JOIN USBangaloreans continue to pay high prices for vegetables and fruits. But the farmers hardly get their due share, as too many middlemen in the supply chain pocket much of the profits.
Baiyappa and Venugopal arrive in the City from Kadiri in Anantapur, Andhra Pradesh, every day before the break of dawn. After enduring long hours of travel transporting their tomato produce, more often than not, their effort turns futile.
The remuneration they get at the Agriculture Produce Market Committee (APMC) yard in Bangalore, just about reimburses their travel cost. And many a time, they do not even recover the train fare. Tomato growers secure about Rs five per kg of the produce at the market yard. By the time it reaches retail outlets in the City, the price goes up to anywhere between Rs 10 and Rs 18.
Baiyappa and Venugopal are one among hundreds of farmers who fail to get a price justifying their efforts at production. “Sometimes we wonder why we even take the trouble of bringing it all the way till here. Then again, it is better than letting it rot in the fields. There are many occasions when people just dump their extra produce in the yard and leave,” Venugopal says.
While on the one hand, farmers fail to secure a fair price, on the other, consumers are faced with inflated prices of vegetables, fruits and foodgrains. At the retail store, the consumer is not just paying for the produce, but also for the number of hands it has changed before reaching the store — for the rentals of the store, the processing and marketing costs of the retailer.
Supply chain
The problem is age old: The supply chain involving too many middlemen stretches beyond its tensile strength. Since the problem has been persisting for long, apart from the oft-pronounced solutions and the existing government policies, it demands new interventions and replication of successful models.
The trick is to cut short the supply chain with direct marketing between the farmer and the consumer. Of course, evolving this form of supply chain involves many hurdles.
Speaking about middlemen in the supply chain, convenor of Alliance for Sustainable and Holistic Agriculture (ASHA), Kavitha Kuruganti, dismisses the notion that all middlemen are villains. Due to the nature of the supply chain, they too have a positive role to play.
For instance, provision of mill and storage facilities. A farmer might bring one quintal of produce. It would not make sense to him to maintain a storage facility or mill. This is where middlemen walk into the picture. The problem arises when middlemen become the epicentre of the supply chain, marginalising the farmer.
“Eliminating middlemen is impractical. However, their role can be minimised, strengthening the control of farmers in the supply chain. One way to achieve this is by mobilising the farmers into a collective. So that, collectively, they can maintain processing and storage facilities,” Kuruganti says.
The root of the problem
Placing prominence on this idea of farmers’ collective through Farmer Producer Organisation (FPO), on February 12, a National Advisory Council (NAC) working group committee submitted its recommendations to the government on ‘Enhancing Farm Income for Small Holders through Market Integration’. The NAC working group points out problems in mobilising working capital and investment credit for an FPO.
Financial institutions levy a rate of interest as high as 13 per cent to 14 per cent on loans availed by farmers to market their produce. This dissuades small producers from approaching them. The numerous licences one has to obtain from various departments have also restricted such ventures. The committee observes that the existing provisions in the APMC Act need to be amended to make it easy for FPOs to buy and sell directly from producers, outside the market yard.
The NAC recommendations suggest the government to designate an ‘apex organisation’ to take care of the technical support, training, research and knowledge management of FPOs. On the loan front, the committee prescribes collateral-free loan up to Rs 25 lakh.
It recommends compulsory procurement of at least 15 per cent to 20 per cent of the produce from small and marginal farmers by retail outlets.
The way out
Experts believe that if the government implements these recommendations, it would go a long way in bringing a makeover to the supply chain. A case study of a farmers’ initiative in Belgaum, documented by members of ASHA, demonstrates how such a collective can benefit both the producer and the consumer.
About 82 farmers are part of a registered ‘Organic Food Club,’ which caters to 500 consumer families. For over a decade, they have worked on building direct relationship with the consumer. The quantity of their produce is based on the money needed for these many families. This way, they ensure that most of their produce gets sold. Since they directly sell their produce to the consumer, they get a better price for it, and the consumers too get their supplies for a reasonable price.
This will work for farmers selling non-organic produce too. The answer here is not establishment of large retail outlets, instead smaller collectives catering to a specific number of consumers, says Kuruganti. Another model of marketing that seeks emulation is ‘Rythu Bazaar’ set up by the Andhra Pradesh government. This bazaar is a market space meant for farmers for direct interface with consumers. They even get concession on the travel fare to bring their produce to the market from their hometowns. This way, people in urban areas are able to buy farm produce for a lower price.
Value addition to fruits and vegetables has been a long-term demand of many farmers’ groups to improve the market for their crops. This means, for example, creating market for mango pulp and various other forms of the fruit for consumption. Instead of just selling the fruit, the other food products derived from the fruit will help in drawing more customers and better market for farmer’s produce.
In a mass marketing set-up, the supply chain cannot be turned fair for farmers without minimum support price for their produce, says Krishna Prasad of Sahaja Samruddha. Be it grains, vegetables or fruits, the government must ensure MSP for farmers’ produce.
Knowledge inherited
Education about the importance of growing native crops and skills in marketing crops unique to their region are yet to be worked on. Sticking to region-friendly crops will fetch better yield for farmers and will help the public secure that ‘healthy meal’ at a lower price.
There are many examples where companies have coaxed farmers to grow foreign crops, promising huge profits. A look into these cases shows that most times, crops have failed and the fertility of the land has been lost. To improvise on the traditional knowledge and adapt it to present market conditions, activists working closely with farmers have often called for roping in rural youth to educate them about entrepreneurship in agribusiness.
At the consumer’s end too, there is lack of awareness about what is being sold to them as ‘nutrition’. The public, most of the time, have no clue about the ‘healthy’ choices made on their behalf by retailers. “People eat oats because they are available in supermarkets. Oats have only 11 per cent nutrition value, while other native millets grown in the State have better nutrition value,” says Prasad.
The NAC working group has also encouraged involving educational institutions such as the IIMs in running courses on FPO promotion. Consumer awareness will aid in cleaning the supply chain. A proactive approach to melas or fairs, bringing the farmer closer to the consumer and awareness campaigns will further help the cause.