Alternative Market Channel for Farmers
- 10 Apr 2020
- 5 min read
Why in News
In Maharashtra, an alternative market channel aids the impact on production and distribution of agricultural commodities as a result of the lockdown.
- It is a nearly two-decade-old initiative to reach fresh produce directly to consumers in Maharashtra, bypassing the mandis.
- Mandi System:
- The mandi is a marketplace where farmers sell their produce to the licensed buyers through auction.
- It is operated as per the regulations of Agricultural Produce Market Committee (APMC).
- The auction is facilitated by the adithis (commission agents, middlemen) at the mandi, who hold licenses and are allotted a shop in the market.
- These are wholesale markets - sites of aggregation and assembly, dealing with the bulk purchases and trade of agricultural commodities, before goods are processed in different units and distributed through a range of retail channels.
- The model was introduced in the early 2000s.
- The idea was to create smaller, less congested markets in urban areas with the participation of farmers’ groups and Farmer Producer Companies (FPCs), so that growers of vegetables and fruit have direct access to consumers.
- The model is implemented by the state Agriculture Department and Maharashtra State Agricultural Marketing Board (MSAMB). Maharashtra is one of a handful of states where FPCs are robust.
- At least 118 such markets were set up in Mumbai, Pune and Thane, with more planned in Nashik, Aurangabad and other cities before the lockdown began on March 24, 2020.
- The farmers’ groups have filled much of the gap created by the shuttering of wholesale markets. More than 200 FPCs are now supplying fresh vegetables in urban Maharashtra.
- The government and MSAMB identify farmer groups and FPCs, and form clusters.
- The FPCs and farmers’ groups are allotted space for weekly markets in municipal wards or localities.
- The local bodies choose the market sites and link the markets for direct delivery to cooperative housing societies.
- Some producers’ groups even park pick-up trucks loaded with fruits and vegetables at the gates of housing societies.
- Advantages during lockdown when social distancing is critical:
- Traffic of both buyers and sellers in these decentralised markets can be controlled more effectively than in wholesale mandis.
- In several areas of Pune and Mumbai, the decentralised markets have given way to FPCs delivering directly to the gates of housing societies.
- Most FPCs have minimised contact, and have taken to selling pre-packed, customised packets of vegetables.
- Benefits to Farmers
- The start of the Covid-19 coincided with the peak vegetable harvesting season.
- As the markets were locked down, there was a threat to the crop in over 100 lakh hectares in the country.
- A significant part of the produce of the state has made its way to these markets, lessening the impact on farmers.
- More importantly, larger numbers of vegetable growers in Maharashtra have got into direct selling to consumers.
- The practices of rudimentary packing, sorting and branding are being inculcated in farmers, as they pack and send pre-ordered packets to housing societies.
- This model will likely help create alternative market chains that could continue even after lockdown.
Farmer Producer Companies
- A provision for setting up FPCs was made in the Companies Act, 1956 in 2003 by an amendment to the Act.
- According to the National Bank for Agriculture and Rural Development (NABARD), a producer company is a hybrid between a private limited company and a cooperative society.
- Therefore, it enjoys the benefits of professional management of a private limited company as well as mutual benefits derived from a cooperative society.
- Most of these FPCs are concentrated in a few states such as Madhya Pradesh, Rajasthan, Maharashtra and Bihar.
- Some have been formed by landless women, labourers or marginal farmers.
- A significant proportion of FPCs has been engaged in sale of agricultural inputs such as seeds and pesticides to farmers while some of them are involved in commercial seed production.
- However, only a handful of FPCs have been able to become financially viable.