More companies enter rural India to provide market access to farmers
More companies enter rural India to provide market access to farmers
Even as changing climatic conditions and erratic rains affect farmers directly and consumers indirectly, a new class of companies is emerging that seek to eliminate middlemen in the food supply chain to benefit both the producer and consumer.
“There are many intermediaries in the food supply chain in the country. While most of them run their business on commission at each level, some may also take price positions which could inflate the retail price. We seek to eliminate middlemen by hand holding farmers from the procurement, storage, warehouse receipt finance, and connecting them to the consumers,” said Sunoor Kaul, director of Origo Commodities India, on the sidelines of an event to launch the company’s retail brand Origo Farms.
Heritage Foods, Ion Exchange EnviroFarms, Amira Foods India, Green Agro Park, etc are already in the contract farming, where organised entities like companies or the farm producers organisations provide critical market linkages to farmers.
As companies directly tie up with farmers, the producers will get around 20 per cent more than what they would get by selling their produce through traditional channels, which were created centuries ago. Apart from this, farmers can also avoid post-harvest loss due to wastage, which amounts to 12 per cent in staples and 40 per cent perishable products like fruits and vegetables, etc.
On top of this, Mr Kaul said the farmer can get better prices by storing his produce at our warehouses for a couple of months. “Since there would be an initial oversupply in market after the harvest, farmers get low rate if he sells it immediately. So we allow farmers to store their produce at our warehouses and raise loans on our warehouse receipt to pay off input costs.”
Experts call for higher institutional credit to farmers to protect them from usurious rates charged by money lenders. Origo Commodities is also planning to set up an NBFC in a year to provide input finance to farmers.
Recently, Niti Aayog member Ramesh Chand pitched for more private sector involvement and easy market access to farmers, as the farm sector crisis is expected to deepen further in 2016-17 if the current trend of falling global commodities prices is not reversed.
Apart from affecting farmers and consumers, spiralling food prices affect the overall macroeconomics as they have a cascading effect on wages and overall inflation, ther-eby on the entire economy.
The main problem faced by the Indian agriculture is that the produce of each farmer is too low to have a better say in the market. “Farm Producer Organis-ations, an initiative of Nabard, can help farmers to address this. FPO can float a private limited company, where farmers will be the shareholders. This company can procure produce from member farmers to create volume to have a bigger say in the market.”
