Soyoil firms get up, close and direct with farmers

Soyoil companies in Madhya Pradesh have started procuring soybeans directly from farmers, thus abasing the role of conventional mandis.

MP is a major producer of oilseeds in the country, with soyabean being a principal oilseed crop.

Sanwariya Agro Oils, for example, is one such company which has set up direct procurement centres (DPCs) at its premises.

As per the state Agriculture Produce Marketing Committee Act, these companies have to procure licence from local mandis to open a procurement centre. Again, the companies have to buy soybeans at the prevailing mandi rate and the deals have to be executed before a mandi representative.

DPCs, however, provide farmers with a choice and they say it is convenient to sell the produce to these centres. In mandis, private traders control rates and it is not regular. These centres ensure that the measurement is accurate and there is no wastage. Prices in mandis change frequently "" something that seldom happens at these centres. The biggest advantage is the elimination of mediation.

As far as soyoil companies are concerned, this ensures doorstep delivery of the produce. It also helps them earn better profits on the produce.

Sanwariya Agro Oils has set up 15 DPCs and has saved the transit cost when soybeans are procured from mandis.

"Our direct procurement model is similar to Indian Tobacco Company where procurement price for choupal/ centre delivery is declared on a daily basis for soybean and the farmer has the choice to sell to any buyer. This ensures a better price realisation and saves cost for us," said Anil Agarwal, director, Sanwariya Oil Mills.

The trend is catching up with other companies also. Devesh Jain, managing director, Prestige Feed Mills, said, "We are working on a model and will be operational soon. This will help us maintain direct access with farmers and will establish a regular supply chain, besides saving costs."

Prestige is also planning to make a similar arrangement for procuring wheat for its flour mills.

Besides MP, Haryana, Uttar Pradesh and Maharashtra have started experimenting with the direct procurement route.