Supply chain inefficiencies must be fixed to bring agri-reform benefits to all farmers, says ex-Karnataka price commission chief
While APMCs in Karnataka have flaws, one should not use that as an excuse to advocate a total death knell to the APMC system, said Dr Prakash Kammardi
While much of media attention is directed at the ongoing farmers' protests in and around Delhi, there has been little examination of how India's major agrarian states actually go about the business of procuring and marketing farm produce. A series of conversations with economists and agricultural marketing experts from various states show aspects specific to those states, and how farmers and buyers engage in negotiations. The following interview, with former chairman of the Karnataka State Agriculture Price Commission (SAPC) and professor of agricultural economics at the University of Agricultural Sciences, Bengaluru, Dr Prakash Kammardi, looks at the agri-economy of the southern state.
Edited excerpts follow:
Karnataka amended the marketing rules in 2013. Has private investment come into the state after that?
The entry of the private sector was designed in Karnataka much before the recently-passed laws by the Centre. I don’t think substantial private investment has come in, despite the incentives. Take the example of tomato. It is within the purview of APMCs, but only 23 percent comes to the market. The rest is sold outside the APMC. Every year, we see agitations of tomato farmers. There are no cold storage chains, or a decent market. Because of the inadequate infrastructure, the present system is not doing well.
What are the agri-marketing inefficiencies as far as Karnataka is concerned?
The SAPC has been working out the marketing situation in different parts of Karnataka for different commodities. The commission has been focusing on 26 commodities. They include paddy, jowar, ragi, maize, pulses, oilseeds, onion, tomato, red chilli, mango, banana, etc. Fourteen of them are agricultural commodities, and 12 are horticulture commodities. Put together, they comprise almost 80-90 percent of the farm produce in Karnataka. In all, about 34 percent of farm produce gets into the APMC. This is our serious concern. Only 50 percent or so of the paddy crop comes to the market. The figures for jowar and ragi are 27 percent and 7 percent respectively. The rest of the produce that does not come to the market is either consumed by farmers or sold out of the state, especially in the bordering districts. But the major chunk of it is sold outside the purview of APMC.
Why is the reach so low?
APMCs are located at the taluka headquarters. It is very difficult for small and marginal farmers to bring their produce to the APMCs. They are trapped in debts. Many of them are in distress. They need the money immediately. Traders like big landlords and moneylenders buy produce from small and marginal farmers at throwaway prices. That is the crux of the problem.
Our prescription is to ensure the commodities are brought and transacted within the purview, control and supervision of the APMC rules and regulations. If the farmers cannot come to the APMC, the APMC should build an infrastructure close to where the farmers are. The market can go to the village area and make the procurement, so that farmers are not cheated.
What about the farmers that manage to make it to the APMC?
The most interesting thing is not even 32 percent of the total commodity that gets into the market is sold above MSP in Karnataka. Ninety percent of jowar that comes to APMC is sold below the MSP. They say the quality is not good, the supply is more and so on. But we are just not ready to honour (the MSP), that is all. Tur never gets the MSP. The support price of tur is about Rs 6,000, it is always sold below Rs 4,000.
If the product is brought inside the APMC, it should be sold above the MSP. That should be the ultimate goal by making systems workable. The system of competitive price discovery needs to be improved.
However, using this as an excuse, one should not advocate a total death knell to the APMC system. It would mean that even the little amount of produce that gets MSP at APMC would also not get decent rates.
We should instead make the system workable and efficient. There is no reason why it can’t become efficient. If you go to the coastal area, there are very efficient markets in Karnataka. It needs to be replicated across the state.
Karnataka also grows coffee and raw silk. How are farmers cultivating these two crops doing?
Karnataka is the number one state as far as coffee is concerned. It is a well-established market. There are several procurement centres as well. The coffee board used to regulate the market. After liberalisation, it became a facilitator, providing the market information pertaining to global fluctuations, supply-demand, export-import etc. The farmers are aware of the market system. When the price crashes, they know why it crashed. They are equipped to deal with liberalised market structure because of the nature of the commodity and the coffee board. That is the case with raw silk too. They are big farmers. They have a niche market, which is established. The farmers that need protection are mostly the ones who grow cereals and pulses.
Does Karnataka have a decent amount of contract farming?
Karnataka has contract farming for ginger, turmeric, gherkin, medicinal plants, rose onion etc. Farmers get stable prices. Because they are pre-determined.
But it has a disastrous impact on the environment. All of these crops are water-intensive and they use enormous amounts of pesticides and fertilisers. Farmers have to follow the recommendations of the company. In contract farming, the company has to take utmost care about quality of production. Farmers grow produce under their dictation. They follow their own methods. But they pay little attention to the environment.
For example, gherkin is cultivated in Hiriyur, and parts of Tunkur. In these places, ground water has been over-exploited. In Coorg and Haasan, ginger and turmeric cultivation has caused large-scale water pollution.
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