Farm to fork at the right price

Farm to fork at the right price
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First Published: Thu, May 31 2007. 12 01 AM IST
Updated: Thu, May 31 2007. 12 01 AM IST
The term “Green Revolution” was first used by the American scientist William Gaud to denote higher productivity by the more efficient functioning of green plants. Farmers who cultivate these plant crops to provide us our food are also integral to our society. It is, therefore, the responsibility of society to ensure the well-being of the farmers.
No doubt, the green revolution led to a significant growth in foodgrain production in our country. India has indeed been self-sufficient in foodgrains for years. But, the limitation is that it has primarily focused on paddy, wheat, maize, jowar and bajra only. While the productivity of foodgrains and coarse grains improved, there has not been much headway in pulses and oilseeds. As a result, the import of foodgrains—around 10 million tonnes in the 1960s, has been arrested, but we continue to import pulses and edible oils in large quantities. Both, pulses and edible oils, are costlier than foodgrains, and hence, the net impact on the exchequer is even higher.
The benefits of the green revolution have been seen only in select North Indian states, including Punjab, Haryana, Uttar Pradesh and Madhya Pradesh, which implies that growth was lopsided.
Thanks to better quality seeds, farm productivity increased over the 1970s. But unfortunately, during the last 10 years, production and productivity have remained stagnant or even tended to decline. Clearly, the green revolution has not been able to support a growth pace that could match with growing demand. Thus, during 2006, we witnessed a mismatch between demand and supply, particularly in wheat and pulses.
India has emerged as a leading producer in a number of agricultural commodities. In a number of commodities, it is the leading exporter and has the largest market share in world trade. Still, the first image of a farmer that strikes one is that of a poor man living in misery in a village without sufficient income to fulfil his needs and social obligations, borrowing from local moneylenders to buy fertilizer and seeds, as well as for marriages, rituals and other functions—repaying the debt out of his expected crop output and in the process, getting caught in a debt trap. If the crop fails, the overdue debt traps him completely, which sometimes leads him to suicide because he does not want to face the wrath of local moneylenders.
The present system of agricultural marketing, regulated under state Agriculture Produce Marketing Committee (APMC) Acts, is aimed at providing an organized market place, where farmers of areas nearby can sell produce under the supervision and administration of local APMCs. The APMC, an autonomous body comprising representatives of farmers, traders and other stakeholders, is expected to protect the interests of all.
Although the intention was good, its benefits seem to have been cornered mainly by the licensed commission agents and traders. Conceptually, the commission agent operates in a free market environment. The farmer voluntarily consigns his produce to the agent who then auctions it on his behalf, retaining only the legally specified commission. The auction system is intended to secure the farmer the highest ruling price for the variety and quality of produce consigned.
In practice, the system works somewhat differently. Most large commission agents operate extensively in production areas. Working through sub-agents, they compel the grower to supply produce by financing his production and other needs. The price ultimately realized by the auction is then “adjusted” to deduct the loan principal and disguised interest, the latter generally exceeding the statutory limits.
In order to ensure proper price realization by the farmer, structural reforms are necessary in the area of agricultural marketing and marketing infrastructure. A focus on productivity will not be able to achieve the desired results in isolation. The use of powerful new technologies that make it possible to incorporate farmers, large and small, into formal agribusiness networks, on a fair and equitable basis, would be a key driver.
A practical approach is to develop a national electronic, institutionalized spot exchange for farm produce, where farmers can sell on one side and the end-users can buy on the other side, with the settlement responsibility being undertaken by the exchange. In this case, local traders will not be able to influence the price of farm produce, rather prices will be discovered through such interaction among a large number of end-users.
This will reduce the cost of intermediation, bring efficiency in the agricultural marketing process and create a common Indian market. Farmers will become equal partners in “farm to fork” and “farm to fashion” value chains.
In this model of inclusive growth, both rural and urban masses will share the success. It will increase farmers’ realization without raising the consumer‘s price. Higher farmers’ income will trigger a chain reaction in revolutionizing the rural economy. The next generation may term it the “evergreen revolution”—protecting farmer interests in the growth process.
Anjani Sinha is director, MCX. The views are personal and not that of the exchange. Comment at theirview@livemint.com
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First Published: Thu, May 31 2007. 12 01 AM IST
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