From the time a farmer in India harvests his produce to the time it lands on your plate, farm products go through several layers of middlemen, wholesalers, cold chains and other intermediaries, which push its price up by many notches. The end result: growers get paid less and consumers pay more. The stranglehold that the government has over agriculture produce marketing in India has given rise to abject inefficiencies, lack of transparency and an army of middlemen, wholesalers and retailers who breed in this system.
?Similar to the many state monopolies that have been privatised, we need the private sector to run the system of agriculture marketing in India to make it sound and efficient. Though efforts are being made by amending the model Agriculture Produce Marketing Act (APMC), that’s all cosmetic in nature as agriculture marketing is a state subject. We seriously need to change the system,? says Gokul Patnaik, head of CII’s agriculture marketing council.
Patnaik is not off the mark. As per data from the National Horticulture Board for July-October 2010 period, the price-differential for five key vegetables (potato, onions, tomato, cauliflower and brinjal) in ten select cities (Agra, Ahmedabad, Bangalore, Bhopal, Chennai, Delhi, Guwahati, Kolkata, Mumbai and Ranchi), between local mandi or wholesale markets and retail cost to the consumer ranged from 18% to 200%, with an average cost escalation of over 50% for the consumer. Further, the wholesale prices themselves vary drastically across India, with considerable difference even within cities in same zones such as Agra and Delhi. Consider this: India, which is the world’s biggest producer of mangoes, bananas, along with a host of other vegetables and fruits, officially has only 5,381 cold storages having a total installed capacity of 24.5 million tonnes.
In foodgrains too, Food Corporation of India (FCI) godowns, along with Central Warehousing Corporation and state warehousing corporations, fall short of the actual procurement, leading to wasting of hundreds of tonnes of grains, fruits and vegetables every year.
The inadequate supply of storage and godowns not only destroys food items, but also kills their competitiveness in global markets.
India’s share in global farm products trade is less than 1%, which itself speaks volumes about the country’s lack of modern storage, fumigation and warehousing facilities. Share of farm exports in the country’s annual total exports have dropped from 18.49% in 1990-91 to 10.23% in 2008-09. If this is not all, the government’s policies for marketing farm produce are riddled with inconsistencies.
Between 2007 and 2010, exports of non-basmati rice, wheat, sugar, edible oils and cotton have been banned numerous times, mainly to maintain local supplies and ensure domestic prices are kept under check. While this is not wrong, what is definitely does is that it destroys the long-enriched global markets completely. A classic case is non-basmati rice, whose exports were banned in August 2008 as domestic production dropped, pushing up retail prices. Since then, though annual production of rice has neared 100 million tonnes and government’s granaries are brimming with rice, the ban hasn’t been lifted, leading to a annual loss of around Rs 7,000 crore of exports.
Though exports of basmati (aromatic) rice is allowed, it also had been subjected to numerous checks and controls. The result of all this has been that India, which was the world’s biggest exporter of aromatic rice, has had to concede much ground to Pakistan, its nearest competitor. If our system is inefficient, our policies don’t make it any better, because of which consumers end up paying more, while farmers don’t get adequately compensated.
?India is still divided into many markets and what should have been our advantage in terms of geographical spread and variety has now become our biggest stumbling block in ensuring remunerative returns to farmers,? Patnaik sums up.