MAR­KET­ING

Lack of cold chains ends in dis­tress crop sale, ex­po­sure to price volatil­ity

India Today - - COVER STORY -

The lack of a na­tional agri­cul­tural mar­ket is the big­gest con­straint in rais­ing agri­cul­tural pro­duc­tiv­ity, ac­cord­ing to Si­raj Hus­sain. “Mar­ket im­per­fec­tions in­clude no cold chain and price un­cer­tainty. When pro­duc­tion of crops is good due to a suc­cess­ful mon­soon, prices crash, lead­ing to mis­ery for the farmer,” he says.

Agri­cul­tural markets in the coun­try are reg­u­lated by state APMC (Agri­cul­tural Pro­duce Mar­ket­ing Com­mit­tee) laws ever since the Atal Bi­hari Va­j­payee-led NDA gov­ern­ment re­leased a model APMC Act in 2003 to be en­acted by the states. Un­der these state acts, farm­ers are re­quired to sell their pro­duce at state-owned man­dis pro­tected by re­mu­ner­a­tive prices. The sys­tem fell into dis­ar­ray due to short­com­ings: APMC man­dis levy a mar­ket fee on farm­ers, which makes it ex­pen­sive for them to sell pro­duce. Ad­di­tion­ally, farm­ers have to ar­range for their pro­duce to be trans­ported from their farms to the near­est mandi, adding to costs. In trans­port­ing grain from the farm to the store, sev­eral in­ter­me­di­aries are in­volved, who charge com­mis­sions. Again, man­dis are of­ten shut for lack of stor­age or, if open, have fort­night-long queues. Thus the farmer is forced to sell his pro­duce at sig­nif­i­cantly lower prices to the trader com­pared to the com­pet­i­tive price he gets from the re­tailer.

The Act pro­vides for selling pro­duce di­rectly through con­tract farm­ing, per­mits pri­vate per­sons, farm­ers and con­sumers to es­tab­lish agri­cul­tural markets, levies a sin­gle mar­ket fee on the sale of the com­mod­ity and re­places li­cences with reg­is­tra­tion of mar­ket agen­cies so they can op­er­ate in more than one mar­ket. But only 18 states and Union ter­ri­to­ries have im­ple­mented the re­forms in the Model Act.

HOW TO FIX IT

The Eco­nomic Sur­vey of 2014-15 rec­om­mended that a Na­tional Agri­cul­tural Mar­ket (NAM) be cre­ated as a na­tional elec­tronic plat­form for farm­ers to sell their pro­duce. Such a mar­ket would en­able farm­ers to re­ceive a price for their pro­duce and al­low them to sell their pro­duce any­where in the coun­try. In April 2016, the Modi gov­ern­ment launched e-NAM to link 585 reg­u­lated agri-markets across eight states and in­te­grated whole­sale man­dis in these ar­eas to cre­ate a com­mon plat­form.

Cre­ate in­fra­struc­ture for agri­cul­tural markets. The rea­son why In­dia does not have ad­e­quate agri­cul­tural markets is be­cause, as Alagh points out, “there is no price-dis­cov­ery mech­a­nism; just some mar­ginal and poor farm­ers selling

their pro­duce on the high­way for ur­ban mo­torists is no re­place­ment for an ad­e­quate mar­ket”. There is no way for the farmer to find out op­ti­mal pric­ing in the re­gion or glob­ally, he adds. “The price in­for­ma­tion avail­able is months old and out­dated when the farmer needs cur­rent price in­for­ma­tion. The In­dian gov­ern­ment and pri­vate sec­tor need to set up smart agri­cul­tural towns, smart agri­cul­tural markets, smart vil­lages, not merely smart cities to fix the lack of agri­cul­tural markets.”

Pro­tect farm­ers against price fluc­tu­a­tions. Ru­ral dis­tress to­day is largely due to fall­ing prices, es­pe­cially of pota­toes, corn and cot­ton. While fall­ing prices have slashed farm­ers’ in­comes sub­stan­tially, the MSP (min­i­mum sup­port price) sys­tem is ben­e­fit­ting less than 10 per cent of the ru­ral sec­tor, says Hus­sain. Gov­ern­ments can­not con­trol prices but can help build clauses to pro­tect farm­ers.

Set up cold chains so that farm­ers can store ex­cess pro­duce and not sell them in dis­tress. In a re­cent in­ter­view with in­dia to­day, Union min­is­ter for food pro­cess­ing in­dus­tries, Har­sim­rat Kaur Badal, said Rs 92,651 crore (at 2014 whole­sale prices) worth of food is wasted in the coun­try. She quoted a 2013 ICAR study that blamed the lack of short-term stor­age in­fra­struc­ture, par­tic­u­larly at the farm level, and the lack of pro­cess­ing ca­pac­i­ties in pro­duc­tion catch­ments. “We’ve sanc­tioned 101 new cold chains and five food parks in the past three years,” she said. She is also putting in place in­fra­struc­ture for three sep­a­rate food grids—for fruits, veg­eta­bles and other cash crops—and work­ing on a Na­tional Food Grid De­vel­op­ment Au­thor­ity, or NFGDA, which will help plan move­ment of food, es­tab­lish

PRAB­HJOT GILL

Lay­ing siege Fam­i­lies of de­ceased farm­ers in Pun­jab seek com­pen­sa­tion in 2014

Newspapers in English

Newspapers from India

© PressReader. All rights reserved.