Necessity of market linkages among farmers for better price realisation

It is known that 85% of India's farmers operate less than or just five acres of land, half of which in many parts of India may be dry/rainfed. Small farmers contribute 51% of agricultural output with 46% of operated land, and a much higher share (70%) in high-value crops, such as vegetables and milk. However, small farmers are less literate and are from more marginalized castes and communities, and are generally excluded from modern market arrangements, like contract farming or direct purchase.

How does the supply chain of agriculture work?

Farmers→ Small Traders (Kaccha)→Larger Trader (Pakka)→Commission agent→ Wholesaler→ Retailer→ Consumer

In the absence of a direct link with the consumers, the farmers are at the mercy of the middlemen who occupy the entire space between the production and the ultimate sale of the produce. This makes middlemen very powerful and the farmers often find themselves at a disadvantage despite being the producers. Monopoly is hazardous whether it is established by a public or a private entity. Since there are only limited agents in an APMC, it’s profitable for them to form a cartel and deliberately increasing the bids, pushing prices higher. Thus, delinking the producers and consumers, deprives both- the farmers of better returns on their produce and the common people of fair pricing on their vegetables.

Over and above the license fee, rent of shops at these markets is quite high which prevents healthy and necessary competition which is a prerequisite to maintain quality and reasonable prices. At most places, only a group of village/urban elite operate in APMC. These high costs are usually passed down to the farmers, who end up benefiting very little and having to separately pay commission, marketing fee, APMC cess, and at times even VAT.

Necessity of market linkages among farmers for better price realisation

The inefficiencies of agricultural markets in India pose challenges for the organized retail sector to participate effectively. The need for vertically coordinated markets where the intermediaries are bypassed and transaction costs are reduced is necessary for the signalling price and quality information, contract formation to mitigate supply risks and to establish of grades and standards.

Farmers need a conducive environment which allows them to have a say in the pricing of their produce in accordance with the demands of the consumers by interacting and trading directly in the market. Presently, the supply chain should be shortened to bring the producers as close to consumers as possible. Too many intermediaries can be a deterrent to a farmer, leaving them with an unfairly small return on their produce. Specially, middle-men are the one who exploits the farmer most. Usually, they buy at a less price from the farmer and sells at a high price to the consumers.

If we want the consumer to pay less and the farmer to gain more the role of private sector role has to be enhanced by setting up private mandis where farmers can come and sell their crops directly. There is a need to create efficient market linkages to the farmer for better price realization for their production. So, they will not be exploited by middle-men anymore. This will not only allow to have better price realisation but also, they will create an ecosystem for vegetable businesses to partner with multiple stakeholders and putting necessary infrastructure like Gramin Mandi, cold chain network in every primary vegetable cooperative society to reduce vegetable wastages.

MITHILA VEG UNION

Introducing MITHILA, started in 2021 "Mithila Veg Union" formed more than 50 Primary vegetable cooperative Societies with more than 2000 active members in the said region. Mithila Vegetable Processing and Marketing Co-operative Union Ltd is formed under the aegis of Bihar State Vegetables Processing and Marketing Scheme, Department of Co-operative, Government of Bihar.

While most aggrotech start-ups in India focus just on farmers, Mithila's USP (unique selling preposition) is that they focus on the entire value chain consisting of vegetable growers, vegetable processors, arhatiyas, and other mandi participants.

WHAT WE DO-

• To create a professional institution which provide post-harvest management services.
• To provide permanent marketing centres which help in bridging market inadequacies.
• To create efficient market linkages to the farmer for better price realization for their production.
• To ensure maximum outreach and impact at the base level through formation of three-tier cooperative structure to mobilize farmers and build their capacity.

OBJECTIVES-

• To Establish a farmers vegetable supply chain framework in and outside Bihar.
• Value addition by processing packaging and branding the product.
• Increase in vegetable production and productivity in the state.
• Bridging the demand and supply gap of fresh and quality vegetables and providing training and extension services to the vegetable growers.
• Minimizing the post-harvest losses by enhancing the product shelf life.
• By creating an ecosystem for vegetable businesses to partner with multiple stakeholders and putting necessary infrastructure like Gramin Mandi, cold chain network in every primary vegetable cooperative society to reduce vegetable wastages.

You can easily contact us through-

Email: - mithilaunion@tarkaari.in / mithilavegunion@gmail.com