000 FPO formation scheme, implemented by the Small Farmers’ Agribusiness Consortium (SFAC), is designed to scale this model to serve the roughly 120 million smallholder farmers across the country.

Expanding and modernizing market facilities 🔗

Physical market infrastructure upgrades are just as critical as policy reform. Many existing mandis lack basic amenities – covered auction platforms, reliable weighing equipment, proper drainage, grading facilities, and electricity. Studies from FFTC’s Agricultural Policy Platform show that low market arrivals in several regulated markets in Karnataka were directly linked to inadequate grading and weighing facilities, while markets with better infrastructure consistently attracted higher volumes of produce and better prices.

The Agricultural Marketing Infrastructure (AMI) sub-scheme under the Integrated Scheme for Agricultural Marketing (ISAM) directly addresses this by providing financial assistance for construction of warehouses, rural storage godowns, and non-storage market infrastructure across the country. Rural haats – the traditional periodic markets that serve millions of farmers at the grassroots – can be progressively upgraded with covered spaces, electricity, and digital communication tools to improve their efficiency without displacing their social function.

Fixing transportation and cold chain infrastructure 🔗

Storage and transportation are where India’s marketing infrastructure faces its steepest challenge. According to a NABARD Consultancy Services study, India suffers food losses of approximately $17.7 billion annually due to post-harvest mishandling – with horticulture losses alone amounting to 49.9 million metric tonnes every year, driven primarily by inadequate cold chain infrastructure.

The cold chain gap is stark. According to India Brand Equity Foundation (IBEF), NABARD estimates that cold chain access can boost farmer incomes by 15-20%, yet India’s cold storage infrastructure remains insufficient relative to its vast agricultural output. The government has set an ambitious target: a senior Agriculture Ministry official stated at REFCOLD India 2025 that the goal is to reduce post-harvest losses in horticulture from the current 15% to below 5% by 2047 – which would save nearly 10 million additional tonnes of produce annually.

Improving rural road connectivity is equally important. Data from Officers Pulse shows that about 97% of fruits and vegetables in India are transported by road – the mode most vulnerable to delays, damage, and spoilage. Better all-weather roads, refrigerated transport vehicles, and digital logistics platforms are all needed to reduce transit losses and connect remote farming communities to distant markets.

Building a digital marketing ecosystem with eNAM 🔗

One of the most significant structural interventions in recent years has been the National Agriculture Market (eNAM), a pan-India electronic trading portal launched in April 2016. As per the Government of India’s Press Information Bureau, eNAM networks existing APMC mandis into a unified national market, enabling transparent online bidding, real-time price discovery, and direct online payment to farmers’ bank accounts. Over 1,389 mandis across 23 states and 4 union territories have been integrated into the platform, with more than 1.77 crore farmers registered as of early 2024.

The platform addresses one of the most persistent problems in Indian agricultural marketing: information asymmetry. When farmers have no visibility into prices beyond their local mandi, traders can exploit that gap. eNAM’s mobile app – available in 8 languages – displays commodity prices, allows advance gate entry, and shows real-time bidding progress, directly empowering farmers in the price discovery process. Warehouse-based trading modules further allow farmers to store produce and sell from warehouses without physically transporting goods to the mandi, reducing post-harvest losses and distress selling during peak harvest.

Challenges in eNAM adoption 🔗

Despite its promise, eNAM’s implementation faces real hurdles. Many states have been slow to provide assaying and grading infrastructure at mandis, which is essential for online trading based on quality. Carnegie’s analysis and academic reviews both note that without functioning quality testing labs at mandis, distant buyers cannot confidently bid on produce they cannot see, limiting the platform’s competitive potential. Bridging the digital divide in rural areas and transitioning farmers away from long-standing relationships with commission agents are equally important challenges that require sustained investment in farmer training and connectivity.

The role of grading, standardization, and market information 🔗

A market is only as efficient as the information flowing through it. Without standardized grading and quality certification, prices remain subjective and negotiations remain one-sided. The Directorate of Marketing and Inspection (DMI), set up in 1935 under the Ministry of Agriculture, plays a central role in implementing AGMARK-based quality standards for agricultural commodities. Expanding AGMARK coverage and integrating grading infrastructure into more mandis and collection centers – especially those tied to eNAM – would directly improve price realization for farmers by ensuring buyers pay for actual quality.

The free flow of market intelligence – prices, arrivals, demand patterns – is equally vital. When farmers know prevailing prices in multiple markets before they sell, they can negotiate better or choose to delay sales if warranted. Government platforms like AGMARKNET aggregate price data from across the country, and their integration with eNAM and mobile apps continues to expand the reach of real-time market information to remote farming communities.

Policy coordination between centre and states 🔗

Agricultural marketing is a state subject under the Indian Constitution, which means that reforms move at different speeds across the country. The FFTC Agricultural Policy Platform notes that states with high reform scores consistently perform better in attracting investment across the supply chain – underscoring that complete and coordinated APMC reform, not partial measures, produces the best outcomes. States that resist market liberalization due to political pressures from commission agents or trader lobbies often leave their farmers worse off.

The central government’s strategy of incentivizing states through infrastructure funding – such as AIF grants and AMI scheme subsidies – while simultaneously offering model legislative frameworks represents a workable approach to policy alignment. The challenge is ensuring that incentive structures favor genuine competition and farmer welfare, rather than simply creating new rent-seeking opportunities within a reformed framework.

India’s agricultural marketing infrastructure is at a pivotal moment. The policy frameworks are in place, the funding mechanisms have been launched, and the digital tools are being rolled out. What remains is the hard work of last-mile execution – getting cold storage close to farms, bringing mandis online with working grading labs, and connecting every farmer to a market where their produce is priced fairly. The gap between potential and reality is closing, but it demands consistent political will and sustained investment at both the state and central levels.

What do you think? Can digital platforms like eNAM truly benefit small and marginal farmers who lack smartphone access and digital literacy – or does the infrastructure gap need to be solved first? And given that agricultural marketing is a state subject, how should the central government balance incentives with accountability to ensure reforms reach farmers on the ground?

References

1. https://ap.fftc.org.tw/article/3256
2. https://www.pib.gov.in/newsite/printrelease.aspx?relid=137359
3. https://carnegieendowment.org/india/ideas-and-institutions/indias-reformist-trajectory-in-agricultural-marketing-or-a-contrarian-view-on-secrecy-in-government?lang=en
4. https://agriwelfare.gov.in/en/AgriMkt
5. https://www.pib.gov.in/PressNoteDetails.aspx?NoteId=152041&ModuleId=3&reg=3&lang=2
6. https://sfacindia.com/Nam.aspx
7. https://nationaleconomicforum.org/nef_articles/addressing-post-harvest-losses-in-india-a-silent-crisis-in-agriculture/
8. https://www.ibef.org/blogs/from-farms-to-fridges-how-cold-chain-infrastructure-is-transforming-india-s-agriculture
9. https://www.theweek.in/wire-updates/business/2025/09/18/dcm89-biz-agri-post-harvest-loss.amp.html
10. https://officerspulse.com/2024/07/19/post-harvest-losses-in-agriculture/
11. https://www.pib.gov.in/FactsheetDetails.aspx?Id=149061
12. https://enam.gov.in/web/