News of

Market News

In Maharashtra, a New Procurement Strategy Is Shielding Farmers From Price Crashes
Jul 07, 2017

The agricultural seasons of 2016-17 (kharif and rabi) have not been favourable for farmers across the country. In spite of the near-normal monsoon rainfall in India in 2016 coupled with record farm production, wholesale and retail prices for agricultural commodities have been depressed for most of the year.

The uncertainties associated with the government announced minimum support price procurement (MSP) operations have added to the farmers’ woes. Added to this scenario is overall desperation and gloom in the countryside, leading to an increasing number of farmers’ suicides in Madhya Pradesh, Maharashtra and even in the northern Indian states of Uttar Pradesh and Punjab.

Amidst this worrisome situation, a few examples of collective action shine as beacons of hope. The MAHA Farmers Producer Co. Ltd (MAHAFPC), the apex organisation of over 200 farmer producer companies in Maharashtra, is a case in point. In the recently concluded procurement season, MAHAFPC did business of over Rs. 1.68 crores. This was the first year of business operation of MAHAFPC.

The organisation was designated by the central government as the lead agency in Maharashtra along with National Agricultural Cooperative Marketing Federation of India Ltd (NAFED) and other government agencies to procure red gram under the Minimum Support Price (MSP) program of the government. The MAHAFPC took up this challenge in all earnestness and ensured that all its members (the producer companies) and in turn their members benefit from active participation in the MSP procurement.

Showing the way

The role of MAHAFPC is commendable because it is acting as an aggregator of aggregators. While the individual FPCs are close to the farmers and are often the first point of contact with their members in diverse locations, MAHAFPC acted as an apex organisation that aggregated the demands of the members, their members being individual FPCs.

While individual FPCS catered to an average of 300 to 500 farmers in their area of operations, the economies of scale that an aggregator brought was the value addition as an apex. MAHAFPC was effective in coordinating national organizations such as Small Farmers’ Agri Business Consortium (SFAC) and establish linkages with the departments of the state and central governments.

Succor to smallholders

The MAHAFPC and its outreach indicated that it catered to the needs of the smallholders. With the value of about Rs 1.7 billion of procured commodities from 26,800 farmers, per farmer commodity procured was of Rs 60,000. In volume, it meant that of the 332, 270 quintals of produce from 26,803 farmers. It averaged about 12 quintals per farmer. These numbers show that small farmers could participate in the MSP operations only because they had someone representing them in the market, namely the FPC they were members of. In 50% of the cases, the procurement centers had mechanical cleaning and grading facility that ensured that only certain fair accepted quality (FAQ) produce was procured.

There is another story beyond these numbers. When the state government had announced MSP operations, the state machinery was not adequately prepared to receive the huge quantities of tur dal (red gram). As a result, there were long queues of farmers waiting for close to seven days outside the government market yards, waiting for their turn to come in for selling their produce. Contrasted with this scenario, the farm gate procurement arrangement made by members of the MAHAPFC was a boon to the farmers.

Diversified reach across regions

One of the noteworthy features of the role of MAHAFPC was that it covered a large number of districts from Chandrapur and Yavatmal in the eastern part of Maharashtra to Ahmednagar in the west. The procurement covered districts of Vidharbha and Marathwada that had consistently reported distress. Districts like Sholapur, Ahmednagar, Beed and Osmanabad that are perennially draught-prone also figured in the procurement of pulses.

The credit of such a diversified procurement goes to the dispersed presence of farmer producer companies across the state. The decentralised approach thus ensured that not only farmers from resource-rich regions benefited from the MSP operations, but also ensured coverage of otherwise marginalized districts.

The Wire

Trade Leads

Directory's

APEDA Agri Exchange

News & Analysis

Contact

Trade Leads

Directory's

APEDA Agri Exchange

News & Analysis

Follow Us

Contact