Access to market information can double farmers' income, reduce losses

Access to market information can double farmers income, reduce losses

The Maharashtra protest by 40,000 farmers walking 180 km from Nashik to the heart of India's financial capital refraining from aggressive sloganeering was symbolic of their fair expectations. They just want a fair share of their contribution to India's economy.
A critical issue faced by farmers is that they get only a fraction of the price at which their produce is sold in the market.
Situation Assessment Survey of farmers' households and Cost of Cultivation Survey data reveals that the country's food production has increased tremendously from 51 million tonnes in 1950–51 to about 252 million tonnes in 2014–15. But there is no substantial growth in terms of farmer's income. The National Commission on Farmers, 2006 and National Commission on Agriculture, 1976 highlighted that higher quantity of produce would not provide higher income to farmers if it is not marketed well.
Farmers dumping their bumper produce (tomatoes, onions) and emptying cans of milk on the streets highlights the issue. The excess produce can easily be transferred to deficit areas, if effective marketing solutions can be implemented. Market integration across the country is a viable solution to the paradox of plenty and it can result in improved farmer's income as

Present Agricultural Market Scenario

The participation of farmers in the agriculture markets is limited only to local mandis. The farmer's share in the final price of the product generally varies from 15–40%. The middlemen has higher share in the agriculture market involvement leading to low farm income and profitability for the farmer.
The agriculture market is dominated by middlemen and commission agents. In Delhi, commission agents charge fees ranging from 6%–15%. Where as in Punjab, there are as many as 22,000 commission agents and innumerable middlemen in each market.
Some reports state that open auction platforms exist only in two-thirds of the regulated markets and one-fourth have common drying yards. Cold storage units exist in less than one-tenth of the markets and grading facilities in less than one-third. Electronic weigh-bridges are available only in a few markets. Due to lack of proper market and reach farmers have no choice, but to demand higher minimum support price (MSP) and procurement.
India must make its agriculture supply chain more efficient or it shall face a situation of food shortages. It has been found that India's food security is directly linked to securing and doubling the income of its farmers. Hence, on April 13, 2016, the Modi government had set up a committee under Ashok Dalwai, former additional secretary in the agriculture ministry, to prepare a series of reports on doubling farm income. The committee stated that doubling of farm income meant increasing real or inflation-adjusted incomes. (
The Dalwai panel points out that real incomes of farmers need to register a compound annual growth rate of 10.4% for farmers' incomes to double by 2022. In 2017-18, agricultural growth is expected to slow to 2.1%, compared to 4.9% in the previous year, according to official forecasts. (
From increasing exports to accelerating food processing, to increasing efficiency in farm, are usually considered as enablers to double farmer's income. But none of this will be possible unless you have a mechanism to maximise the nutritional value of agricultural output, and minimise losses as well. (
Such food losses can be anywhere between 15 per cent and 40 per cent. According to the Committee for Doubling Farmers' Income (DFI) report, the loss in the farm-to-market link segment, whether at 15 per cent or 40 per cent, is an unmistakable opportunity to add to farmers' income. (
However, other estimates by organisations like Indian Council of Agricultural Research (ICAR), state that "the Indian agriculture sector incurs 18 to 25 per cent losses in the entire supply-chain (moving produce)," revealed DFI report. (
Lack of technology is not the only reason, but a large quantity of food loss is due to lack of access to the national markets too.
"Efficient agri-logistics and enhanced market linkage are the key factors which help reduce food losses," said National Centre for Cold Chain Development (NCCD) CEO and chief advisor Pawanexh Kohli in a report in the Free Press Journal recently.
The 2018-19 budget announcement to develop and upgrade existing 22,000 rural haats into Gramin Agricultural Markets (GrAMs), will help in market linkages, stated Kohli. These GrAMs, electronically linked to e-NAM and exempted from regulations of APMCs, will provide farmers the facility to make direct sale to consumers and bulk purchasers. (
"This would be like a commodity market that will allow farmers to reduce losses and get the right price for their produce." This will reduce middleman and to make this linkage smooth. (

Digitizing Agriculture Markets Can Help

Production and Marketing should march together to benefit farmers and consumers. The prime power to decide when, to whom, where and at what price to sell the produce should lie with the farmer. The current system that exists between the farmer and the end consumer should be scrapped. Innovative market reforms need to be introduced in order to address the food inflation caused by seasonal spike in prices of perishable commodities.
Agricultural marketing is inferred to cover the services involved in moving an agricultural product from the farm to the consumer. It is also the planning, organizing, directing and handling of agricultural produce in such a way as to satisfy the farmer, producer and the consumer. Numerous interconnected activities are involved in doing this, such as planning production, growing and harvesting, grading, packing and packaging, transport, storage, agro- and food processing, distribution, advertising and sale. Effectively, the term encompasses the entire range of supply chain operations. However, its key function is to help direct these services, by providing competent and able market information, thereby linking the other operations into an integrated service with targeted outcomes. (
In agriculture, postharvest handling is the stage of crop production immediately following harvest, including cooling, cleaning, sorting and packing. The instant a crop is removed from the ground, or separated from its parent plant, it begins to deteriorate. Postharvest treatment largely determines final quality, whether a crop is sold for fresh consumption, or used as an ingredient in a processed food product. (
In agriculture, marketing is the key factor that determines the economic viability of farming. To bring in the market reforms, a lot of information is required about the complete cycle of cultivation, consumption and commerce. Many times it's not lack of production but over production that hits the stability of farmers. A supply glut, such as the one presently faced by pulses, chili, potato, and onion cultivators in India, generally leads to a price crash, which results in poor returns. The Centre should keenly watch the import contracts so when there is a case of excess production, we don't end up importing. Importing on a large scale further increases the competition for local farmers. The concept of e-markets and digitization will surely help the issue of low returns to farmers and also the hardships that occur due to presence of multiple middlemen.
In the absence of sound marketing facilities, the farmers depend upon local traders and middlemen for the disposal of their farm produce which is sold at throw-away price helping the farmer in absolutely no way. In general, the farmers do not have a fair idea about the demand in the region. This information asymmetry makes them financially unstable and they are stuck in the vicious cycle of debt, which affects not only the loanee farmer but their immediate family and the generations to come.
In some cases, the roads connecting villages to cities are in a poor state or non-existent. If they exist, they are inaccessible during the rainy seasons. The poor state of transport infrastructure forces the farmer to sell their crop at the closest market rather than at a place where they will get the best price for their produce. This is where the middlemen or commission agents make their money as they purchase the produce from this markets and sell it a premium to better markets. Due to lack storage spaces and warehouses, farmers tend to store their produce at their own farms. Sometimes the farmers have to travel long distances with their harvest and fail to find a place in the warehouses. This results in waste of not only the produce, but also lot of time and money. Information regarding availability of space in warehouses needs to be provided to farmers through effective information solutions. This will help farmers save both time and money, and reduce wastage significantly.

Some Solutions To Improve Farm Marketing

In most cases, small and marginal farmers are unaware of the market prices due to presence of middlemen and commission agents. High consumer prices do not trickle down to profits for farmers as the lion's share goes to middlemen.
Farmer need to be made aware of the existing market prices and the best mandis where they can derive maximum returns on their crops. Agritech start-ups like FarmGuide have been instrumental in creating awareness amongst the farmers. They give personalized calls to farmers regarding market prices and mandis located nearest to the farm. The info-service will help them make smart choices and get the best prices for their produce.
The Start-up also informs farmers about the nearest cold storage and warehouses with its real-time capacity so that they do not end up taking their produce to wrong facility. This will help prevent post- harvest loss and improve the decision making process in terms transportation and logistics.
These measures along with other information and communication technologies and services can help improve farm income. This is a small step for India in its goal to achieve food security and the means to this end is through securing and doubling farmers' income.

Vishal Menon

Vishal Menon

Vishal Menon works with Farmguide, an organisation that is instrumental in building the crop insurance scheme of India

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