APMC monopoly being broken?
There is a move by the Fadnavis Government to remove the APMC and allow the farmers to sell directly to the end customer. The MSM says this will increase inflation – because of the TRADER’S STRIKE and the internet media says that the farmer’s income will go up 300 to 400%.
The truth obviously lies somewhere in between. The trader was doing the following functions:
- going to the farmer and buying the vegetables
- taking responsibility for the transport (from the mandi to the urban centers)
- storing from farm to the retail shop chain
- making it available to the retailer in lots of his requirement
Of course he was incurring interest costs, fuel costs, rent, labor and of course he had a MARGIN.
Now the government cannot wish away all the costs. They can ONLY wish away the margins. Suppose one trader was buying vegetables at Rs. 5 and selling it at Rs. 30, our great journos will talk about the EXHORBITANT margins for the trader. They keep forgetting that perhaps there was Rs. 15 of costs while doing the transaction. Then there was the occasional theft, accident, decay..against which the small trader had no insurance. If there was insurance available it was very very expensive and claims never reached the farmer.
Now the farmer will come with his produce to the place of sale. Given Indian conditions, he will have to take a bus – and the bus will not allow him to carry more than 20kgs MAXIMUM. What does he do with the balance produce?
What about the touts who will ask him for bribes on the way? some uniformed and some ununiformed? who will pay or negotiate with them? These days if they see value, they start at 5k.
Will the farmer have the energy to do this every day or who will attend to his farm?
So do read this article (see the link below) – and do ponder about
- you can eliminate the wholesaler, but cannot eliminate wholesale related functions
- prima facie farmer and consumer will benefit, but it will not be so simple
- 1000 farmers coming from Nasik to mumbai to sell the same veggies looks difficult !!
- solutions are different..they will emerge..
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Dr Aniruddha Malpani
Another alternative is that smart startups will take advantage of this inefficiency and come up with win-win solutions, which allow them to leverage logistics technology without having to charge a huge markup to the consumer
subra
lets see..suddenly the farmer’s income is not going to go up 400%…like that example says..
BRS
In Karnataka, farmers bear the transport cost to APMC. Also, once transported, farmers have to accept what ever is the cost or MSP. They cannot transport it back. That is why there are so many sad instances of farmers throwing produce on roads. Breaking APMC monopoly is a step in the right direction.
Manju
I was speaking to a farmer yesterday. He is from Satara. He told me this. “What do you want me to do now. Should I take all my produce and come to Mumbai, sit out somewhere and wait till I sell my 2 tons of produce?”
Also we cannot expect 1000s of farmers to travel to different parts of MH to sell their stuff.
One good part that might come out of this is – RPL (residual Pesticide Level) may go down. Most of the pesticide spraying happens at the APMC, not the farm. To preserve the fruits and vegetables traders spray them with pesticides. Sadly my beloved curry leaf has the most amount of RPL.
Rajeev
Written by a person who has no knowledge of how the agri products are sold.
The farmer grows the vegetables, harvests them and transports them to the Mandi. He has to sell via the commission agents only. Commissio agents lease space in the Mandi for this. The vegetables are auctioned by the agent to traders. This whole thing is pre set. Farmer has no option but to take the rate he is given. If he decides not to sell at the price in auction, he is asked to take the stuff away. No other commission agent will help him.
The wholesale traders sell the stuff to middle level traders and so on till it reaches us at 10 times the value received by the farmer.
The only thing that is changed now is that now the farmer has a choice to sell his produce to anyone. Earlier he would have been put behind bars.
If the agents and readers are giving such a wonderful and cost effective service, then they have nothing to fear.
I forget to mention the Mathadi workers union. They are also agitating begause they hold a monopoly on handling the material in the mandi. Today the farmer can not even download his goods from the truck until he pays money to the mathadi’s for allowing him to do so.
This is a very good reform. Unthinkable in times of earlier regimes who were funded by these monopolies.
guru
What I foresee is a farmer movement and co operatives and the big buyers going to coops to buy in bulk.
The market might actually move away from amcs
aparoop
i live in pune, there is something amazing out here.
In pune no outside cheap options can reach , eg mangoes from Andhra, vegetables from Punjab
What is available is at very difficult prices and the story is same for farmers ( who are not benefitted) and consumers who are consumed
Here the market is a market place and it is being rigged
subra
We might suddenly see big shops being opened to sell products from various STATES not just from the state to which you belong. Removing of a few intermediaries always has a good impact on prices. See airlines, mutual funds, equity shares (sub broker eliminated), online life insurance, now vegetables.
You can buy medicines online – generic – …so on and so forth. Veggies being perishables it will not be so easy. However some of our smart entrepreneurs will now start selling in a more ready form and easy to use and hand delivered to you EXACTLY when you want it.
Well good times are here. Achhe din?
Ajay
I think what Amul did for milk must be tried for farm produce. Amul essentially took over the entire milk collection chain from small level operators and later moved into producing all kinds milk products.
Being co-operatively owned(but professionally managed) all the decisions do take the milk producers income/profit into consideration. Amul or something like it must come-up & take up the collection and marketing of veggies, once it grows in scale I believe it will benefit both the farmer & end-consumers.
– Ajay