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Resource centre on India's rural distress
 
 

From farm gate to your plate -Gaurav Vivek Bhatnagar
-The Hindu

The retail vegetable sellers have now started quoting the prices of almost all items in pao or 250 grammes. The concept of darjan or dozen has almost been replaced by the kilogramme for the humblest of fruits like bananas and oranges. But this means little to the common household which now literally thinks twice before buying any grocery item.

A common refrain heard often from politicians is that prices are spiralling. But how this phenomenon -- where the prices of food products in Delhi are now matching those in developed countries like the United States -- has come to such a passé is a matter of real concern.

A major cause for this is the difference in rates between wholesale markets and retail outlets in Delhi. The nearly 100 per cent jump in the case of most items is to be blamed. So while potatoes sold at a modal rate of Rs.5.97 per kg in the Azadpur wholesale market on Tuesday, it was selling at an Easy Day outlet in Rohini at Rs.10 per kg, at the Mother Dairy outlet there at Rs.11.90 per kg and at the Thursday market at Rs.15 per kg.

“Farmers in Punjab recently threw potatoes on the roads as they were not even getting Re.1 per kg for their produce. But here in Delhi the price has not dropped below Rs.15 in the open market even for a day,” rues Rupa Srikumar, who now compares prices at different outlets before making purchases.

Across the city at Mayur Vihar in East Delhi, Kumud Suri now juggles with her monthly expenses to ensure a healthy diet for her family. “The price of eggs has gone up to Rs.50 a dozen for regular size and Rs.70 for the desi variety; bananas here sell for Rs.35 per kg and work out to over Rs.50 per dozen; while potatoes sell for between Rs.15 and Rs.20 per kg; all this is too high for this time of the year.”

A closer look at the way in which the Indian market functions reveals the cause for the variation. Much of it has to do with the presence of numerous middlemen, transportation costs, bribes paid along the way and inability of most farmers to either cold-chain or preserve food items for long only adds to the yawning gap at which he sells the produce at his gate and the amount the final buyer pays to the retailer.

“If a farmer is selling something for Rs.100, say onions in Nasik, then by the time it reaches the consumer, the price usually goes up to anywhere between Rs.200 and Rs.250,” said an office-bearer of the Agricultural Produce Marketing Committee, Delhi.

The small farmer usually sells at the farm to the locals, and the big ones usually carry their produce to the local mandi or the closest city mandi , the APMC member said. The increase in price between the farm and the local mandi is around 10 per cent. And this includes the 2 per cent (for pulses) to 5 per cent (for fruits and vegetables) commission; and the half to four per cent market fee (1 per cent in Delhi).

Incidentally, in Delhi the government collects Rs.80 crore per annum through this fees and almost Rs.60 crore comes from Azadpur, with the three other wholesale markets at Ghazipur, Keshopur and Okhla contributing the rest. Delhi, however, grows very little on its own.

Between the local mandi and the small city mandi, another 15 per cent hike in rates comes about and about 3 to 4 per cent of this is due to transportation and labour costs and about 5 per cent is due to packaging and grading. The rest is commission of the agents.

From the small city wholesale markets to Delhi, the cost increase is another 10 per cent. Of this Rs.1.50 (from nearby cities in Haryana or U.P.) to Rs.4 per kg (from Bangalore or West Bengal) is the transportation cost. Apart from this there is 6 per cent commission which is charged by the wholesalers, 1 per cent goes towards market fees and 3 per cent is other expenditure, including labour.

So on a compounding basis, by the time a Rs.100 product leaves Delhi’s wholesale markets it already costs Rs.160. From here the product moves to either a retail seller who may be a rehri (cart) or patri (pavement) seller; institutional buyers like canteens and hotels; or semi-wholesaler who breaks it into smaller packs for the small vendors.

“While the retail sellers charge a 80 to 100 per cent profit, the semi-wholesalers jack up the rates by another 55 to 60 per cent. There is weight loss along the way due to repeated weighing and pilferage etc. and that too is factored into the prices,” said the market expert. The APMC regulates the commission at the wholesale markets to a maximum 6 per cent.

“The concept of hoarding does not apply to these vegetables and fruits, for they are perishable items. It is the competition among the traders which regulates the rates,” he says.