As farmers up north lock horns over MSP, the Latur model has come up with a viable solution

“Unlike the markets, the FPC does not deduct commission from the final rate. The prices they offer are always higher than the prevailing market price. Infact I can safely say, I have always been paid above the government declared Minimum Support Price (MSP) for my produce,” he said.

One of the main demands of the now suspended farm protest was for mandatory payment of MSP. But for farmers like Mirajkar, in Maharashtra’s soyabean and pulses belt of Latur, FPCs with their off-market procurement models have become a feasible guarantee against market fluctuations. With FPCs paying more than the prevalent market prices, farmers are slowly but steadily weighing in their options before taking a decision to offload their produce.

At the 2,200 tonne-warehouse in Nagzari village, Vilas Uphade, director of the Vikas Agro FPC, explains their model. “Currently, we have dual strategies to deal with the farmers- government procurement for central agencies such as National Cooperative Agricultural Marketing Federation (NAFED) and private procurement for the solvent extractors and the dal millers of the state,” he said. This year, with all commodities trading over their MSP, private trade is the only source of income for the FPC.

What gives Vikas the advantage over markets is that unlike the wholesale mandis, they do not charge commission, weighment and other charges from farmers. Normally, at any mandi, the market committee deducts around 2.8-3 per cent of the final bill in way of commission, market fees, surcharges etc. While the deduction is done at the trader’s end, in reality, the price the farmer is quoted during the auction takes care of all the further deductions that would be made.

But FPCs who operate under the Direct Marketing Licence (DML) do not have any such fees or commissions to pay. “The extra money we always pass on to the farmer,” said Uphade. Thus, if at Latur’s market, soyabean is being traded at Rs 4,500/quintal at Vikas Agro, the price would be around Rs 4,600-4,700.

“Our end customers are spread across the state. We deal with dal millers in Solapur, Latur as well as solvent and extractors in Nanded and other parts of the state,” said Uphade. Over the years, assured quality and quantity has earned the FPC good will among the processors.

Constructed over a land taken for a long lease, the warehouse at Nagzari is the hub of the operations where grading and packaging is done. Constructed as part of the Honorable Balasaheb Thackeray Agribusiness and Rural Transformation Project (SMART), the warehouse allows the FPC to participate in private trade and wean away from government procurement model. Latur has four such projects and the total capacity created is around 8,800 tonnes.

For the last financial year, Vikas Agro had dealt with around 1,000 tonnes of soyabean and 7,000 tonnes of chana with the total quantum of business being around Rs 4 crores. “We have around 5,000 farmers who deal with us regularly. Our aim is to ensure we are able to give the farmers of 10 villages in our catchment the freedom to sell where they want,” said Uphade.

Another project implemented in Latur is at the village of Katpur in the same taluka. Lalasaheb Deshmukh, director of the Katpur Agro FPC, said their main trade still is with the government. “We can’t get into private trade much without working capital,” he said.

But Deshmukh said they are working with banks as well as private players to reduce their dependence on government procurement and present farmers another alternative.

Sham Shastri of Javla (62) has been doing business with Vikas Agro for the last six years and does not feel the need for MSP guarantee. “I normally grow chana and soyabean over 15 acres of my holding. The payment that the FPC offers is always more than the market. Their new warehouse allows them to buy in bulk from us,” he said.