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LATEST NEWS UPDATES | Build an efficient supply chain between farmers and markets

Build an efficient supply chain between farmers and markets

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published Published on Jan 15, 2013   modified Modified on Jan 15, 2013
-The Economic Times

India's consumer prices climbed 10.56 per cent in December from a year earlier. This will hold the RBI's rate-cutting hand and prove politically painful for the government.

The increase in the Consumer Price Index (CPI), over three percentage points more than the increase in the Wholesale Price Index (WPI) number, is due to a spurt in prices in the food and beverage category - mainly vegetables, oils and fat, cereals and sugar. The rise in prices of grain and sugar is entirely on account of bad policy and governance failure.

The government today hoards close to 70 million tonnes of foodgrain, creating shortage in the marketplace. This practice of jacking up the support price and procuring far in excess of the stocking norm must go first, if prices are to stabilise. Vegetable prices in December rose a baffling 26 per cent from a year earlier.

The supply chain allows any minor shortage in relation to demand to translate into speculative gains for trade. Policy focus has to be on creating the marketing infrastructure and linkage between retail demand and the farmer, than on production. Once farmers stand to gain from higher prices of farm produce, which is not at all the case at present, they will start producing more.

The need is to build an efficient supply chain that links farmers directly to the markets. It would require a huge jump in logistics including cold chains and also swift transport of the produce from farms to consumption centres in towns. And free movement, in turn, calls for either scrapping or amending the Agricultural Produce Marketing Committee (APMC) Act to exempt perishables from its ambit both in the originating state and the consuming centre.

Farmers also need to be organised into producer cooperatives or companies, as milk producers were, to create Amul, the country's first organised retail chain connecting farmers to consumers. This will give them better bargaining power vis-a-vis retail giants. The demand for superior foods is seeing a surge due to the rising income levels and accompanying shift in consumption habits.

Therefore, policy should boost dairying, poultry, fisheries and fruit farming.

The Economic Times, 15 January, 2013, http://economictimes.indiatimes.com/opinion/editorial/build-an-efficient-supply-chain-between-farmers-and-markets-/articleshow/18026156.cms


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