Do farmers get low share due to Unfair Trading Practices in Agriculture ?

Food is the primary requirement of human civilization. Food production is also primary employment for the human civilization. Earlier days of human civilization food production was attached to the rehabilitation, cities or villages. After the rapid urbanization food production activity and agriculture became the secondary employment. Most of the food production move out from big cities. The distance between production and consumption gave birth to trading & food processing activities. In the earlier days, there was the direct exchange of agriculture produce between producer and the end consumer. Grading, packing, and delivery activities were at producer (Farmer) end at another side most of food processing activities like cleaning, preservation tasks were day to day domestic activities at buyer end. In this exchange, there was no gap between producer and consumer. 

Now the scenario has changed. The producer has limited himself to food production and the buyer has limited himself to food consumption. In between task like grading, cleaning, packing, processing, preservation, trading, selling is done by the middleman. Producer and consumer have been totally cut. Now the consumer is not aware of the selling price of producer and producer is not aware of buying price of the consumer. Earlier days consumers were totally depended on local production. The producer was totally depended on local consumer. Now people have developed their different taste and they are consuming the food which is produced which is not produced locally. Trading of food activities started with this change and adoption of taste.

With increasing trading activities, food processing activities developed to stabilize the form of produced food. Now it has become full-scale food processing activities. Food production & Food processing activities have become investment-centric activities or industries. With increasing investment, the gap between seling price of producer and buying price of the consumer is increasing slowly and slowly. Nowadays scope food is not a limited to health or taste. The scope of food in increasing slowly and slowly. Now packing, colour, branding, emotion, taste, lifestyle, status, readiness, export, import, health, taste, process of production, type of production, form of produce, delivery, readiness, comfort, shelf-life, quality, grading, shape, packing, colour, and others has become the scope food. Companies are adding different values in food. 

After production and before consumption all the activities are value addition activities. A margin is added at every value addition activity and prices of food produce are keep increasing. Ultimately buyers/end consumers bear and pay all these costs.

Now economists are raising the question that farmers or producer or not getting the fair share of what buyer or consumer is paying. for food produce. By looking the financial condition of producer question is guanine. 70 % world food production comes from small and marginal farmers. In reality buyer not only bear the cost of food, but he also pays for packing, transportation, storage, endorsement, branding, research, interest on, investment, rent of land, cost of post-harvest loss, the inferior performance of employees, manufacturing losses, taxes and duties. 

All these value addition activities provide the employment. If anything is added to increase the farmer’s share will be defiantly reach to buyer or consumer end. Buyer or consumer will have to bear that cost. This is also the duty of Govt that buyer get cheaper food without any unnecessary extra regulatory burden. 

What can agriculture expect from union budget?

This is last full budget of Shri Narendra Modi led NDA Govt. As per expected there will be a lot of things for poor, farmers and common man as all there are major vote contributor. For the benefit of farmers Govt will give through agriculture and for common man govt will give through industry. What does farmer or agriculture need?

Govt must come with complete supply chain assistance which will assist both farmers and common man. Govt must come with two or three crop specific supply chain system in every district.  It will require farmers for production, common man for employment and industrialist for run this concept.

District “X” produce a lot of tomato. First of all, govt must ask agri input companies for quality seeds and micro nutrient fertilizers as per general soil analysis of that district. It will require an expert team of agronomist for tomato cultivation so that attack of disease and insect can be controlled at first step.  Assist farmers in better production. During the cropping period govt must assist industry to establish sufficient storage facility (it can be permanent or temporary) and all possible processing facilities, which can be pulp extraction, sauce making, dice tomato canning, drying, powder making and long-term tomato storage. 

Now question is consumption. Govt must come with concept of promotion of this processed tomato. There must be some GST benefit for a period to ready to eat or processed. Food. Once people will start to use these production then demand will increase slowly and slowly. Dehydration if most stable form which can be stored for long time with zero additional charge. Dry form will also easy to transport. But it must cover complete value chain from production to end consumption.

For some time ready to eat packaged food must keep out of GST. These processed food can be distributed to mid-day meal program. It will save cost of mid-day meal preparation at every school and children will get nutritive food. Processed food have maximum solution of inflation, price falling, storage, consumption, wastage. 

This is just an example there can be several other idea. In current budget govt focus on food processing, with complete value chain setup ( from production to consumption) and consumption of processed food. 

Are bad agricultural loan and food subsidies killing Indian agriculture ?

Today agriculture is stock in-between the producer and consumer. Where farmer is producer and he is poor and common man is consumer and he is also poor.  If prices of wheat or any food commodity rise, then it hurts common man at another side if commodity prices falls then it hurts farmers. At one side govt is trying to curb the inflation of food product with control distribution, crube on private stocking, importing of commodities, promoting import by lowering duty, banning export and a lot of food subsidy. At another side Govt is trying to help farmers by procurement and govt, minimum support price, opening the export and putting duties on import and a lot of farm subsidy. 

Govt is expanding a lot of money on both side for making farmers and consumer both happy. Every year there is farm loan waiver and every year there is distribution of food commodity at a nominal price.

To whom we are making foolish? 

One thing is clear we can’t make both farmers and consumers happy at the same time.  But we are killing agriculture and food business at the same time. At one side Govt has keep agriculture and farmers separate and at another side govt must separate the agriculture commodity business and consumer. So that agriculture and agriculture commodity business can take breath, and both can compete with international business scenario. 

On ground farm loan is going to lifestyle expenses in rich states. it going to living expenses in poor states. There is same situation with food subsidy. Food subsidy is going to importers, traders and other middleman. Bad agriculture loan has reached to Rs. 60,200 crore rupees in year 2017 with increase of Rupees 24,800 Crore in comparison to year Rupees 48,800 crore of year 2016.Govt is also giving a lot of food subsidy through PDS system.

Govt must come with Aadhar based social security scheme where every citizen can be covered. Farmers and consumers both will cover in same scheme and there will be no seepage in the fund meant for consumer and farmers. At another side investment in agriculture and other business will secure. Both the business will run independently without interfere of Govt. 

92% Farmers are the net buyer of agriculture commodities.

As per Govt data, around 92% farmers are small and marginal farmers. They are cultivating only less than 2 Hectare land only. They are producing the agriculture commodities. Most of the produce is consumed by themselves only. They are not producing all commodities for their consumption. They buy these nonproducing commodities from market produced by other farmers. Instead of net seller most of the farmers are the net buyer of agriculture commodities. India is an agrarian country, but it is importing essential food items. India import a lot of Edible oil, Pulses and Wheat. In peak festival season, there is always the shortage of these three items.

Many organization and farmers group advocate the increase of Minimum Support Price ( MSP). Any proposal of To increase of MSP and price of other agriculture commodities will hurt farmers themselves. Even today farmers can’t afford regular Vegetable, Milk, Meat, Egg and nutritive food. Malnutrition is major health problem due to the lower affordability of Food items. Minimum Support Price is not a solution for larger farmer population of India. Govt is providing few food items through PDS. Supplied quantity itself is affected by the corruption problem and it doesn’t reach up to last end beneficiaries.

Big farmers will benefit from the increased MSP because they are capable in holding and selling their produce in Agriculture market as per MSP procurement. Small and marginal farmers can’t wait for MSP procurement process, he has to sell just after the harvesting. Govt should first focus on health and affordability of food item to major agriculture population. Once Govt will include more agriculture commodities or food items in PDS system then automatically demand of other agriculture commodities will increase and prices will go up due to limited supply. Farmers will benefit automatically from demand driven.

The inclusion of packed processed food items in PDS. In the tribal area, we see a larger population don’t have access to nutritive food. They are depended on limited forest products. Govt must include processed fruit, vegetable, milk product for them in PDS. Costs of buying of agriculture commodities by the farmers will come down. Due to low price farmers will avoid the overproduction of nondemand agriculture commodities. They will focus on in-demand agriculture commodities fruit and vegetable. If there will support of Govt policy for processed fruit and vegetable, then processing of agriculture commodities will go in next stage. The demand for Fruit & vegetable will increase, and the farmer will benefit from the demand of these agriculture commodities. Farmer’s buying cost will come down, his selling revenue will go up and his health will improve. 

Dairy, Meat, Vegetable and fruit production is good for Small land holdings. Consumption of these items is India is lowest in the world in similar economies. Govt must focus on increasing the consumption of these items. Demand-driven policies will lead to the better economic environment. It will generate rural employment, Industry and traders will benefit from it. Farmers will be the major beneficiary from these policies. We have so many nutritious local fruit and vegetable. The demand of these fruits and vegetable will increase Local Farmers will benefit from it.

For example, In Rajasthan, there is production local vegetable by the name of SANGARI (Prosopis cineraria) and KAIR (Capparis decidua). The market price of dehydrated Kair & Sangari is around INR 1000/Kg Price of green Kair & Sangari cost around 100-120/Kg. Both the vegetables are pesticide free and grown in local rainfed climatic condition. Agronomical point of view it will require lesser water and lesser plant protection cost of cultivation will almost zero after 3-4 years. This is one example there are thousands of species in India which are grown locally and there is huge demand at the premium price.

Policymaker should come with the policy for farmers by keeping in mind that they are the net buyer of agriculture commodities or produce. Govt should come with demand generation policy for agriculture produce instead of buying them from farmers and after that let the produce decompose. India is the largest consumer of agriculture food products in the world after China. This demand of agriculture food products will not come down it will keep increasing.