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LATEST NEWS UPDATES | Collective farm gate procurement offers solutions to cover price crashes -Ajit Kanitkar

Collective farm gate procurement offers solutions to cover price crashes -Ajit Kanitkar

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published Published on Jul 1, 2017   modified Modified on Jul 1, 2017
-VillageSquare.in

Farmer producer companies have started to play an important role in procurement from smallholders, which guards against price crashes that has been plaguing marginalized farmers across the country despite record harvests

The agricultural seasons of 2016-17 (Kharif and Rabi) have not been favorable for farmers across the country. In spite of the near-normal monsoon rainfall in India in 2016 coupled with record farm production, wholesale and retail prices for agricultural commodities have been depressed for most of the year.

The uncertainties associated with the government announced minimum support price procurement (MSP) operations have added to the farmers’ woes. Added to this scenario is overall desperation and gloom in the countryside, leading to an increasing number of farmers’ suicides in Madhya Pradesh, Maharashtra and even in the northern Indian states of Uttar Pradesh and Punjab. Also see: Telangana’s tur dal farmers face yet another uncertain season, Marathwada farmers face bleak sowing season

Amidst this worrisome situation, a few examples of collective action shine as beacons of hope. The MAHA Farmers Producer Co. Ltd (MAHAFPC), the apex organization of over 200 farmer producer companies in Maharashtra, is a case in point. In the recently concluded procurement season, MAHAFPC did business of over Rs 1.68 billion. This was the first year of business operation of MAHAFPC.

The organization was designated by the central government as the lead agency in Maharashtra along with National Agricultural Cooperative Marketing Federation of India Ltd (NAFED) and other government agencies to procure red gram under the Minimum Support Price (MSP) program of the government. The MAHAFPC took up this challenge in all earnestness and ensured that all its members (the producer companies) and in turn their members benefit from active participation in the MSP procurement.

Showing the way

The role of MAHAFPC is commendable because it is acting as an aggregator of aggregators. While the individual FPCs are close to the farmers and are often the first point of contact with their members in diverse locations, MAHAFPC acted as an apex organization that aggregated the demands of the members, their members being individual FPCs.

While individual FPCS catered to an average of 300 to 500 farmers in their area of operations, the economies of scale that an aggregator brought was the value addition as an apex. MAHAFPC was effective in coordinating national organizations such as Small Farmers’ Agri Business Consortium (SFAC) and establish linkages with the departments of the state and central governments.

Succor to smallholders

The MAHAFPC and its outreach indicated that it catered to the needs of the smallholders. With the value of about Rs 1.7 billion of procured commodities from 26,800 farmers, per farmer commodity procured was of Rs 60,000. In volume, it meant that of the 332, 270 quintals of produce from 26,803 farmers. It averaged about 12 quintals per farmer. These numbers show that small farmers could participate in the MSP operations only because they had someone representing them in the market, namely the FPC they were members of. In 50% of the cases, the procurement centers had mechanical cleaning and grading facility that ensured that only certain fair accepted quality (FAQ) produce was procured.

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VillageSquare.in, 30 June, 2017, https://www.villagesquare.in/2017/06/30/collective-farm-gate-procurement-offers-solutions-cover-price-crashes/


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