Wednesday, May 25th, 2016

The ploy of middle men in Indian onion market and the pathetic situation of farmers

Narada Desk | May 25, 2016 7:21 pm Print
According to a PTI report, Devidas Parbhane of Pune just sold nearly a tonne of onions at Rs 1.6 per kilo at the district Pune Agriculture Produce Market Committee (APMC) and made just Rs 1 from the entire sale!

Though vegetable price rise is a not an uncommon problem in India, But the rates of Onion fluctuating very often.
Onion is a basic agricultural commodity. The supply side of all agricultural commodities sees flux cyclically which is representative of its price. The cyclical nature is owing to some basic factors. Monsoons and economy are the main factors that defining the rate most of the time. Hoarders and politics also carry an equal power in this game.

Then comes APMC, Agricultural Produce Market Committees, There are unneccessary taxes, layers which makes it the agri produce to increase prices. If farmers have some 50kg*500bags of onion, he must sell them through APMCs. But problem of APMC is license provided to traders to purchase it are limited to that place only. We need to change this and need to create all India, free market oriented licenses with permissions to buy from anywhere. Due to this layers of middle men are created which affect prices.

Though these are the matters that effect the business of the industry, but the middlemen layer playing a pivotal role in this by using the product belong to farmers.

Some brokers or dalals, they are middleman between farmers and consumers.In every morning farmers bring their crops like fruit, vegetables, grains and flowers in city market.Brokers does auction of farmers crop with some brokerage.Its like wholesale selling.after that small vandors buy from wholesalers. Same procedures are follow in all over India. where farmers doesn’t get good price for their crops.

These layers, depending on the product, processing and terminal market. It includes primary aggregators, processors, whole sellers, distributors and retailers. Over decades, in India, maybe elsewhere, certain social sections have started controlling these roles. Their social affinity, community-linked trust, familial relations, etc., helps in networking and syndication. Many of these players have associations which are powerful, and are linked with political parties and influential politicians. Most of them have deep pockets, and can survive occasional regulatory raids. Modern food processing industry is changing some of the players and relations in different supply chains. Technology is also playing a distortionary role, though it is not in favour of farmers, but towards corporatisation and monopolies. To cite an example, small and medium rice mills are being replaced by big rice mills. However, I am not sure if this is leading to a change in the related community control (I am using community as it is and also as a euphemism to caste). Transport is also big intermediary and transport sector is also undergoing change. A single-axle two tonne lorry is being replaced by multi-axle big tonne lorries owned by fleet operators. such a change has implications on aggregation, pricing and destination markets. A twenty tonner is used to for long haul, than short distances. Thus, food miles (distance between production and consumption) is increasing and so is the intermediary involvement. Increasingly, transactions are becoming complex, pricing volatile and price addition (and not value addition) is happening at every stage.

Organised, syndicated and networking players benefit the most and are likely to decide prices and availability of agri-products. Within these intermediary levels, unorganised sections continue to get less, not commensurate with their efforts and toil. Ofcourse, farmers and consumers who are not organised in any sense, do end up paying variously without commensurate returns.

So by this planned complicated middlemen chain, end of the day farmers not getting much money for their effort.