Thursday, 16 June 2016

Farm Gate Prices And Urban Apathy...

Today’s Indian Express carries an interesting article on the rural landscape of India, bringing to the fore a superbly balanced presentation of the farm gate prices issue: should farmers be able to sell as per their choice, and not just through the APMC-demarcated regulated market   yards and auctions. This raises many questions, as we shall see. But first, the article in question:





APMCs were originally established with a view to prevent exploitation of farmers by intermediaries, who compelled them to dispose of their produce at the farmgate at very low prices. By mandating all farm produce to be brought to regulated market yards and sold through auctions, the APMC mechanism was meant to ensure fair prices to farmers. But in many cases, these bodies have themselves become dens for cartelisation by traders, who control prices and charge hefty commission fees on produce transactions.


An extreme case that surfaced recently was of Devidas Maruti Parbhane. This farmer from Vadgaon Rasai, a village in Pune district’s Shirur taluka, supplied one tonne of onions early this month at the local market yard under the Pune APMC’s jurisdiction. The price he got — a little more than Rs 1.5 per kg — was itself very low. But adding insult to injury was the various “cuts” imposed on top of this.


A scrutiny of Parbhane’s patti (trade slip) by The Indian Express revealed his total revenues from the sale of one tonne of onions at Rs 1,523.20. The total cuts even on this meagre amount added up to Rs 1,522.20. That included commission fees of Rs 91.30, hamali or labour charges of Rs 59, bharai or filling-in-bags charges of Rs 18.55, tolai or loading charges of Rs 33.30, and transport charges of Rs 1,320 (as the kutcha patti issued in Shirur was billed for delivery at Pune). Parbhane, at the end of it, was left with a net earning of Re 1: “When after the auction, the trader handed me a Re 1 coin, I was flabbergasted. Maybe, he should not have taken the trouble to pay me even that!”


Traders, however, dismiss these as one-off incidents, while claiming that delisting of F&V would ultimately hurt even farmers. “The produce brought by farmers is not uniform, which is what processors want. The APMCs are tuned to handle variety. Here, we have 50-55 varieties of vegetables and 25-30 varieties of fruits arriving on a daily basis. Such variety will disappear once delisting happens. Moreover, instead of a centralised marketplace, you’ll have small and medium vehicles carrying farm produce and creating traffic mayhem in Mumbai,” warned Rajendra Shelke, a leading onion and potato commission agent at the Vashi APMC.


Besides, the APMC system guarantees that the farmer is paid for his produce, which wouldn’t be the case if he were to sell directly? “The proposed reform looks good on paper, but it will only spell doom for the farmer and end up completely destroying the agrarian economy,” he added.


Sanjay Pansare, who represents traders at the Vashi APMC’s fruit market, justified the high commission rates on grounds that the goods being handled here were perishable and prone to quality deterioration. Only around a quarter of the produce brought to the market is eventually of the best quality; the rest falls between medium and bad. The losses borne by b on this count have to, therefore, be made up through higher commission fees. Since 2002, the Maharashtra government has been issuing marketing licenses to various entities for procuring directly from the farmgate. Besides, 34 private markets have been allowed to be set up. But despite this, an estimated 75 per cent of annual arrivals of F&V in the state still take place in APMCs. The proportions are lower at 46 per cent for cotton and 25-30 per cent in oilseeds and foodgrains.





The good part of the article is for the first time in my reading at least, has someone tried to place the other side – the benefits from traders to farmers; for too long, we have been treated to articles that focus on the low farm gate prices prevalent in India. Such an approach suffers from one major disadvantage: the bulk of purchasing happens through these regulated markets; these are an intermediary reality that cannot be wished away; they form an ecosystem within the economy, have large dependencies of families as well as business connected to them.



Any change process can only be successful when both sides of the coin are taken care of; the concerns of the traders need to be met head-on and dealt with, as, regardless of the question of compensation to farmers, they currently fulfil a market function. This is where a slow and planned change can bear results – as seen in the example above, wherein the procurement for cotton and oilseeds, foodgrains are at much lower percentages. Full marks to the Maharashtra state Government for crafting a graded transition to the newer system!



It is heartening to see Maharashtra and Delhi take the first tentative steps towards making a fair and balanced system for all; this is something needs to be taken forward in all states. Therein lies the major issue- it nationwide implementation. Sadly, I have not come across more coverage, or at least focused and concerted coverage in the media on this vital aspect. While Foreign Policy, Political brouhaha, Make In India etc find coverage and deep, informed, threadbare analysis – this is all but absent in this matter. As a net result, sporadic articles spring up in the media, and the public remains mute, unconcerned and uncaring regarding this matter. While the other initiatives will impact Urban India immediately, and Rural India through the trickle down effect over time – this will have a  much faster and potent impact, given that more than 2/3rd of India is Rural...



This is a systemic change, deep and layered; it does not have the dramatic, esoteric and visual impact of  Make In India, or Digital India or the other steps of the Government; and yet, it is equally, and in some ways more effective in ensuring the development of our nation; it is also something that the internet generation, social media, mainstream media and Urban India just do not have an interest in, which is truly sad.  Frankly, this state of affairs is a brutal indictment of Urban India



The shocking example above exposes the state of affairs – that the farmer is not getting anywhere near enough; other data and proof in the for of articles can be provided; let us take Onions as an example. How much do we pay in retail? 20/- a Kg – 30/- a Kg? At times, 40/- a Kg? How much of this should the farmer take home? Prices to farmers have even gone as low as 20 Paisa a Kg. We hear a massive hue and cry when prices shoot up – so why are the people and the media silent now? Why is there total silence on such a vital matter? Because it doesn’t impact Urban India?





The bumper harvest this year, however, has left farmers in tears with reports suggesting that prices have fallen to an all-time-low of Rs. 30 paise per kg at Madhya Pradesh's mandi in Neemuch district. “There has been surplus onion production across the country this time, and the demand is relatively low. The farmers are badly hit as they spend at least Rs. 12 per kg in the entire process of producing the crop, excluding their labour cost,” said Rajender Sharma, member of Azadpur, Agriculture Produce Market Committee (APMC).


In Delhi, which primarily relies on these two States among a few others for onions, the situation is equally grim. At the Azadpur Mandi, the kitchen essential is being sold at Rs. 7.86 per kilo on an average. The best-quality onions are being sold at a wholesale rate of Rs. 10.5 per kg, whereas the poor-quality and the smaller ones are being bought by traders at Rs. 4.5 per kilo. The retail prices in the city range between Rs. 18 per kilo and Rs. 20 per kilo.







Did we read much of this in  the Media? And do note the difference between retail and wholesale prices; and ask yourselves some questions on tis state of affairs. Also do ask yourself is it fair that these matters take backstage to the much more visual steps that directly impact Urban India – and also ask yourself how can we change the state of affairs?





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