Thursday, February 6, 2014


The reported remark by a minister in Tamil Nadu that his government "will" make farmers stake holders in food processing industry makes one laugh or cry depending on how knowledgeable one is regarding the pitiable condition of agriculture and the farmers in India. Concept wise the above statement is fantastic and will be a boon to the farmer if the government can make it work. Unfortunately the minister did not elaborate how this can be done! In a country where farmer suicides are rampant and agricultural productivity one of the lowest in the world, what is required is to strengthen the farming infrastructure in the country before talking about processing the crops into value added products.

Talking about the viability of farming in India, it is nothing but hypocrisy to imagine that all is well in the country because of government's huge subsidy doling and loan waiver schemes during election times. There are many agri varsities in the country which boast of a host technologies for boosting land productivity but only a few farmers get the benefits due to limited funds for extension activities. Added to this water availability is a big constraint and in allocating water resources, industry is invariably preferred over agriculture. The recent revelation that many irrigation projects built in Maharashtra for the benefit of farmers are diverting water to giant distilleries owned by local politicians, bears this out. Major crops depending on rains show variation in production year after year if rain fall is below normal. Under these circumstances how can any one think of integrated food production and processing systems?

If Amul dairy is a success in the case of live stock farming, it is largely due to linking of inputs like feeds, veterinary services and marketing under the aegis of that doyen late Dr FV Kurien. Why the country has not been able to replicate what Dr Kurien achieved during sixties, seventies and eighties of last millenium, is a point worth pondering over. Agriculture Market Produce Marketing Centers (APMC) are supposed to be providing decent prices to the crops brought by the farmers in a transparent manner but these centers are monopolized by mafia groups which manage to cheat the farmers by "ganging up" and through cartelizationHonest business in agri produce in the country is unthinkable under these conditions.

It was with grate fanfare that foreign investment policy was changed to accommodate international retailers in the Indian market. The "hope" was that these retailers will invest billions of rupees to establish the much needed infrastructure to procure, transport, preserve and market the perishable produce through out the country. Why would these players be doing what the government is supposed to do unless they have an agenda to recover their investments through under pricing of the agri corps procured from the farmers to sell the same to consumers at low prices? It does not make any sense to the ordinary intelligence of a citizen in this country!  

There is no evidence to show so far in any part of the world in support of the contention that entry of international retail chains has benefited the farmers. It is true that consumers get products at relatively cheaper rates and this has been attributed to the economy of large scale handling. In countries like USA the land holdings are of huge size and hardly a few thousand farmers have to be dealt with by the retail chains to source their materials. Added to this most farms in the USA receive government subsidies to compensate for low price realization in the market which enable them to sell their produce at lower prices. In contrast India has millions of farmers with average land holding less than an hectare in size and where the agri operations are costly. If these farmers are forced to sell their produce at low prices, they have no other alternative except committing suicide!

Ideally farmers' cooperatives similar to Amul are the answer to make them richer and prosperous like milk producers. But the political class in the country does not allow this to happen because of the fertile ground provided by such societies for grooming politicians! In stead of pumping billions of rupees in the form of subsidies, Government must organize agri cooperatives with each panchayat playing an active role and building up the supply chain with appropriate infrastructure for storage, transportation and terminal markets. The practice of minimum support price must be given up once cooperative organizations start operation in a big way. These cooperatives can always decide what prices are reasonable and plow back the profits to its members. This is the only way to make the farmers stake holders in food industry.

If there are many cooperative dairies working successfully in the county, why such farmers cooperative also cannot work economically making the farmers partners in creating wealth across millions of villages across the country?Just like these dairies, agri cooperatives can build their own cold storage and low temperature transport infrastructure for safeguarding the quality of their produce before delivering the same to the market or set up their own processing facilities to create branded products that can be sold through the existing retail market system or their own retail outlets.

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