Lack of transparency in agri-produce hits farmers hard

The price received by the farmer varies from 24 per cent to 58 per cent of the price paid by the end-consumer for different produce in Karnataka.

According to the field study on agriculture produce market dynamics in the area of Hoskote and Kolar taluks of Bangalore commissioned by the Confederation of Indian Industries (CII), tomato secured the farmer Rs 2 per kg, whereas the price paid by end consumer is Rs 8.20 (a mark-up of 310 per cent).

Similarly, banana Rs 4 and Rs 12 (mark-up of 200 per cent); cabbage Rs 5 and Rs 9 (mark-up of 80 per cent); potato Rs 6.60 and Rs 12 (mark-up of 82 per cent) and cauliflower Rs 5.50 and Rs 9.50 (mark-up of 73 per cent).

For the field study on agriculture produce market dynamics, the markets covered included - New Kalasipalyam, Binnypet and Yeshwantpur APMCs, which has the highest sales volume in the fruits and vegetable segment in Karnataka.

The study was conducted by Indian Institute of Management, Bangalore. The study is part of CII - FAO Report on Building Competitiveness of Horticulture Sector in Southern Region.

The survey revealed that there are many intermediaries in the lengthy Indian agro-distribution chain. It is the farmers who take the risks and suffer the consequences.

On a 0-5 of risk-taken scale, the farmer (5) is the highest risk bearer, followed by retailer (3), consolidator (2), market wholesaler (1) and semi-wholesaler (1).

The study also indicated that the incremental cost added on at each link in the distribution chain, one finds that each player's profits are disproportionate to the value-added, time spent or risk taken.

The farmer, who grew tomatoes over a period of three to four months, took all the risks from sowing to harvesting (seed quality, weather, pests) and realised 24 per cent to 58 per cent of the consumer price.

The rest of the players moved the stock from farm to markets within 10 days and while taking the inventory and the price risk received the remaining 42 per cent to 76 per cent of the end price. This is based on just one example, but the situation is not atypical.

The packaging, transport and material handling cost (per kg of produce which reaches the end consumer) is tomato Rs 1.37, potato Rs 0.84, cabbage Rs 0.78, cauliflower Rs 2.27 and banana Rs 0.56.

The cumulative wastages across the supply chain varied from 24 per cent (for potato) to 40 per cent (for tomato). That means huge quantities of produce never reach the consumer market. These wastages result primarily from poor and over handling, packing in bags rather than crates, no temperature controlled vehicles or storage facilities and poor infrastructure (roads, warehouses, and market yards).

All the three markets which were studied were congested and do not have the storage capacity to handle the daily volume of the vegetables reaching the market.

Conditions are unsanitary due to waste accumulation and poor/no drainage. Shelf-life depends entirely on the weather, as there are no temperature or humidity controls.

CII is of the strong opinion that the key factor contributing to the current disturbing situation of farmers is the lack of freedom for them to sell their produce to alternative markets, even though some opportunities does exist.

This is primarily due to over 100 years old policy - The APMC Act, which does not allow the farmers to directly sell their produce outside the 145 APMC yards spread across the state.

This has resulted over 55 Lakh farmers, most of them marginal farmers, being forced to sell their produce only through the 18,000 plus APMC-registered commission agents.

Ironically, the state exchequer receives only around Rs 150 crore as annual cess against the total agriculture output of the state which stands at Rs 17,146 crore. This has resulted in a lack of transparency and unacceptable inequity in farmers' remuneration.