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LATEST NEWS UPDATES | Farmers' travails

Farmers' travails

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published Published on Dec 29, 2009   modified Modified on Dec 29, 2009

Replying to a question in the Rajya Sabha on farmers falling into a debt trap, the government came out with data that are startling. Rice farmers have suffered losses in all regions save Andhra Pradesh over three cropping years ending in 2006-07, with wheat farmers faring a little better. Even today, news reports suggest that farmers do not really gain much even as consumer prices go through the roof. This anomaly of farmers suffering losses, even in crops for which the government provides support prices, while consumers pay high prices deserves urgent official attention. Clearly, fat margins accrue to those who control the series of transactions farm produce undergoes after it leaves the farmer and before it reaches the consumer.

These would be compounded by spoilage, pilferage and waste along this transaction chain. There is no escaping the logic: if we want the farmer to get a remunerative price and the consumer not to be fleeced, this supply chain from the farmer to the consumer has to become efficient, competitive and organised. When the Centre blames the states for failing to act on possible hoarding and artificial shortages leading to a rise in prices, what the Centre fails to mention is its policy of discouraging organised retail. Organised retail is the one industry that has a vested interest in shortening the farm-to-fork supply chain and making it efficient. True, it is the supply chain and logistics management rather than the final distribution to retail customers that really cuts costs. And the government has allowed foreign investment in cash and carry operations that handle the pre-retail supply chain management. Then, why blame the government? Because cash and carry has limited appeal for the investor. It leaves the retail player to add a fat retail margin while having done none of the hard work that brought down the bulk price at the cash and carry outlet. Only when the supply chain manager gets a chance to sell directly to the consumer does it have the full incentive to scale up its operations.

The obverse of the coin is that the farmer also needs to have an organisational form that allows them to negotiate with organised buyers with some leverage, of the kind that Amul offers its stakeholders.


The Economic Times, 29 December, 2009, http://economictimes.indiatimes.com/opinion/editorial/Farmers-travails/articleshow/5389893.cms
 

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