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How Online Mandis are different from Commodity Trading Companies

How Online Mandis are different from Commodity Trading Companies

By providing farmers with a digital platform to sell their produce directly to buyers, online mandis are building a name for themselves in the agricultural industry. Online mandis, which can be generic or specialised in terms of items, are essentially online markets where farmers can sell their produce. E-mandi is the name of the technology that makes these transactions possible.

An E-mandi is essentially an electronic marketplace that facilitates transactions between sellers and buyers of agricultural produce. This article will explain how online mandis are different from commodity trading companies, and why agri-producer firms should consider registering as an online mandi instead of a CTC. E-mandis are gaining popularity among farmers and traders because of the ease with which they can strike deals and open new markets using these platforms.

Commodity Trading Companies (CTC)

A partnership corporation known as a commodity trading company (CTC) facilitates the trading of agricultural commodities. A CTC operates under the commission model, acting as a neutral party to assist buyers and sellers in negotiating a price before purchasing the good from the manufacturer and reselling it to the customer.

Read also – How Apna Godam brings Mandi at the door step of the farmer

Companies that trade commodities have been operating for a long time and offer several advantages. For instance, these companies can contribute to boosting the trading of agricultural commodities and the market’s liquidity. Their lack of operational transparency, however, is their biggest drawback. Commodities are highly perishable and cannot be kept for an extended period of time after purchase.

Online Mandi

A technologically enabled online marketplace run by an e-mandi corporation is known as an online mandi. Farmers can upload information about their produce and the quantity they are willing to sell on the online mandi. The information is then made available to customers via the website, where they can purchase the fruit at a price that both the vendor and the customer have agreed upon.

The e-mandi company normally takes a percentage of the amount that the vendor and the buyer agree upon as payment. One of the main distinctions between an e-mandi and a CTC is this. Produce isn’t first purchased by the e-mandi company and then sold to the customer. Online mandis are fully digital platforms that help sellers and buyers conduct transactions. In contrast to a CTC, there is no third party interference in this situation.

Apna Godam is an online mandi that is brought right to the doorstep of farmers. A corporation that specialises in post-harvest solutions, Apna Godam primarily serves the non-perishable market. It is the first officially announced online Mandi in both Rajasthan and India. As value-added services, it also offers warehousing, commodity finance, and logistic services in addition to facilitating spot trading of commodities. The farmer need not travel anywhere to sell the product to any buyer in the nation. With the assistance of a network of logistical partners, Apna Godam manages the logistics.

Read also – [Funding alert] Agri-Fintech startup Apna Godam raises Rs. 2 Cr in seed funding

Key Differences Between Commodity Trading Companies and an e-Mandi

  • Buyer-seller interaction – Commodity trading companies are not direct sellers to the buyer and may not even be aware of the names of the buyers. On the other hand, an e-mandi facilitates a direct interaction between the seller and the buyer. Once a seller has listed the produce they want to sell on the website, the buyer can contact the seller directly and negotiate a mutually agreed price.
  • Product specificity – Commodity trading companies deal with a broad range of agricultural commodities, such as wheat, cotton, corn, and soybeans. However, an e-mandi can be specific to a product or a group of products. For example, an e-mandi for onions or potatoes.
  • Product quality – In most cases, the quality of agricultural commodities is difficult to grade or differentiate. An e-mandi can segregate the produce based on the grade or quality of the produce. For example, cotton crops are graded as either normal or extra. Through an e-mandi, a farmer can sell only normal grade cotton and not extra grade.
  • Payment frequency – Payment for commodities is usually made once a year, and the entire quantity sold is paid to the farmer at that time. In the case of an e-mandi, the payment frequency can be as low as once a month.
  • Taxability – Commodity trading companies are taxed as non-corporate business entities (NCBEs). However, an e-mandi is taxed like any other marketplace.

Read also – Apna Godam – Super App for Farmers | Online Mandi

Why Agri-Producer Firms Should Register as an Online Mandi Instead of a CTC?

An agri-producer company should be persuaded to register as an e-mandi rather than a CTC based on the benefits mentioned above. There are moreover some other advantages. For instance, e-mandis are able to list and sell a wide range of agricultural commodities, including perishable goods and hard-to-sell goods. The vast advantages that an e-mandi offers over a CTC are the reason that agri-producer companies should think about registering as an e-mandi rather than a CTC.

E-mandis are additionally subject to GST, making them a more dependable source of income and a superior business opportunity than a CTC. E-mandis are more dependable sources of revenue and better business opportunities than CTCs because they are subject to GST. Aside from the primary distinctions between CTCs and e-mandis, it is important to keep in mind that an e-mandi is not a magic solution to every problem facing the agricultural industry. A wholesaler or a retailer in the supply chain cannot be replaced by an e-mandi or any other digital platform.

Conclusion

E-mandi is an online market for purchasing and selling agricultural products. Unlike a CTC, an e-mandi doesn’t involve a third party. The buyer and seller negotiate a price directly, and e-mandi facilitates the transaction. Agri-producer enterprises should register as an e-mandi instead of a CTC due to its many benefits. E-mandis aren’t a cure-all for agriculture’s problems. In the supply chain, it can’t replace a wholesaler or retailer. It has advantages over a CTC and can be an agri-ideal producer’s partner.

Read also – How Agri logistics is solving the big problems of small farmers

Frequently asked questions (FAQs)

What is an Online Mandi?

A technologically enabled online marketplace run by an e-mandi corporation is known as an online mandi. Farmers can upload information about their produce and the quantity they are willing to sell on the online mandi.

What are the Commodity Trading Companies (CTC)?

A partnership corporation known as a commodity trading company (CTC) facilitates the trading of agricultural commodities. A CTC operates under the commission model, acting as a neutral party to assist buyers and sellers in negotiating a price before purchasing the good from the manufacturer and reselling it to the customer.

How Online Mandis are different from Commodity Trading Companies?

Online mandi is an online market for purchasing and selling agricultural products. Unlike a CTC, an e-mandi doesn’t involve a third party. The buyer and seller negotiate a price directly, and e-mandi facilitates the transaction. Agri-producer enterprises should register as an e-mandi instead of a CTC due to its many benefits.

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