Oct 30, 2013

Food Inflation: Farmers' Market is the answer

A Farmers' Market in India. Most Farmers' Market are unhygienic, dusty and filthy.  

In the midst of the food inflation period, especially during the time onion prices had shot through the roof, I had been often asked as to what is the way vegetable prices can be maintained at a reasonable level all through the year. This question assumes importance in the light of the exploitation of farmers as well as the consumers at the hand of the middlemen.

When onion prices had touched Rs 70/kg in August, a study by NABARD had shown that while farmers were paid Rs 8/kg in the month of April-May, the traders had collected the onions and stored it at several paces, only to make a killing by creating an artificial scarcity. The consumers paid as high as Rs 70/kg for onions in August, and two months later in October the prices had crossed Rs 100/kg at several places. A newspaper report has computed that the wholesale and retail trade had profiteered by at least Rs 8,000-crore by keeping the prices high in the past 4 months.

Not only onions, prices of all vegetables had remained on an upswing. No vegetable, except for potatoes, were available for less than Rs 40/kg. Even in case of leafy vegetables, prices had jumped by close to 200 per cent. Interestingly, even in the organized retail chains – like Reliance Fresh, Easy Day, Metro, Big Bazaar – the prices had remained almost at the same level as the open market. These organized retail chains were supposed to remove the array of middlemen and thereby provide vegetables and fruits much cheaper to the consumers. 

Even at the time when open market price of onions was around Rs 100/kg in the open market, prices in the wholesale were around Rs 55/Kg, which means the retail traders had also been making a fast buck. While it is known that the unorganized retail chain too had exploited the situation to sell onions at Rs 100/kg, I don’t understand why didn’t the organized retail chains sell it at Rs 60/kg or so. If Reliance Fresh, Big Bazaar and the likes had made available onions at Rs 60/kg we would have seen an uncontrollable rush before these shops. There would have been long queues of buyers. 

It is therefore very clear that organized retail is not the answer to food mismanagement. Neither the farmers nor the consumers stand to benefit. The only beneficiaries are the organized retail chains, which have replaced the arhtiyas and the hawkers. They certainly have made huge profits. This shows that the big fish is no different from the smaller fish. Nor do I see much hope in corporate giants like Mahindra & Mahindra who have announced with much fanfare a proposal to diversify from its manufacturing activities. The auto-to-airspace giant now proposes to become a middleman. It plans to kickoff with branded apples – sourced from Kinnaur in Himachal Pradesh – and sell them at its proposed 15 outlets in Hyderabad for a premium of about 10 per cent or so.

This may be suitable for the upwardly mobile section of the population who do not want to buy from the traditional vegetable markets.  But for the aam aadmi there seems to be no respite from the rising vegetable prices.

Expecting the agri-business industry to provide good quality fruits and vegetables at affordable prices will remain a fake dream. Nowhere in the world has the agri-business industry succeeded in doing so. But there is a new renaissance in food delivery, quality of produce and economics that is I find is slowly but steadily taking roots.  From Australia to United States, from Japan to Argentina, the local food systems are changing. Enhancing the livelihoods of local producers, and meeting the consumers’ aspiration, food markets are now becoming popular.

Even in America, where Wal-Mart dominates the retail market, the growth in farmers’ markets has been phenomenal. From just 370 farmers’ markets that existed in 1970, there were more than 7,000 in 2010. The US Department of Agriculture estimates that in 2007, more than 136,000 farmers were selling food directly to consumers. In Australia, farmer markets too have grown rapidly. From none in 1999, there are 150 farmers markets in Australia today. The Australian Farmers’ Markets Association claims that as per a survey the Farmers Markets in the province of Victoria alone have registered sales of over $ 2 million every week.

Farmers Markets provides farmers and consumers a suitable environment to interact, and that enables farmers to meet the specific needs of the consumers. It enables greater consumption of fresh and healthy fruits and vegetables, and in the bargain reduces the carbon footprint. Since consumers are now becoming increasingly aware of the damage chemical pesticides and fertilizers do to health and immunity systems, the demand for organic food is growing by approximately 20 per cent every year. Moreover, since farmers come and sell directly to consumers on a regular basis, farmer’ markets eliminate middlemen thereby providing stable prices.

The concept is certainly not new. It was launched in Punjab as Apni Mandi a few decades back, but has never received the impetus and investments required. In Andhra Pradesh the farmers’ markets are called Ryatu Bazaars, again suffering from lack of support. In metros like New Delhi, Mumbai, Chennai and Kolkata the weekly bazaars that have been operating for years now stem from the same idea. But because these weekly bazaars have not been provided any permanent space, with adequate infrastructure and sanitation, they have failed to emerge as an alternate marketing hub. These bazaars are being held in open spaces wherever available. These spaces are unhygienic, dusty and filthy.

Over the years, I find that less number of farmers and more commission agents are now operating in these markets. This is contrary to the underlying objective of farmers’ markets. Some mechanism therefore has to be evolved that makes farmers’ markets only accessible for genuine farmers. To begin with, farmers could be encouraged to form cooperatives for marketing purposes. Each cooperative could then participate in farmers markets. This would leave farmers to undertake other farming operations.

In UK the community food sector has grown to 150 million pound sterlings in just a five-year period between 2007and 2012. The potential in India therefore is enormous. All it needs is a shift in thinking, and proper policy support. It will be the beginning of a new food culture in India, supporting farmers, consumers and reducing much of the environmental damage as well as health costs. #

Further reading: An edited version appeared in Deccan Herald: Open Farmers Markets, Oct 30, 2013. http://www.deccanherald.com/content/366044/open-farmers039-markets.html

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