Mandi electronic exchange: orchestrating Indian agricultural markets for maximizing social welfare

Abstract

In this paper, we discuss the prevailing agricultural marketing system in India and identify the problems and inefficiencies. We propose that the government wholesale market called the Mandi should be transformed into an electronic marketplace (exchange) for agricultural produce. An important function of the electronic exchange is to match the supply of the farmers' produce with the demand from the wholesalers and retailers. We present a mixed integer programming model that the electronic exchange needs to solve in an iterative way to optimally match buyers with sellers. We present a stylized case study to illustrate the functioning of such a Mandi exchange. We believe such a Mandi exchange will have a translational impact on agricultural trading, particularly in India.