Opinion A fair deal for farmers

Of my personal experience,I can speak without fear of being contradicted. I live on my farm and grow kinnow,a citrus fruit. I sell the fruit in wholesale markets or sabzi mandis,like those in Delhi. The kinnow tree yields a saleable amount of fruit only after six years of obsessive,devoted care. Last year,I sold my kinnow at Rs 9 per kg,factoring in the cost of grading,waxing,packaging and transportation to the mandi.

After an overnight truck journey,the kinnow was sold by street vendors to consumers at Rs 25 per kg. Now this mammoth 300 per cent margin is preposterous and certainly worth fighting for. That is exactly what the middlemen are doing. Traders are reacting to the possibility of economic loss due to increased competition and I do not blame them for that. But it is unacceptable that the farmer puts in the hard work and takes all the risks of value addition while traders make all the money.

In a system where everybody is entitled to make a profit,the farmer seems to be the odd one out. Prices may go through the roof but the farmer will not get a share of the higher price that the consumer is forced to pay. All that the farming community asks for now is a share of the proceeds that is commensurate with its efforts. It is not against others in the value chain making profits; it is only worried about being able to sustain itself. Private guilds of commission agents,street vendors and vegetable sellers in the retail market work in tandem to maximise returns for themselves. The farmer’s share in the consumer price keeps going down even as the consumer pays more. Yet,when it comes to preparing guidelines for FDI in multibrand retail,the government seems to think only of protecting these guilds from the anticipated competition of large format stores.

Most agricultural produce sold in large retail stores will be horticultural produce. Vegetables are grown by large families of small and marginal farmers who pool in labour to add value. If the consumer price is allowed to percolate down more,such farmers will benefit. Currently,the Indian farmer is bereft of choice. He has to sell at the mandi and accept whatever price the buyer offers. Given the perishable nature of fruit and vegetables,the farmer is compelled to sell his crop right after the harvest. He cannot wait for a better price and is thus exploited by these guilds. The market is regulated in favour of traders and middlemen.

But India is too diverse for large retailers to be the sole purchasers of its farm produce. That means farmers will also continue to sell to agents or middlemen. Logically,the large corporations would need to bypass the middlemen to make a bigger profit,but this may not always be the case. To ensure this happens,it could be made mandatory that every prospective retailer,whether Indian or foreign,with an investment of Rs 5 crore purchases three-quarters of the agricultural produce sold in the retail store directly from the farmers. This condition would exclude all small kirana store owners and so on. Given the dire straits the Indian farmer is in today,he could hardly care about what kind of buyer purchases his vegetables. His priority would be to find a reasonable price for his produce.

Government policy must encourage fair competition for balanced growth. FDI could be a means to infuse competition while challenging the existing stranglehold of agents and traders. Farmers can leverage that very competition to get better prices. FDI should be viewed as a way of managing excess and waste and of ensuring accessibility. While farmers will be able to access more buyers,consumers will be able to get food at lower prices.

FDI in retail is a step forward,but it should have been preceded by deregulation and reforms in the archaic laws that prevail in the farm sector. This becomes more difficult because agriculture is a state subject; marketing laws are controlled separately and are different in various states. FDI in multibrand retail may not be a reform in itself,but it is definitely a worthwhile notification. But the government is too focused on trying to convince traders that there is nothing to fear. That effort should have been put into convincing farmers that this is good for them. It would have won the government significant support from farmers.

FDI is not the game changer that the government or the opposition is making it out to be. A fair share of India’s growth story is what farmers are asking for. This has become a national political debate in which everyone is clearly confused.

The writer is chairman,Bharat Krishak Samaj

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