Are you interested in investing in business anywhere in the world? Are you in dilemma in selecting a country to invest? No need to worry. You have many financial firms, consultants who can help, you also have indices like FDI Confidence index that rank the countries in the order of attractiveness of FDI.
Do you want to know the country where people live happily? You have Happiness Index to help you. Similarly, you have many indices like HDI index that rank the countries on human development, GHI that rank on hungry index. We can get some indices on most of the parameters we like.
However, one may be shocked to know that we don’t have any indices to measure the welfare of farmers’ on whom we are dependent for our basic need for survival. I consider the welfare of farmers as most important in the country like India where 60% of our population is directly dependent on agriculture. The welfare of the farmers has trickle down effect which has impact on majority of population and many other sectors. The improvement in farmers’ condition will naturally result in improvement in indices like HDI and GHI apart from solving the problems of food security. Hence, I consider the welfare of farmers’ as most important parameter.
In the absence of any indicator to measure the farmers’ welfare an attempt has been made to develop a suitable index. The index can be termed as “Farmers’ Welfare Index” (FWI) and the following components can be considered to calculate the index.
The components considered can be broadly classified into:
1. Domestic support
2. Terms of Trade and
3. Infrastructure
Domestic Support:
Support to the farmers by state and central governments in the form of price support; subsidies on inputs like fertilizers, pesticides, seeds and machinery and insurance policies for crops and livestock are important domestic forms of support which have impact on the welfare of farmers. Hence, these factors are considered to calculate the domestic support.
Terms of Trade:
Economic welfare of farmers is ultimately depending on terms of trade. If the market price for the produce is low even the bumper harvest will not make any significant change to farmers’ economic condition. Similarly, all the input prices (land, labor, fertilizers, water, pesticides, etc) and its variation among seasons are to be considered to arrive at the total cost of production which have implications on profit.
In the era of globalization, the factors of WTO agreements like export duty or concessions, import duty and market access has to be considered which have direct impact on farmers’ income.
Infrastructure:
The infrastructure facilities play important role in marketing of agricultural produce especially fruits and vegetables which are highly perishable. Market yards, their density, facilities at the yards, transportation facilities to markets, market information system are important facilities which influence the marketing of produce. The infrastructure facilities for inputs like fertilizers, pesticides, seeds are also to be considered for the index to be comprehensive. The extension services which create awareness about technology, production practices, market service and information are also considered under this component.
Sustainability of resources like soil and water are important which affect the future production and thus the welfare of farmers. Hence, the condition of resources like soil and water are considered to calculate the index.
The index can be calculated for each crop or a region to enable the policy makers to initiate specific policies or programmes for a crop/region. The aggregate index can also be developed at state and national level.
(This is in the initial stage and the suggestions or comments are welcome).
Wednesday, December 5, 2007
Tuesday, November 6, 2007
Unlucky Anantapur Farmers
Farmers in the district of Anantapur and nearby areas were very happy before few days. The happy moments are rare for the farmers of this region because of successive crop failure due to erratic rainfall. This region is one of the driest regions of the country after Rajasthan.
Farmers were very happy because after about 7-8 years the groundnut crop was good due of timely rainfall. They were dreaming of fulfilling their aspirations which were due from many years. They were dreaming of repairing the old houses, paying the debts which were borrowed for agriculture, children’s education and family needs. Some were even thinking of marrying off their daughters this year – All depending on groundnut crop alone.
All these dreams were shattered suddenly at the last moment. The crop affected badly immediately after the harvest because of continuous rains due to cyclone for more than a week. The colour, taste and oil content of the groundnut has affected on which the price is dependent. The fodder is unsuitable as cattle feed because of rotting and change in colour. Some farmers were able to harvest early and form the heap. Even this is being affected partially because of insufficient drying and continues rains.
Not only the nature even the market is affecting their dreams. The price of groundnut which was about the Rs.2500 per quintal a month ago has suddenly dropped to around Rs.2000 per quintal on arrival of new crop. One cannot imagine the support the farmers are getting for groundnut crop from government. The minimum support price (MSP) announced by the government is not even nearer to reality. The present MSP is only around Rs.1500 from which farmers cannot even cover their production costs.
Farmers affected by nature and market lost all their hopes. The government is also not making enough effort to help them. Even they don’t have the option of insurance coverage to take care of risk due to excessive rains. How can the farmers realize their dreams when neglected by all? Many farmers have lost interest in agriculture. They are continuing agriculture as they don’t have other options. They don’t want their children to be in agriculture. Previously farmers used to suffer due to insufficient rainfall but this time due to the same rainfall in excess quantities unseasonally and made them unlucky once again.
One can imagine the sufferings of farmers by one of the incidents I come across. When I called up my parents last week the only thing my father talked is about the rainfall and crop spoilage. No mention of my studies or health when the son has called up after long time from more than 1000 km away!!!!!!!
Farmers were very happy because after about 7-8 years the groundnut crop was good due of timely rainfall. They were dreaming of fulfilling their aspirations which were due from many years. They were dreaming of repairing the old houses, paying the debts which were borrowed for agriculture, children’s education and family needs. Some were even thinking of marrying off their daughters this year – All depending on groundnut crop alone.
All these dreams were shattered suddenly at the last moment. The crop affected badly immediately after the harvest because of continuous rains due to cyclone for more than a week. The colour, taste and oil content of the groundnut has affected on which the price is dependent. The fodder is unsuitable as cattle feed because of rotting and change in colour. Some farmers were able to harvest early and form the heap. Even this is being affected partially because of insufficient drying and continues rains.
Not only the nature even the market is affecting their dreams. The price of groundnut which was about the Rs.2500 per quintal a month ago has suddenly dropped to around Rs.2000 per quintal on arrival of new crop. One cannot imagine the support the farmers are getting for groundnut crop from government. The minimum support price (MSP) announced by the government is not even nearer to reality. The present MSP is only around Rs.1500 from which farmers cannot even cover their production costs.
Farmers affected by nature and market lost all their hopes. The government is also not making enough effort to help them. Even they don’t have the option of insurance coverage to take care of risk due to excessive rains. How can the farmers realize their dreams when neglected by all? Many farmers have lost interest in agriculture. They are continuing agriculture as they don’t have other options. They don’t want their children to be in agriculture. Previously farmers used to suffer due to insufficient rainfall but this time due to the same rainfall in excess quantities unseasonally and made them unlucky once again.
One can imagine the sufferings of farmers by one of the incidents I come across. When I called up my parents last week the only thing my father talked is about the rainfall and crop spoilage. No mention of my studies or health when the son has called up after long time from more than 1000 km away!!!!!!!
Friday, October 12, 2007
Should Organized Retailing be allowed in Fruits and Vegetables?
Recently, we are witnessing attacks on organized retailers like Reliance Fresh in most of the states in the name of monopoly and exploitation in the long run. Can the organized players monopolise the fruit and vegetable retailing in the country? Are they exploiting the farmers?
Organized retail is growing at a faster rate in the country with the entry of big players. The big business houses like Reliance, Bharathi, Pantaloom, Subhiksha, Heritage have entered retailing of fresh fruits and vegetables. This sector which was earlier regulated by APMC act and operated by many small unorganized players is now opened up with the modifications in APMC act.
Most of the time, the farmers in India are not getting even 50% of the price paid by the consumers because of exploitative practices of middlemen and large scale inefficiency in supply chain. The inefficiency is still higher in perishable goods like fruits and vegetables. Traditionally, farmers used to sell their produce to village level traders at lower prices because of lack of transport facilities, market facilities, cold storages, time, knowledge, power, etc.
The produce from village traders was procured and passed through host of middlemen before reaching retailer and consumers. At each step in the chain the price of the produce increased with deterioration in quality because of multiple handling and time taken. The post harvest losses were as high as 30 % in fruits and vegetables. All these practices resulted into higher consumer price for the produce. The major share of the consumers’ price is swallowed by intermediaries which resulted into lower price for the producer. The farmers are being punished for no fault of theirs.
Corporate houses have entered retail sector of fruits and vegetables with the modifications in APMC act which allows contract farming and setting up of private markets. These players are replacing the middlemen purchasing the fruits and vegetables directly from farmers and selling to customers at their own stores. Some of them have entered into a contract farming agreement with farmers, providing technical advice and inputs to farmers and investing in storage and transportation facilities. These have resulted into reduction of post harvest losses, preserving the quality of produce, improved marketing efficiency, benefiting the farmer and also consumer. Now farmers are getting better price, have many options to sell their produce and consumers are also getting better quality produce.
This has affected the exploitative middlemen and traders who are protesting against the organized retailing. If they believe in transparency in transactions, true competitive spirit they have to compete with organized players. Why can’t they start operations like organized players by organizing themselves into cooperatives or groups and compete? Their argument is that allowing organised players like reliance will lead to monopoly and farmers will be exploited in the long run.
At any point of time and place organized players will not be in a position to monopolise this sector but they will surely change the present system. Always the demand exists for vegetables at street corner shops and street hawker. Organised players can’t open shops in all the streets and cater to all the section of the population. They can’t displace small players altogether. The organized retailers will not invest in small towns and win over small players. Small vendors will have an edge over big players in small towns in terms of cost of operation etc.
Presently, this sector is monopolized by exploitative middlemen and traders and they are worried about themselves. The real concern for them is not the farmer but themselves. What they have done to farmer all these years? Why farmers are not getting right price for their produce when only these people are operating in the sector? Why the farmer has to suffer because of inefficiency in present marketing system?
The efficiency of agricultural marketing system has direct impact on more than 60% of Indian population i.e. farmers who are dependent on farming for their livelihood. If the organized retail bring competition and improve infrastructure and efficiency why can’t we allow them? The investment required for improving infrastructure is huge and will take decades if we depend on the government. For example, presently we have cold storage facilities sufficient for only 10 % of production of fruits and vegetables. According to the estimates, in another 10 years we need an investment of Rs.27000 crores for cold storages only. One can imagine the total investment required for other facilities. In this situation we need to encourage private participation in the sector that are willing to invest and improve the system.
Why can’t this sector be opened up and allow fair play of supply and demand forces? Why can’t we liberalise the sector and allow at least Indian business houses if not other MNCs? Why can’t the farmers realize the right price for their produce? How long can we support these vested interests?
Organized retail is growing at a faster rate in the country with the entry of big players. The big business houses like Reliance, Bharathi, Pantaloom, Subhiksha, Heritage have entered retailing of fresh fruits and vegetables. This sector which was earlier regulated by APMC act and operated by many small unorganized players is now opened up with the modifications in APMC act.
Most of the time, the farmers in India are not getting even 50% of the price paid by the consumers because of exploitative practices of middlemen and large scale inefficiency in supply chain. The inefficiency is still higher in perishable goods like fruits and vegetables. Traditionally, farmers used to sell their produce to village level traders at lower prices because of lack of transport facilities, market facilities, cold storages, time, knowledge, power, etc.
The produce from village traders was procured and passed through host of middlemen before reaching retailer and consumers. At each step in the chain the price of the produce increased with deterioration in quality because of multiple handling and time taken. The post harvest losses were as high as 30 % in fruits and vegetables. All these practices resulted into higher consumer price for the produce. The major share of the consumers’ price is swallowed by intermediaries which resulted into lower price for the producer. The farmers are being punished for no fault of theirs.
Corporate houses have entered retail sector of fruits and vegetables with the modifications in APMC act which allows contract farming and setting up of private markets. These players are replacing the middlemen purchasing the fruits and vegetables directly from farmers and selling to customers at their own stores. Some of them have entered into a contract farming agreement with farmers, providing technical advice and inputs to farmers and investing in storage and transportation facilities. These have resulted into reduction of post harvest losses, preserving the quality of produce, improved marketing efficiency, benefiting the farmer and also consumer. Now farmers are getting better price, have many options to sell their produce and consumers are also getting better quality produce.
This has affected the exploitative middlemen and traders who are protesting against the organized retailing. If they believe in transparency in transactions, true competitive spirit they have to compete with organized players. Why can’t they start operations like organized players by organizing themselves into cooperatives or groups and compete? Their argument is that allowing organised players like reliance will lead to monopoly and farmers will be exploited in the long run.
At any point of time and place organized players will not be in a position to monopolise this sector but they will surely change the present system. Always the demand exists for vegetables at street corner shops and street hawker. Organised players can’t open shops in all the streets and cater to all the section of the population. They can’t displace small players altogether. The organized retailers will not invest in small towns and win over small players. Small vendors will have an edge over big players in small towns in terms of cost of operation etc.
Presently, this sector is monopolized by exploitative middlemen and traders and they are worried about themselves. The real concern for them is not the farmer but themselves. What they have done to farmer all these years? Why farmers are not getting right price for their produce when only these people are operating in the sector? Why the farmer has to suffer because of inefficiency in present marketing system?
The efficiency of agricultural marketing system has direct impact on more than 60% of Indian population i.e. farmers who are dependent on farming for their livelihood. If the organized retail bring competition and improve infrastructure and efficiency why can’t we allow them? The investment required for improving infrastructure is huge and will take decades if we depend on the government. For example, presently we have cold storage facilities sufficient for only 10 % of production of fruits and vegetables. According to the estimates, in another 10 years we need an investment of Rs.27000 crores for cold storages only. One can imagine the total investment required for other facilities. In this situation we need to encourage private participation in the sector that are willing to invest and improve the system.
Why can’t this sector be opened up and allow fair play of supply and demand forces? Why can’t we liberalise the sector and allow at least Indian business houses if not other MNCs? Why can’t the farmers realize the right price for their produce? How long can we support these vested interests?
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