Veggies Burning A Hole In The Pocket While Farmers Get A Pittance
Linus tackles things head-on. He takes sides in his analysis and it fits excellently with our editorial policy. No 'maybe's' and 'allegedly' for him, only things in black and white.
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By Linus Garg
First publised on 2024-10-10 07:15:27
About the Author
Linus tackles things head-on. He takes sides in his analysis and it fits excellently with our editorial policy. No 'maybe's' and 'allegedly' for him, only things in black and white.
View all posts by this Author
What was common knowledge for many years has now been confirmed by a series of research papers published by the RBI. Farmers get only one-third of the retail price of their produce - the rest is gobbled up by the middlemen comprising of wholesaler, trader and retailer. There is loading & unloading and transportation involved too but still, the prices of vegetables and fruits are unnaturally high in our cities and towns due to the number of times the produce changes hands before it reaches the kitchen. There is an urgent need for setting this right.
As per the report in The Times of India (TOI), apart from dairy, where farmers get 70% and eggs where they get 75%, in most other produce they do not get more than 37% of the final retail price. The study has been co-authored by economist Ashok Gulati. The papers have suggested expanding private mandis, leveraging e-NAM, promoting farmer collectives and re-launching futures trading to prevent price spikes in TOP (tomatoes, onions and potatoes). This year, the prices of all three commodities have hit the roof - tomatoes are retailing between Rs 100 to Rs 150 per kg, potatoes between Rs 30 and Rs 45 depending on the variety and onions between Rs 70 and Rs 90, again depending on the variety. Most other seasonal vegetables are selling between Rs 60 and Rs 120 per kg, which is twice of what they were selling at last year.
The TOI report mentions a supply chain that consists of four sources - farmer, trader, wholesaler and retailer. Ideally, the supply chain should be of three sources. The trader needs to be eliminated. But the problem is that the trader is the first point of contact with the farmers. They are local traders who buy the produce in bulk from farmers and mostly pay them a pittance by forming a cartel. They then sell to wholesalers in the cities and towns from where the retailers source their wares. The mark up at each stage is almost equal to what the farmers get, which is odd as these items do not have any marketing expenses in the form of advertising or other commissions.
The only plausible reason for the high mark up is that these items are perishable and traders and wholesalers need to be compensated for damaged goods. But even then, the mark up is too high and needs to be adjusted for fairness. Vegetable farmers should ideally get 50% of the retail price. This is not an unreasonable amount considering the percentage dairy and poultry farmers get where the risk of spilling and curdling (in dairy) and breakage (in eggs) is far greater. Even the transportation in the latter two involves cold chain which is not generally needed for vegetables. The government must ensure that the farmers get a fair price and the mar up at subsequent stages is also reasonable so that the end consumers do not pay a highly inflated price.
