Legislators fond of dubbing the forward market for commodities as speculator zone, might do well to hear how farmers describe Azadpur mandi, Asia?s largest fruit and vegetable market.
?It can be a double or nothing game?, said a trader at the market describing how farmers take risks in guessing when to sell their potatoes. ?There?s no telling, which way the prices will move,? he said.
It all begins in the manner in which crop changes hands several times on its journey from farm to fork. At each level, more is invested in bringing the crop to market?the cost of transport, rent for cold storage space and labour, for instance?and at each level, the selling price of the produce goes up, too.
The crop that goes for Rs 3-4 at the farm gate then travels to a vegetables mart, where an agent helps sell the produce in exchange for a 5-6% commission. At marts such as Azadpur in Delhi, traders pay 1% of all sales to the Agricultural Produce Market Committee towards maintenance cost. The cost of transporting the crop from the fields of Uttar Pradesh to a market such as the Azadpur mandi can come to around Rs 222 per tonne, or Rs 0.22 per kilogram. From here, the crop is sold to companies, pushcart vendors and organised retail stores, where the mark-up can be up to 100%.
According to Rustom Singh, 29, a farmer at Mayee village, it can cost up to Rs 11,370 to produce 50 bags of potatoes. A bag contains 50kg of the crop and is a popular measure both at the farm gate and the commission agent?s shed. Of this, one-fifth goes towards renting the land for a year while the next big expenditure is on fertilisers. Mohan Singh, 34, also a farmer at Mayee, explains that farmers often have to purchase fertilisers from the black market. ?Once the fields are ready and the seeds sown, farmers must put in the fertilisers after sometime. Marketeers hold the farmers hostage to this situation and extract exorbitant prices for the commodity?. He says despite paying a higher price, farmers have ?no guarantee that the fertiliser would not be spurious?.
At harvest, sending to a cold storage unit could improve price realisation, but it?s a risk few farmers can afford to take.
Add to it, the additional cost of renting space in a cold storage facility. The manager of Atul Cold and Ice cold storage, Devendra Choudhary, 37, says it costs Rs 110 per quintal to rent space at the facility, whether it is for a day or 10 months. The facility has six makeshift board floors and can store up to 2,30,000 bags. The storage is currently building a new wing. The temperature is maintained at 30-35 degrees fahrenheit inside, says an engineer at the cold storage based in Sababad, near Dauji.
?The space fills up very quickly once the crop is harvested,? Choudhary says. The storage unit only makes money on renting out rack space, explains Choudhary, adding that the managers can sometimes facilitate sales by introducing farmers and big traders known to them.
Rustom Singh says the farmers who can afford to transport the crop to markets such as New Delhi and Mumbai can also get better prices for the produce. It costs Rs 2,000 to hire a truck to take the produce from Dauji to Delhi. A six-tyre truck can accommodate around 9 tonnes, or 180 bags.
In order to attract customers, four or five farmers shout frantically towards their customers. One of them rips open the seams on a sack of potatoes, and rolls them out on the floor. ?If they don?t draw the customers? attention to their produce, how will they sell it?? explains a trader at the Azadpur mandi.
Some farmers travel long distances to come to this Delhi fruits and vegetables mart, often arriving in the early hours of morning. The day entire lot is not sold, they stay throughout the night in Delhi.
?I left Sambhal at 7:00 pm yesterday and came here at 4:00 am this morning with 417 bags of potatoes,? says Bhagwan Das, a farmer from Sambhal in Moradabad, Uttar Pradesh, ?And I may have to spend the night at the commission agent?s shop if I can?t sell the entire lot today.? The total overheads for bringing the ready crop to market, including the transportation cost, labour cost for loading and unloading the crop and the agent?s commission, all of which are borne by the farmer, comes to Rs 120 a bag, estimate farmers and traders.
The commission agents at the mart often arrange accommodation and food for the farmers they regularly trade with under such circumstances. Farmers can also rent a room with two beds at the Kisan Bhawan for Rs394 a night.
The commission agent?s make up to 5-6% on the sales, depending on the variety and state of origin of the produce. The agents pay 1% of all sales to APMC, which keeps a daily tab on the number of trucks passing through and the produce brought into the mart by issuing gate passes.
From here, the produce is sold to other traders, companies, shopkeepers, pushcart vendors and even homemakers. After being sold for around Rs4 at the commission agent?s shed at the mart, the potato then travels to people?s homes via pushcart vendors or through organised retail store purchases. Farmers and agents say this is where price almost doubles.
According to the ministry of consumer affairs, food and public distribution website, potatoes continued to retail for Rs9 even as a trader at the Azadpur mandi confirmed the price of the crop had declined from Rs250 a bag on 12 February to Rs200.