New Delhi: Farmers in eight states have started directly selling their produce to agri-businesses and buying fertilizers and seeds via a government-backed technology platform, cutting out middlemen entrenched in wholesale markets.

Since its February debut, Krishidoot has brought on board 350 farmer groups, who have used it to complete transactions of 30 crore.

Krishidoot is a joint initiative of Small Farmers’ Agribusiness Consortium (SFAC), an agency under the agriculture ministry and Reuters Market Light (RML), which provides information such as crop prices and local weather forecasts to Indian farmers. Via mobile telephony, web interface and a ground team, it brings buyers and sellers together.

Till 31 August, SFAC has helped to create over 600farmer producer organizations or FPOs (229 FPOs registered under the Companies Act and another 376 are in the process of getting registered), providing greater bargaining power to small and marginal farmers. Krishidoot, in turn, links these FPOs to the market, leading to better prices for farm produce and lower input costs.

The idea is to give agency and leverage to the small producer to benefit from emerging marketing opportunities, says Pravesh Sharma, managing director of SFAC. “There is more demand today for high-value products like fruits, vegetable and poultry, but farmers cannot benefit from value chains unless they have sufficient scale to offer. Building FPOs is one way of bringing together small farmers and giving them greater bargaining power," says Sharma.

So far, over 2,000 transactions across 39 crop types—covering oilseeds, pulses, cereals and vegetables—totalling 1.38 lakh quintals have been conducted via Krishidoot.

“We have sold 8,000 quintals of soyabeans via Krishidoot this year. Our members have benefited by saving on transportation cost of taking the produce to markets, besides getting a better price," said Vijay Chowdhury, head of an FPO in Diwas district of Madhya Pradesh, with 1,000 farm households as members.

Chowdhury said the farmer benefits by selling through an FPO, as buyers cannot cheat on the weight of the produce like in designated mandis, adding that his FPO has sold its produce at rates 5% higher than wholesale market rates.

Traders dealing in agricultural commodities say they save on mandi charges by buying directly from farmers. “Purchasing at mandis means we have to pay taxes and commissions which are nearly 8% of the price. I have purchased nearly 400 quintals of barley this year directly from farmers and saved on these costs," said Pradip Sharma, a grains trader from Jaipur, Rajasthan.

“The corporate sector’s ability to access farmers is limited and newer experiments are being tried out in the country to encourage direct purchase from farmers outside the mandi system. A prominent example is ryuthu bazars in Andhra Pradesh where small farmers directly sell to consumers. But none of these experiments have been able to achieve the scale required to influence the market at an aggregate level," said Himanshu, assistant professor at Jawaharlal Nehru University and a fellow at Centre de Sciences Humaines.

The bulk of India’s farmers bank relies on wholesale markets regulated by state-level Agricultural Produce Marketing Committee (APMC) Acts. The prices at these markets are often non-transparently set by traders’ cartels. Besides, lack of grading and storage facilities lead to post-harvest losses.

The latest Economic Survey envisaged reforming existing APMC Acts to create a national common market and enable farmers to sell their produce anywhere in the country. This, it said, will curb rising prices of fruits and vegetables.

As of now, 19 states allow direct purchase of farm produce from farmers and FPOs. “But this is not really a hurdle in our experience," says Sharma of SFAC. “The APMC bogey is overused by all sides to explain why bulk buyers don’t approach farmers directly and the private sector’s lack of interest in building supply chains. The truth is that buyers feel there are not enough volumes and quality, that dealing with farmers is fraught with political risk and transaction costs of intermediaries are not so high that they need to be bypassed."

Despite the initial success, the FPOs have a long way to go. India has about 140 million farm households. In the past two years, over six lakh farmers have joined FPOs. “The idea of aggregation has been accepted, but to enable FPOs deal with market, we need to build infrastructure like pack houses, grading and sorting facilities and cold storages at the farm gate. On the positive side, we are increasingly getting queries from market players to put them in touch with farmer groups. The market is interested in direct sourcing which guarantees traceability and quality," said Sharma.

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