Proponents of foreign investment in retail say that farmers are being shortchanged by wholesalers and retailers at present. Akshat Kaushal traces the journey of an apple consignment from the orchards of Sopore to the dining tables of Delhi.
It is early Monday morning and the Choudhary Hira Singh Wholesale Vegetable Market or Azadpur Mandi is buzzing with chaos. The roads inside the market are clogged. Everything from a hand-pulled cart to a tractor and a truck is vying for space where there is none. They all want to be the first to reach the market in order to sell the farm produce at the best possible price. There are stalls owned by commission agents where buyers (wholesalers) and sellers can meet and strike a deal. The seller then unloads his stock and the buyer takes these items to sell to green grocers across the city and elsewhere.
A truck laden with ginger has just come in from Siliguri in West Bengal, while there is another one with onions from Alwar in Rajasthan. The third in the queue bears a Jammu & Kashmir number plate. Inside the passengers’ cabin sits Abdul Hamid, an apple grower from Sopore, a town located 35 kilometers from Srinagar and better known as the apple town of Asia. Forty-something Hamid is dressed in the trademark kurta and pyjama. The fatigue of the long journey does not show on his weather-beaten face. He is here, after all, to make some serious money.
On Friday, Hamid, as on any other day, had performed his evening prayers and then got into this hired truck. During the day, workers had loaded 1,000 boxes of apple (15 kg each) onto the truck. Three hundred of these belonged to him and the rest to other Sopore farmers. The apples had been plucked from his orchard only a few days ago. Hamid had a fair idea of what each box would cost him by the time it reached the Azadpur Mandi: he had spent, on an average, Rs 150 on fertiliser, pesticide and labour, and another Rs 60 for the wooden box. The trucker had charged him another Rs 60 per box. In addition, the commission agent at the Azadpur Mandi would have to be paid a 12 per cent cut. The total cost was a little above Rs 300. The other growers, who owned the stock, were huddled with him in the cabin.
After a non-stop journey, apart from brief halts at Jammu and Ambala, Hamid and others brought the truck straight to Azadpur Mandi on Monday. Constructed in 1977, the mandi has the distinction of being the largest fruit and vegetable market in Asia, and has about 3,700 commission agents. It is the national distribution centre for fruit such as apple, banana, orange, mango, and vegetables like potato, onion, garlic and ginger. Hamid could have sold his stock at Sopore but a visit to Delhi was unavoidable. In March this year, before the apple trees had started bearing fruit, Hamid had taken a loan of Rs 1 lakh from his commission agent of two decades, Prem Kumar Chaudhary of Prem Fruits Traders. The loan had two strings attached: one, the commission agent would charge no interest, and two, a part of the farm produce would be sold through this commission agent and no other. That’s why Hamid is here.
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Chaudhary is aware of Hamid’s arrival. They have been in touch through mobile phones. After a brief conversation, Hamid pulls out few samples of his apple stock and shows them to a trader from Azamgarh in Uttar Pradesh. The trader quotes the price and the deal is quickly sealed at Rs 600 per box. There are no handshakes at the end of it. The process, which can be described as an auction, is monitored by Chaudhary who pockets a commission of 12 per cent from Hamid and another one per cent from the buyer. However, the rules of Azadpur Mandi, which are laid down by the Agricultural Produce Marketing Committee, forbid any commission agent from charging beyond six per cent. Chaudhary has overcharged but no one’s complaining.
At Rs 300 a piece, Hamid’s 300 boxes had cost him Rs 90,000. Today he gets Rs 1.8 lakh, thus making a profit of almost 100 per cent. The entire truckload has been sold for Rs 6 lakh. The money will reach his bank account electronically. Prices this year are reigning high because the crop is relatively small. He has more stock waiting at home; but the cold in the valley will ensure that the apples survive for another three months.
Hamid says he will sell when prices rise further; he has till February to decide the right time. Moreover, now that his commitment to Chaudhary is done, he could sell in Sopore itself. “Selling in Sopore is profitable as we are able to avoid the transport expense. But we can’t avoid coming here,” says he. He also lets in that there is a good opportunity for arbitrage if prices at Sopore are different from New Delhi.
On the pavement, just a few steps outside the Azadpur Mandi, Rahim sells the same variety of “Sopore apple” at Rs 65 a kg. This is almost 60 per cent higher than what Hamid sold his apples for: Rs 40 a kg. Rahim looks least surprised when asked about his fat profit margin. He says that his business depends on a lot of “luck” and the risk factor forces him to sell at a high price. “Most of the times the produce doesn’t measure up to 15 kg and on other occasions the quality is poor. Our pricing has to take this into account,” he says. Further, he claims that he pays one per cent as commission to the commission agent, Rs 600 a month as bribe to the beat constable and another bribe to the Municipal Corporation. If he were to sell the apples some distance away from the Azadpur Mandi, he would have to factor in transport costs also, thus resulting in higher prices.
While in Azadpur Mandi, the modal price of an apple, categorised as 'delicious’ is Rs 34 as on December 5, 2011 (data by APMC Azadpur), but as soon as one steps out of this market the scenario changes drastically. According to to www.grocery.ebest.in, which lists prices at retail shops in New Delhi, all varieties of apples are selling at upwards of a whopping Rs 100. From Rs 20 a kg in Hamid’s orchard, the fruit has indeed come a long way.